Digital education, research funding and data spaces are the most important areas of investment to support scaleups, new DIGITALEUROPE report shows

DIGITALEUROPE has released today its new report “Scaling in Europe”, providing a snapshot of the most beneficial investments and policies that will support the European digital scaleup ecosystem.

The report was presented today by Director-General Cecilia Bonefeld-Dahl at Masters of Digital, DIGITALEUROPE’s annual flagship policy conference, and it points to digital education and skills, more accessible research funds for small companies, and creating common European data spaces as the most urgent areas of investment.

The findings came from a survey of 37 high-growth businesses from 22 different European countries, all of which were previous nominees of DIGITALEUROPE’s Future Unicorn Award, which every year acknowledges high-potential European small companies. Later today, the 2021 Future Unicorn Award winner will be announced by Mariya Gabriel, European Commissioner for Innovation, Research, Culture, Education and Youth.

Director-General Cecilia Bonefeld-Dahl said:

“Scaleups are essential to Europe’s prosperity, yet they face structural barriers to their growth. Our report “Scaling in Europe” identified obstacles such as outdated regulation, market fragmentation, lack of access to talent, and lack of data cooperation.

The good news is that all these are areas where the EU and national governments can have significant impact. Our survey measures six investment priorities – including digital skills, better connectivity and digitising SMEs – as well as concrete recommendations and examples from these scale-ups on how to overcome their barriers to growth, such as improving public data access for electronic verification and e-identification purposes.

Policy often lacks the on-the-ground evidence to really have an impact. We hope this report will bridge the gap and provide a useful instrument to EU governments when designing their post-COVID recovery plans. Many of these recommendations are great examples of investments that governments should undertake in their 20% digital spending, as well as for the wider EU digital policy agenda.”

Background

A scaleup is usually defined as a company who has been growing at a 20 per cent rate in the previous three years, with at least 10 employees. “Scaling in Europe” stems from a survey DIGITALEUROPE conducted among 37 European high-growth businesses, from 22 different European countries, that were nominated to DIGITALEUROPE’s Future Unicorn Award. It provides a snapshot of investment and policy priorities to support the European scale-up ecosystem and address structural barriers to growth.

Investment priorities:

• Digital education, both in schools and continuous education and upskilling for professionals.
• Research funding, like Horizon Europe, which is essential to spur high tech innovative companies, but needs to be adapted to smaller companies, especially when it comes to procedures and red tape.
• Common European Data Spaces with standardised open data in a vendor and application neutral format, ensuring that smaller players can also benefit from such data ecosystems.

Recommendations from scaleups on addressing structural barriers to growth:

1. Adapting regulations to new technologies. Europe needs a legal framework that is adaptable to the pace of technological developments and that closely involves scaleups to ensure that both laws and implementing instruments are fit for purpose.
2. Bridging market fragmentation. Europe needs a single Europe-wide e-Administration portal for businesses providing guidance on entering new markets (e.g., product authorisations, patents, tax administration, GDPR compliance).
3. Improved investment framework. Europe needs increased expertise and diversity on evaluation panels, promoting long-term vision for investment criteria and more patient capital available.
4. Better access to talent. Scale-ups need additional tools to help them in the competition for highly-skilled professionals, such as options to offer company shares to employees or allow for easier migration rules.
5. Improved data cooperation. 90 per cent of scale-ups consider the creation of European data spaces a high priority. GAIA-X, as a European project supporting data spaces, was mentioned as a step in the right direction, but it is important to ensure fair access to small companies.