The larger point is: you can't replace a healthy investment ecosystem with grants. A government fund is itself representative of a lack of ambition. If the EU actually wants its own SV, they're going to have to address regulation, not throw money around.
The real problems startups face in the EU are labor and tax laws. Companies can't use equity as compensation (which is a big lure for talent) and it's extremely hard to fire people (which makes pivoting or dealing with general market changes impossible for small companies). Pro-employee policies are necessarily anti-employer. Smaller, more innovative, companies have a harder time surviving such policies. So long as there is greater risk in EU companies, investors will take their money elsewhere.
> Companies can't use equity as compensation (which is a big lure for talent)
What? Where do you get that? Then I better return all the equity I got.
> and it's extremely hard to fire people
I would say that is hyperbolic, unless you find anything but at-will employment "extremely hard". Small companies (<20?) in Germany, can fire people without reason. I do not know any country (Edit: in the EU), where restructuring is not a valid reason to fire someone (with a severance of 0.5-1.1 monthly salaries per year of employment).
(Edit: But then, I cannot claim to know all the labour laws in the EU)
> What? Where do you get that? Then I better return all the equity I got.
Startups normally use options for equity compensation rather than direct shares because of the tax benefits for employees and simplicity for reporting. Options are look at more like regular shares in the EU. Can't was a bad way of phrasing it. More like shouldn't because tax laws make it a crap shoot.
> I would say that is hyperbolic, unless you find anything but at-will employment "extremely hard"...
Anything but at-will is extremely hard with knowledge work, especially for small companies.
> Pro-employee policies are necessarily anti-employer
I can't help but feel offended that you feel this way. As a technocrat, sure, let's treat employees as numbers on a sheet that we can hire and fire at will because who cares about them as people right?
Don't forget employees are people, with families, who are usually working to sustain their own lives.
It saddens me how deep this US-centric rhetoric on treating employees unfairly has gone.
I'm not sure how you feel, that's up to you to tell us.
The EU has done a fantastic job of respecting worker rights, from the right to disconnect, to time off / vacation from work, worker's rights for employment and having a social safety net if you become unemployed.
If you like metrics you can read the world happiness report [1] or look at how the OECD measures income inequality across the world [2], the US is below most European countries.
Well, it is easy to get rid of employees in case revenue is declining. ESOPs and RSUs are a very real thing as well. Of course, equity in an unproven company is basically short changing employees on salary.
Also, the EU has what, almost 30 different sets of tax and labour laws.
I was making generalizations based on things I had heard from people I know in Europe. The things I said may not apply everywhere, but I know from coworkers overseas that they definitely apply to Germany, France, and Italy.
Having had a failed start-up myself in Germany, I take issue with the sentiment that equity isn't feasible as part of compensation. That usually comes from founders unwilling to work inside the legal framework to find a solution. And from investors, because paying employees with shares, that get deluded and take the second seat compared to investors, reduces HR costs for their portfolio companies.
> That usually comes from founders unwilling to work inside the legal framework to find a solution.
I appreciate your engagement, but this statement feels like it proves my point. In the US, startups have simple, standard, procedures for creating option pools for future employees. I had my own failed startup in the US, and never had to give a thought to how to structure equity compensation.
Same goes here, again ESOPs or RSUs. You do need the correct legal entity. And I don't see any reason why stock based compensation would be the main reason holding European start ups back.
Edit: Thinking of it, you can even do that with GmbH in Germany by handing out equity that is tied to to the employment, at least for directors and the like. Don't ask me about the details, obviously it never came to it in my case.
To be fair it is also not part of the culture in Europe. Most people who misses it are the one who've compare with the USA.
The USA is riddle with complex tax rules for investment and capital gains that makes those incomes interesting for an employee. That might not be necessarily true in Europe.
This accelerator is just to make more high risk capital available in certain select fields. It's actually a very small thing that the EU has fielded, the real solution has been and continues to be The Capital Markets Union (https://ec.europa.eu/info/business-economy-euro/growth-and-i...)
It's far from completed, but I understand some of the more important actions have been done and it's already had a significant impact.
There is also a bright side here. This indirectly incentives alternative organizational structures such as cooperatives. Some would argue it's also a healthier way to grow and has existed in more traditional sectors such as farming for a long time.
Personally I think EU has a long way to go, but it's not all doom and gloom.
The real problems startups face in the EU are labor and tax laws. Companies can't use equity as compensation (which is a big lure for talent) and it's extremely hard to fire people (which makes pivoting or dealing with general market changes impossible for small companies). Pro-employee policies are necessarily anti-employer. Smaller, more innovative, companies have a harder time surviving such policies. So long as there is greater risk in EU companies, investors will take their money elsewhere.