The Industry, Transport, Research and Energy Committee of the European Parliament (ITRE), with rapporteur MEP Tsvetelina Penkova, proposes to help Startups in a special way, as they would be more disadvantaged than SME, and trying to underline the differences between the two categories of companies. The first impression is that we are seeing a strange version of “food jealousy”. But before we contribute actively to a fight among the poor(-er companies), let’s give a look into the details of this surprising report.
First of all, yes SME and Startups are substantially different. While SME develop their business based on their owners’ practical professional skills and capacities, create trust with clients, raise quality steadily, access markets one after the other, make incremental innovation, employ and train people, scale up their companies step-by-step while struggeling with high taxes and complex bureaucracy, survive crises, inherit from one generation to another their successful stories transferring also a strong entrepreneurial mind-set in the families, and sometimes even become hidden champions in a niche of the global economy, Startups essentially base their business model on one idea: first formulating a (supposedly) disruptive idea for a business, normally with the use of new technologies, then trying to proof the concept, prototyping and starting a first roll-out to the market, and eventually find an investor to sell the business idea and prototyped product. I.e. 9 out of 10 Startups don’t look for becoming a successful company of the real economy, but simply want to monetarise their genius ideas as soon as possible. Good for them if they succeed (and for the lucky Big Companies – from Europe and broad – that buy their ideas and solutions), not really useful for a diversified, resilient and strong economy. Good as an exercise labs for young entrepreneurs, not good enough to build a long-term perspective. And indeed, Startups represent – if much – 3% of the registered companies.
And it is for sure true that Startups have a difficult life, as 9 out of 10 fail in the first 5 years after their business idea had been born. And it is as well true that many of the difficulties they face – and which the report lists in an explanatory note – are the same problems SMEs face. Given that, we could conclude that also SME need a more favourable business environment, better access to finance, less bureuacracy, one VAT number valid for the whole Single Market, better access to markets and finances, support to find skilled workers and employees, etc. But that would be like saying, “we want the same” – quite trivial.
Instead, we have the impression the whole report is intended to obtain one thing: to include Startups more into EU policy making at all levels. As if they could guarantee a long-term interaction with the European Institutions, as well as a consierable number of voters. And it is even very interesting if not a bit annoying, noting how the rapporteurs try to underline the specific role of Startups for the European Commission’s and Parliament’s political goals – as if they would be the ones that bring the innovations for the green and digital transitions, for AI and a net-zero industry, to say: all that what makes Startups already being the preferred kids on the EU-block (see EIC, etc.).
We think, SMEs do not deserve to be considered less important than others. Our claims are well documented and count for millions of companies in every sector. Simply, there are no “better companies”, independently from being mid-sized, small or micro, “traditional” or “startup”.
We invite Startups to join forces with SMEs and to get better conditions for all – without privileges for some few.
