Do we need a European public private Partnership to support EU web enterpreneurs to start and grow their companies?

lpujol's picture
Submitted by lpujol on Mon, 2012-04-16 07:41

Web entrepreneurship is emerging as a key building block for creating jobs and growth. Although Europe has great web entrepreneurial success stories, there is still lot to do. Many web-based EU start-ups, yet they don’t grow into global players and many of them are bought by US players. How might we support web entrepreneurs in launching and growing sustainable global businessess? Do you thing a EU Web Entrepreneurship Partnership would be a good idea?

The idea behind it would be to give young startups access to resources, connections and expertise. It will also provide support to the development and networking of web entrepreneurs regions across Europe with special focus on the Member States with higher unemployment youth rates.

In January 2011 Obama Administration launched a similar initiative. He called on both the federal government and the private sector to support entrepreneurs across the country. Leaders in the private sector launched the Startup America Partnership, an independent alliance of entrepreneurs, corporations, universities, foundations, and other leaders, joining together to fuel innovative, high-growth U.S. startups. Within just one year, the Partnership has mobilized to make over $1 billion in business services available to a national network that will serve as many as 100,000 startups over the next three years.
http://www.whitehouse.gov/economy/business/startup-americaç

Do you think it would a good idea to launch a Web entrepreneurship public private partnership? Do you know any other inspiring initiative that has worked elsewhere?

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Comments

miguel.gonzalez-sancho-bodero's picture
Submitted by miguel.gonzalez... on Fri, 2012-04-20 23:17

Many people voting 'interesting' so it seems like a good idea to have such European partnership for web entrepreneurs. No the question is, what that should consit of? (taking inspiration indeed from exiting experiences such as start up US)

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adavila's picture
Submitted by adavila on Wed, 2012-04-25 10:20

Entrepreneurship is a team activity and anything that can be done to have people network is a great initiative. These networks have to bring technology and business together and the more international they are the better.
These networks should be created for startups at different stages in their development from their creation to their growth stage.
Some countries have initiatives around these ideas with a high degree of success. The building blocks are always bringing technology and business model, giving training and advice with minimal financial support. Help them grow through their initial stages and then give them access to the private network of growth accelerators--business angels, venture capital and their ecosystem.

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Opus50's picture
Submitted by Opus50 on Wed, 2012-04-25 10:32

Cultural and Cash issues are different between US and EU and that is something that should be acknowledged in this push to copycat what is happening over there.

One often quoted reason for web entrepreneurs to chose Silicon Valley(50% are foreign) is the availability of high end engineers, programmers and coders - however, a recent comment also made the point was that Poland has a strong and growing group of these industry linchpins, that soon they will be oursourceing to the US for CEO's....

My point, let's get specific about the business we are talking about - programmes that actually target day to day industry requirements and not just aspirations.

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Wayneconyers's picture
Submitted by Wayneconyers on Sat, 2012-04-28 18:01

I find this really interesting - our portal is based in IT hardware support and connects companies directly to our supplier network in europe - we have worked hard to try and provide a unified platform and its working - but it does sometimes feel like we are pushing against the tide. Bringing together a lot of independent globally based companies and unifying them is powerful but it changes the way the industry works in layered margins - we just have to keep working hard and investing to get to the vision which isn't far away.

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javimaker's picture
Submitted by javimaker on Mon, 2012-04-30 20:07

I sincerely beleive that it is difficult to simplify the problem; again, the conditions in Silicon Valley (and other USA ecosystems like Boston or Boulder) are not replicable here in an exact form. I recommend you to take a glimpse at this article: http://t.co/SLPNL9qi
In my opinion, governments should empower indirect measures for enhancing our entrepreneurial ecosystem. FOr example, simplification of bureaucracy, modifying obsolete laws for engouraging private investment (Angels and VCs), etc. Education-wise, there are structural changes to be made, but not sure about to what extent the EU could hava an impact in this field.

Creating a framework/space for empowering relations among European entrepreneurial players is a brilliant idea, but I feel the reasons behind our disadvantaged positions go a bit deeper. What do you think? :)

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Carsten Kestermann's picture
Submitted by Carsten Kestermann on Fri, 2012-05-04 11:09

Europe has not a start up but a growth problem. Why? One reason is our massive lack of growth and venture capital (compared to the US). We need to strenthen that to become competitive again in the digital industry. My reccomendation: Look at israels succes story with its yozma programm since 1993, could be a role model for europe! http://www.yozma.com/overview/

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lpujol's picture
Submitted by lpujol on Fri, 2012-05-04 11:24

Is it Yozma a private initiative or has any collaboration/ support of the government? Do you think that the startup Partnership suggested could have a program that could unlock access to capital to fuel web startup growth? should it be a private initiative or have any support from EU institutions?

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Carsten Kestermann's picture
Submitted by Carsten Kestermann on Mon, 2012-05-14 14:53

Yozma today is private but it was started in 92 as a government programm (the government left the yozma fund step by step), as such I would recommend strongly a similar programm for europe, because today we have a lack of available venture capital for european growth companies (not only start up's - very important!). I am totally convinced that there must be a government boost to get things rolling...private investors are not locked out yet but they do not invest as much as it is needed...same problem was in israel in 92... to get the best ROI, I doubt that it woud be usefull to connect such a programm with any other planned initiative...those pork barrel politics never pay off in the end as the try to suare the circle.

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Alex Shani's picture
Submitted by Alex Shani on Tue, 2012-05-15 08:51

Let me 1st refer to Yozma. It was on even before 1992 that the Government of Israel established it as an Private - Government Venture Capital. I was some kind of a show case for interesting investments in technology oriented initiative. The success of Yozma (originally driving new initiatives) was the 1st step in the creation of many Venture Capital Investment entities. The basic formula was based on seed money to create a Start-up growing to solid company which can get a value of 10-30 time of the original investment. Such numbers makes a success rate of 20% (only 2 out of 10 start-ups survived) a good investment for the venture money.
The other issue is about what are those successful start-up. They are all driven by unique technology ideas and a foreseen market. The ability to be the owner / partner in a start-up is the main drive beyond the researchers who are creating them as well as the knowledge that failure of one is not the end of the day as there is the ability to create another start-up. For the Venture Capital one of the most important criteria in making the investment is the "people" their motivation and experience.
Working with many researchers on FP funded program I appreciate very much their technological capabilities and motivation. It is my opinion that it is required to set up a program that will encourage those researchers to see what their innovation can do on the worldwide market (marketing) and would support them in taking the 1st step toward being the owners of their own achievements. Sharing with them the risk by providing them the investment of creating their own working team a a start-up company.
i will be happy to get participants comments a to elaborate on those ideas.

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Carsten Kestermann's picture
Submitted by Carsten Kestermann on Tue, 2012-05-15 13:06

We should discuss that in person at the assembly in brussel, also with eu officials such as Detlef Eckert who was already open for that idea a couple month ago. @Laia: Do you think we can arrange something?

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Carsten Kestermann's picture
Submitted by Carsten Kestermann on Thu, 2012-05-24 12:16

It is quite simple and is based on the yozma. Just a few principles: The program (we called it national software fund) needs to adress vc's instead of companies to create spill over effects. If you invest directly in companies (like the german HTGF), your spill over effects will be weak, you do not attract more risk capital. If you invest in vc's with the principle that they have to match your investment, you'll easily get the engine started. Another principle is, that such a program should not limit itselve to small investments. Many examples in the valley show us, that the investment numbers in the second or third rounds can hit 100 million euros or even more. Especially there we do have problems in EU-27 (exceptions prove the rule there, of course). It is almost impossible to gain such numbers in Europe. For germany we also had an innovative financing scheme to make sure that no tax payers money will be burned, but I doubt that this can work for a european level (the investors will buy a special german ict bond, same rating than "normal" german bonds, the collected money will feed the fund and there will be a longterm final maturity interest.)

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Submitted by fergal on Wed, 2012-05-23 19:31

NDRC in Ireland is modelled on examples including the Magnet programme, which is the other (pre-commercial development) arm of Yozma, and Yozma itself. Imperial Innovations in the UK is another globally recognised example. NDRC in Ireland has been up and running since 2008, has worked with Universities on over 80 commercialisation projects, and is starting to see successes in the form of venture investment in new ventures.

NDRC is a form of Public Private Partnership which allows public funding to make research more commercial and product-oriented, and to allow private investment to drive commercialisation and venture forming and growth.

There is a strong base of research in Europe and we need to make this a bedrock for European business. At NDRC we’ve begun to see the real benefits of the PPP model, combined with a neutral space singularly focused on commercial validation of research, and a dedicated team with expertise in this process.

There are positive signs of Horizon2020 including better structures for encouraging commercialisation of research. It is important that these appreciate that there is a need for facilitators to manage this process in a neutral (cultural, physical) manner.

There is a critical role for innovative forms of Public Private investment to allow this to happen.

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mpailthorp's picture
Submitted by mpailthorp on Mon, 2012-05-28 08:13

Beyond minimizing risks for venture capital (via PPP or other enticements), what are the other gating factors limiting the scaling of successful small enterprise in Europe?

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Carsten Kestermann's picture
Submitted by Carsten Kestermann on Tue, 2012-05-29 10:33

It is not about minimizing risks but to get more capital onto the european playground... we see that we do not get enough capital and we need to change that. In the end, scaling in the it-business is all about money (and of course skills, but If you fall short on your ressources your skills might not help you). In a fragmented market, where internationalization is evident to become bigger, scaling is even more expensive than in a big homogenous market like in the us...

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AxelS's picture
Submitted by AxelS on Mon, 2012-05-28 21:51

I live in Silicon Valley for 14 years and breath it every day. By far the biggest difference is the difference in culture. Europe is trying to imitate Silicon Valley since the 90's knowing that technology controls much of any future in medical care, biology, energy...

Yet the culture is simply preventing it.

1) Investment Culture
30% of the funding globally comes from Sand Hill Road. But isn't funding per see - it's the valuation. I started 3 companies in Europe and 3 in the US - US valuation is simply twice as high as in Europe. Why should I take $2 Million for 20% of the company when I get $4Million for 20% in the US?

2) Investors invested Hundreds of Millions in social media start-ups with no business model. A European investor is only laughing and considers it the most stupid thing without even analyzing why it may make sense ;)

3) European have a very high degree of protectionism. Protect anything, videos, music, papers even thoughts. The fear that somebody can copy something is by order of magnitude greater than the understanding that sharing will augment something more than endanger it.

4) With all that said the next idea is to make it different to be different. And that is when it becomes nothing but embarrassing.

I trust that those are the biggest obstacle of all in becoming an innovation leader. And unfortunately when it comes to innovation there is only a leader. The No.2 is already a follower.

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Carsten Kestermann's picture
Submitted by Carsten Kestermann on Tue, 2012-05-29 10:51

totally agree, but the key question is, how administration and politics can change that... and I doubt that "culture" is a policy field where laws can change a thing (even if this is vital point to stress) ... but indeed there is a need for policy makers to initiate a jump start to attract more growth capital for/in europe (which is possible, india and israel showed it, and even silicon valley was established by public money/public projects a few decades ago - which of course is something that many people have forgotten today - key is to strengthen the vc-szene to create spill-over effects and not only to invest public money), because it is also true, that we have a massive lack of capital in europe, which leads to a more restricted investment praxis than in the US, just because there is not enough "funny money" to play with in europe, which leads to a lack of investments in "really" risky ideas...

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larry's picture
Submitted by larry on Mon, 2012-06-11 00:39

In 2000 I conducted an international benchmarking study of business incubators for the Brussels Region. At the time, private equity-based incubators like Gorilla Park, Brainspark and Speed Ventures were all the rage across Europe. With millions in venture capital funding, they took equity stakes in early-stage startups in the hope of leading them to an IPO in a matter of months. Sadly but not surprisingly most of them collapsed after the burst of the dot-com bubble. What remained were the traditional incubators funded by public authorities in order to stimulate local economic development. They supply subsidized workspace and administrative support to start-up companies, but not the "smart money" and aggressive growth strategy that private investors would provide. Their mission is to ensure that most of the tenant companies survive, whereas the business model of the equity-based incubator was to gamble that just one in five or one in ten would succeed.

With the benefit of hindsight, a few years later I contributed to another benchmarking study for the European Commission, where I made the case for a hybrid model of business incubator based on a public-private partnership, wherein public funds would cover the operating costs of the incubator, and private funds would invest in its tenant companies.

I believe such a model is especially well suited to Europe, which as pointed out in the comments above lacks the entrepreneurial culture and ecosystem of Silicon Valley.

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nobelboy's picture
Submitted by nobelboy on Sat, 2013-02-09 16:30

While we talk about interface I think we should care about 2 implementations - front end (content) and back-end (admin interface). the most trouble we get in menu system when 'Add content' and others are works in both areas. Now textgroup support is dropped and I see no ability to separate this.
http://www.boutique.ll-therapy.com/fr/gants/322-gant-sensinyl-free-7-8.html

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