By Johann Svane, Head of Policy and Press, Danske Iværksættere – Danish Entrepreneurs, and Morten Løkkegaard, Group Chairman of Renew Europe, the Liberal Party in the European Parliament

In our rapidly changing, digitalized world, innovation is not just a luxury, but a necessity for our society. 

Innovation creates solutions to, for example, the climate crisis and other major challenges of our time; innovation ensures growth and new jobs that together raise living standards.  

But innovative startups struggle with stifling bureaucracy in the EU.

Therefore, we citizens of the European community are facing a crucial European Parliament election this summer: Should the EU be a catalyst for innovation or a bureaucratic obstacle for entrepreneurs?

The answer is obvious if you ask us. We need an EU that promotes entrepreneurship.

In the last almost five years, we have seen that the EU has failed to take the specific needs and challenges of entrepreneurs into account. This includes EU decision-making processes that are not geared to keep up with technological developments and the volatile markets in which businesses operate.

Therefore, we will – both as Denmark’s representative for entrepreneurs and as a Danish legislator – work to ensure that all new legislation takes into account how it can affect the growth and development of our innovative companies.

The idea of introducing a so-called ‘Startup Test’ is far from new. Already last year, we from Danish Entrepreneurs suggested that the European Commission present a legislative proposal for a ‘Startup Test’ that assesses the innovative power, capital and competitiveness of startups. And in the European Parliament, the Liberal Party convinced the liberal group, Renew Europe, of the need to establish a competition check that assesses the impact of new legislation on startups. Exactly as has been done with the SME test since 2021.  

MEP Morten Løkkegaard, Venstre, Danmarks Liberale Parti | Photo credits: Mads Claus Rasmussen/Ritzau Scanpix

Another challenge for startups is that the European Parliament is trying, with the best of intentions, to reduce burdens on businesses by proposing exemptions for SMEs to spare them from administrative burdens. Unfortunately, these exemptions are not targeted enough when it comes to the specific challenges that entrepreneurial businesses face. Entrepreneurs are characterized by their willingness to take risks and pursue innovation, which often leads to rapid growth. Therefore, the approach doesn’t work for startups.

Specifically, the problem arises when defining thresholds for companies to qualify for the SME exemption. This is because statutory limits do not take into account entrepreneurs’ natural desire to scale. Entrepreneurs on a rapid scaling journey quickly exceed the existing limits set by the SME test and are then faced with an unclear and uncertain legal situation. 

This uncertainty can be disastrous for entrepreneurs because it discourages investors from getting involved in companies whose future legal framework is unclear. Both Venstre and Danske Iværksættere therefore emphasize the need for startups to have a direct voice to legislators in the European Parliament and in particular the European Commission, who are drafting legislative proposals. We need to give startups a much bigger voice in the debate when discussing new EU laws.

This summer’s European elections will be crucial for startups in the EU, and it will be important to support parties that will promote the conditions for our business community. Otherwise, we risk bureaucracy increasing dramatically – and European startups traveling to the US instead of staying in Europe because it is too difficult to do business in the EU.

Making the EU a catalyst for innovation should therefore be a shared top priority.

🔗 Discover the original article in Danish 🇩🇰 on Altinget.dk: https://www.altinget.dk/erhverv/artikel/danske-ivaerksaettere-venstre-startups-skal-have-indflydelse-ikke-kvaeles-i-eus-bureaukrati