INNOVATIVE STARTUP IN EUROPE

Innovative start-ups represent the engine of growth and innovation in all advanced countries, creating jobs and advancing the economy. For this reason, governments are trying to facilitate its constitution as far as possible. Technological transformation accelerates exponentially and innovative start-up speeds response times to new market challenges.

What does it exactly mean “innovative”? The term “innovation” refers to when a new product / service is introduced into the market or when a significant improvement is made to an existing product / service, revolutionizing it. Also, we can talk about innovation when a process is improved, new techniques are introduced and work organization is optimized, or production costs are reduced.

THE EUROPEAN SITUATION

The different European countries support start-ups in different ways.

For example, German government provides important entrepreneurial basis to students during their school studies and, at the same time, it offers startups good basic infrastructures and numerous funding opportunities. Berlin is considered the European capital of high-tech startups and every year it attracts thousands of young entrepreneurs from all over the world. Public funding in Germany is multi-faceted and structured on four pillars: direct subsidies, public loans, public guarantees and equity. For example, Flixbus is a German startup that changes the way of travelling for millions of people all around Europe, offering many routes on their buses at very cheap prices. Thanks to the simple booking system and an ever-expanding network, Flixbus represents the best convenient and green travel solution. Within the Flixbus intercity buses it is also possible to enjoy free Wi-Fi.

In France, instead, there is the largest startup incubator of the world, Station F based in Paris. In 2017 at the international Consumer Electronic Show held in Las Vegas France rose to second place due to the presence of many startups, preceded only by USA and China. Compared to Italy, many European countries have competitive research taxation and they develop continuous tax exemption agreements (although temporary) for innovative startups and new businesses. In France, by the launch of Bpifrance (Banque Publique d’Investissement), equivalent to the Italian Cdp (Deposits and Loans Fund, in Italian “Cassa Depositi e Prestiti”), supporting public investment in the startup sector has become one of the major objectives on the agenda of various governments that succeed one another over the years.

In 2006, Spotify was born from the Sweden Daniel Ek, a young like many others, passionate about music and with the dream of making it big in the world of technology. Today thanks to Spotify we have access, more or less free, 24 hours a day, a boundless catalog of songs and we listen to everything we want on every kind of device.

An Italian success is represented by Candy Crush, of the Roman Riccardo Zacconi, which in 2015 collected 3.5 million euros a day.

ITALY: INCENTIVES TO INNOVATIVE STARUPS

Italian Government also supports the development of an innovation-oriented entrepreneurial ecosystem, able of creating new jobs and attracting human and financial capital from the rest of the world.

Thanks to the decree-law 179/2012, Italy has adopted an organic regulation. In particular, the law 221/2012 for the conversion of the “Growth Decree 2.0”, aimed at favouring the emergence and growth of new high-technological value companies. Some requirements are necessary, but once the registration is approved, startups can rely on a manifold of benefits, such as incentives, tax breaks and regulatory exemptions. Established Limited companies, also in cooperative form, are considered innovative startups.

Necessary requisites for an innovative start-up:

  • Activities and establishment: it must be no more than 60 months from the date of the application and must carry out business activities;
  • Headquarters: must have its main office of business and interests in Italy;
  • Last financial report: starting from its second year of activity, the total annual production value must not exceed 5 million euros;
  • Profits: it must not distribute or have distributed profits;
  • Corporate purpose: it must have the development, production and marketing of innovative products and services with high technological value as the exclusive or prevalent corporate purpose;
  • Merger, split or assignment: it cannot be constituted by a merger, company split or as result of an assignment of a company or business unit;

In addition to the meeting of these cumulative requirements, the Italian government enquires other 3 requisites, but not cumulative this time:

  • Research and development expenses: research and development costs must be equal to or greater than 15% of start-up’s profits;
  • Patents for industry, biotechnology, semiconductors, plant varieties: it must be the owner, custodian or licensee of at least one industrial patent related to the sectors listed;
  • Workforce: at least one-third of the total workforce must consist of staff with a PhD or who is doing a PhD, or it must employ staff in possession of a second level degree equivalent to 2/3 of the total workforce.

The innovative startups registered in Italy are about 10.610 and represent 2.9% of all the newly established limited companies in the country, as stated in the last quarterly report about the demographic trends and the economic performance of innovative startups, issued by Mise, Ministry of Economic Development.

Milan is the Italian city with the highest number of innovative startups, almost 2,000 (around 20% of the total). Therefore, Lombardy ranks first, followed by Lazio that has 1.155 innovative startups, 10,9% of the national total. The third Italian region in this field is Trentino Alto Adige, since about 4,9% of the companies established in the last 5 years are startups. These Italian startups have created more than 60,000 jobs in recent years. The staff is largely constituted of people under 35.

Italy differs from the rest of Europe with regard to the so-called “innovators”, i.e. those who held a patent before starting their start-up company. The Italian percentage of founders who are also inventors of patents, is 3%, and it is significantly lower than other European countries. According to OECD, “the fact that both students and patent inventors are under-represented among start-up founders… may indicate a greater distance between the Italian university and research institutes, on the one hand, and start-ups and entrepreneurship in general, on the other

If you are digital innovation enthusiast, read more on our JOurnal.

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