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Landmark post-COVID-19 Digital Policies: The EU Startup Nations Standard

September 11, 2020

On Wednesday, our Director EU policy, Benedikt Blomeyer moderated a panel at the Virtual Ideas Festival about the Startup Nations Standard (SNS). Pēteris Zilgalvis, Head of Unit at DG Connect, Dominic Jacquesson Vice-President Talent at Index Ventures and Liz McCarthy CEO from Scale Ireland joined us to do discuss the potential of the SNS for economic recovery post-COVID-19.

As we mentioned in our previous blog post, the SNS is a political initiative that aims to make the European Union the most attractive Start-up and Scale-up continent. It will call for commitments from Member States to implement a set of best practices which will allow for startups to flourish and accelerate their growth in Europe.

How? By collecting and sharing best practices/policy initiatives amongst Member States that may include: stock options reform, startup visas and regulatory sandboxes. Allied for Startups has advocated for many of these policies since day 1. Here is a deep-dive into some of these policies and how they can benefit startups, the wider innovation community as well as the economy.

Talent

Since its foundation, Allied for Startups has made Talent one of its first priorities. We were thrilled to hear that the EU Commission acknowledges the importance of talent for a healthy startup ecosystem and that there will be a focus on talent at the SNS, in particular:

Stock options reform: Unlike traditional companies, startups remunerate partly or in total their employees via stock options. Startups typically do not make profit in their first year or years of existence. Stock options are a way for them to stay competitive for the talent they need while growing their business. Currently, stock options diverge strongly at EU level. We believe EU Member States should work for the unification of stock options schemes across Europe, to avoid startups having to adapt to 27 different schemes and taxation. If more and more countries work together to create an EU harmonised stock options scheme should be open to as many startups and employees as possible, offering favourable treatment in terms of regulation and taxation.

Startup Visas: Getting the right talent is a startup’s top priority. Unfortunately, the right talent is not always next door and startups have to search across borders to find a perfect match. Hiring from abroad can be a lengthy, burdensome and sometimes costly administrative process. This is why some Member States such as Estonia or France have put in place a startup visa framework facilitating entrepreneurs to hire the adequate talent for their team, serving as an example of best-practice.

At Allied for startups we advocate for a special visa that allows non-EU citizens to come to any given EU country and then be able to work in another. The beneficiary of this visa should be allowed to work in the 22 EU countries that are members of the Schengen Area. These countries could be the first adherents to such a European enhanced cooperation programme. The SNS provides the perfect platform and framework for EU-wide cooperation.

Regulatory sandboxes

Regulatory sandboxes are a powerful tool that should be used at national and EU level. A sandbox is a collaborative way for entrepreneurs to test their groundbreaking new technologies in a market while being under the supervision of regulators – startups are able to test their new service or products without harming consumers. Sandboxes also provide entrepreneurs the guarantee that their cutting-edge technology complies with the existing legislation. In turn, legal certainty incentivises and attracts investment. Any Startup Nation should develop regulatory sandboxes as a policy instrument to encourage entrepreneurs to launch and scale in the EU. Ultimately, regulatory sandboxes promote innovation and healthy competition to the benefit of consumers.

Allied for Startups has advocated for many of these policies from day one. We see enormous potential in the SNS especially during the COVID-19 economic downturn. The right legislative framework has the power to unleash startups, the biggest job creators, and in turn build the economy of the future. We look forward to working closely with the European Commission to building a more startup-friendly continent!

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