EU startup fund overwhelmed by high demand
politico.eu
politico.eu
> Companies who are left without any money will get a "seal of excellence," meant to tell private investors that the EU likes the company.
As someone living in the EU, this makes me embarrassed. We should be able to do better than this.
I suppose they will pitch in other funds, e.g. they have encouraged countries to use some of the funds under the Recovery and Resilience Facility to fund projects that got these certificates of quality.
An endorsement is better than nothing.
That they applied for something?
Most of the funds don't go to startups, and that's exactly what I hate about this paper pushing goldberg machine.
The big consultancy companies like accenture are also heavily involved in this scam. Founding AI startups without a single data scientist or engineer is what they seem to do for a living.
If not straight corruption this would be a clear case of bad allocation of EU resources.
This is also the small kinds of financial swindles. There are others that are much worse and involve already established companies.
Raising capital from a good VC firm is hard. period. If you do not have track record, you have to go through a lot of due diligence, it is selective. I can also understand why, because it is some LP's money so you want to invest in a startup that is risk-aversed.
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.
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)
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.
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.
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.
[1] https://happiness-report.s3.amazonaws.com/2021/WHR+21.pdf
Also, the EU has what, almost 30 different sets of tax and labour laws.
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.
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.
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.
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.
Personally I think EU has a long way to go, but it's not all doom and gloom.
Every company I’ve worked for has given equity as compensation here.
Opening a company is insanely easier than anywhere else I’ve been.
I can’t relate any of those factors to lack of innovation from my own experience. It must be something else?
SV has given the world a lot but what actually usually innovation has come from there in the past 10 years (not companies that moved there for easy money, but rather actual innovation creation)?
Total GDP for the USA and the EU was fairly similar before Brexit, but the 2019 EU budget was €148.2 billion in both revenue and expenses compared to the USA federal budget of $3.5 trillion revenue and $4.4 trillion expenses.
Most of the budget and power is in the hands of member states.
let's remember that decent EU SE salary is 3-5k USD
Except Zurich, London hubs.
In the US I would imagine they are drowned out of relevance by VC funding.
I’ve been extremely supportive of the EU all my life but I’m starting to wonder if politicians are in any way connected to the ground-level reality of business and personal life.
Remembering recent stories there have been problems with adtech, spyware (same thing?), tech monopoly behaviour, privacy violations, treatment of workers, dubious automation etc.
https://www.sbir.gov/sbirsearch/topic/current
There are some startups that actually launch using them, but they are relatively rare because when you are a startup you want to focus on finding your product or service, and not spend a lot of time filling out grant proposals and progress reports and going to governmental meetings. So they can be a big distraction. Still, it is an option.
You bet. 2.5 million in free money is bound to attract interest...
Think about the results the EU has achieved in digital. They've managed to:
* create pop-ups on almost every website
* screwed over regional pricing so that Bulgarians have to pay the same price as Belgians. Somehow region locks still exist though.
* tried implementing a system where all ISPs had to save all traffic of their users users
* recently the EU adopted a new copyright directive that will force digital platforms to pay money to copyright holders because a user might upload copyrighted content
* implemented a digital VAT system that screwed over microbusinesses, because the politicians couldn't be bothered to implement a minimum threshold (they eventually did... After a few years)
On the green front more has been done. But I'm not quite thrilled that they banned straws and strong vacuum cleaners. Neither do I like that they seem to be trying to make sure that we end up stuck with confusing USB cables.
But then why does https://europa.eu/ also have this banner? Surely, if this were so easy then the European Union's commission could at least be able to make a website without the banner, no?
And I agree that GDPR isn't all bad, but they had plenty of previous experience to come up with a better system than what we ended up with on the pop-up front. They knew that this would happen, because it happened previously. And yet they did it anyway.
HAHAHA. Right after news of a $400M funding round.
What exactly is the problem - the letter doesn’t mention it?
Being overwhelmed by applicants is a good problem to have (as opposed to having few applicants. That would have been worrying)
"Good!". "Now increase the size of the fund".
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
We do put a standard downweight on major media sites, though, especially ones focused on politics. politico.com has had that for years, but politico.eu didn't. I've done that now.
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que... doesn't look so bad though!
Wouldn't touch China with a ten foot pole though.
China is absolutely NOT an interesting place from the perspective of government contracts, particularly for US citizens that don't want to end up in jail, however. Anything defense related will fall under ITAR and associated tech export bans (this includes just working on these programs, not just physical movement of goods).
Additionally, if you're paid in Chinese currency it might as well be monopoly money to a foreigner.
There's also the massive ethical dilemma of supporting a government that is actively engaged in ethnic cleansing (regardless of the whataboutism).
1. Companies that made a business out of doing SBIR grants (I think the previous poster may have meant the same with SBIR farms). They write one grant after another and do some BS research, write reports and in the end, trash the results and move to the next SBIR
2. Small Start-up that a basically linked to big military suppliers and since the big supplier is ineligible to appply, they apply for them and among the big big stack of applicants, they are selected for the SBIR. Must be really superior ideas I guess. Or huge luck :-)
The SBIR grant was designed for neither, but blue sky ideas that VC don't want to fund. My experience with SBIR has been terrible. Especially
A. Idiot reviewers. I can only tell you that an idiot and google are a very dangerous combination.
B. Idiot management. One lady that is in charge of giving out the SBIR has emailed me that she has occasionally given SBIR to inexperienced (speak not having done an SBIR before) researchers. So she basically handles the grants to companies mentioned above under "1", the SBIR farms. She has no idea what she is doing. SBIR was not designed for that.
In my opinion, and I may be wrong, SBIR were designed to be open to the best blue sky ideas that may be too risky or too early stage for regular VC. This already excludes the existence of SBIR farms.
This was kind of my experience, though it isn't quite so malicious generally. The overhead in setting up the contract, while not ridiculous, is enough that once you get one, you usually end up getting another, and so on until you become an SBIR farm. The grants come in phases, Phase 1 being research and proposal, Phase 2 prototype, and Phase 3 basically being follow on contracts for production/continued development. You have to get them in order and if you only farm Phase 1 contracts you won't get super far. That said getting past Phase 2 is quite hard as the kind of stuff they generally ask for (weird one off fixes for various government procurement requirements) don't generally commercialize well.
They're frequently moonshot type efforts for the size of businesses they're targeting and the ROI is low unless you're using them to build and pay a team for some other goal. That said, if your goal is to build a team/small facility and you know what you're doing, it's not a bad option. It just isn't really anything like what the rest of the software world's VC funding model.