including faster prototyping, intensive handholding by venture capital companies, and the use of rigorous milestones against which funds are released.
but also because of public subsidy of technology and private investment in incubators, venture capital, and startups. The equivalent potential supports for social innovation foundations and public agencies are much weaker.
some create semi-autonomous corporate venture units (like Nokia; some grow through acquisition of other innovative companies as well as their own innovation (Cisco for example;
High entry barriers (technological skills) Lack of conflict-resolution mechanisms Tension between hierarchy and equality Developers Developers Entrepreneurs Tech events Accelerators/incubators Venture capital
Joel Gascoigne's51 or Ryan Carson's52 Others are maintained by different people, organizations or companies and post interesting messages about marketing (such as Startup Marketing53-),venture capital (such as The Startup Lawyer54),
Finally, venture capital can also be considered as an enabler in relation to the community of developers and entrepreneurs.
The venture capital fund earns money by owning equity in the companies it invests in. There are many venture capital firms, many
of which usually invest in technology start-ups. Accel Partners64, Founders Fund65, and Greylock Partners66 are only a few examples in the United states. Regarding governance,
However, according to CB Insights (2014), 2013 was a big year of venture investments at the seed stage.
more visible performance to the relevant audience (peers, labour market, and venture capital community; 2) higher impact of effort on performance;
comparisons and benchmarks are valid across economies. The data not only highlight the extent of obstacles to doing business;
and benchmark regulations applying to domestic small to medium-size businesses through their life cycle. Economies are ranked from 1 to 189 by the ease of doing business ranking.
The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator.
The aggregate ranking on the ease of doing business benchmarks each economy's performance on the indicators against that of all other economies in the Doing Business sample (figure 1. 1)
The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator.
The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator.
) The rankings for comparator economies and the regional average ranking provide other useful benchmarks for assessing the efficiency of contract enforcement in Spain.
) The rankings for comparator economies and the regional average ranking provide other useful benchmarks for assessing the efficiency of insolvency proceedings in Spain.
the distance to frontier score benchmarks economies with respect to regulatory best practice, showing the absolute distance to the best performance on each Doing Business indicator.
The work by Nesta in the UK on the tech for good incubator Bethnal Green Ventures and Waag Society in Amsterdam work on setting up
and accelerators ODI start-up Programme Bethnal Green Ventures Hosting and managing maker spaces and hacker spaces Fablab Amsterdam (hosted by Waag Society) Through research projects
and grow their venture. To address this, a number of incubators and accelerators have emerged, who invest in‘tech for good'projects, typically in exchange for equity, at pre-seed or seed stage.
Bethnal Green Ventures in the UK, who support early stage technology start-ups who are tackling a social or environmental problem with £15,
which funds ventures that demonstrate how technology can offer a viable alternative to existing ways of addressing the social challenges faced by young people.
are able to spread their innovations throughout society due to the flexibility of venture capital in Silicon valley,
In its recent venture into healthcare Fablab Amsterdam identified a lack of skills as a barrier to growing the Fablab approach.
it has received funding from Bethnal Green Ventures to participate in a startup Bootcamp and set up its business proposition in London
when the venture capital firm, Andreessen Horowitz, invested $100 million in the company during its Series A Funding.
what Schulbaum and Senabre refer to as‘problematic practices of‘crowd capitalism'where crowdfunding helps raise money for a commercial venture with global production processes,
This included looking at new models for financing ventures such as the micro credit site Kiva, P2p lending models and emerging crowdfunding platforms like Kickstarter.
The work by Nesta in the UK on the tech for good incubator Bethnal Green Ventures and Waag Society in Amsterdam work on setting up
and accelerators ODI start-up Programme Bethnal Green Ventures Hosting and managing maker spaces and hacker spaces Fablab Amsterdam (hosted by Waag Society) Through research projects
and grow their venture. To address this, a number of incubators and accelerators have emerged, who invest in‘tech for good'projects, typically in exchange for equity, at pre-seed or seed stage.
Bethnal Green Ventures in the UK, who support early stage technology start-ups who are tackling a social or environmental problem with £15,
which funds ventures that demonstrate how technology can offer a viable alternative to existing ways of addressing the social challenges faced by young people.
are able to spread their innovations throughout society due to the flexibility of venture capital in Silicon valley,
In its recent venture into healthcare Fablab Amsterdam identified a lack of skills as a barrier to growing the Fablab approach.
it has received funding from Bethnal Green Ventures to participate in a startup Bootcamp and set up its business proposition in London
when the venture capital firm, Andreessen Horowitz, invested $100 million in the company during its Series A Funding.
what Schulbaum and Senabre refer to as‘problematic practices of‘crowd capitalism'where crowdfunding helps raise money for a commercial venture with global production processes,
This included looking at new models for financing ventures such as the micro credit site Kiva, P2p lending models and emerging crowdfunding platforms like Kickstarter.
Conduct benchmarks and consider what is being done externally in the field. Map Resources Design a supply chain map:
Benchmark your product (s) against competitors on environmental aspects, alongside function, cost, pricing etc. Identify your product (s) absolute and relative environmental features
venture capital; angel investors; share ownership; and crowd funding? What are associated the risks with each source of funding?
Currently, several crowfunding platforms, such as www. Impactcrowd. com (NL) and www. crowdmission. com (UK), specialise in impact investment for ventures that aim to create environmental, social and economic impact.
At a firm level, the survey and interviews also highlighted the importance of ICT enablers such as skills, R&d and access to venture capital.
spurs to innovation such as access to venture capital; and, more contentiously, the creation of open and competitive markets.
take risks and embark on new ventures. According to Tarek Ghouri, director of government practice for Nokia Enterprise Solutions, the technology is available today to create compelling solutions that grow productivity;
and that almost three times as many Americans are involved in entrepreneurial ventures. The Commission, OECD and others also worry that new European ventures grow too slowly.
Innovation often stems from entrepreneurship and a willingness to take risks. Empirical research indicates that new firms tend to be the most innovative in their markets,
and new ventures 32 35 25 5 3 4. Robust legal framework and law enforcement to protect online trade 39 24 27 6 4 5
Innovative ventures need venture capital In the US, venture capital provides a valuable catalyst for the emergence of new, innovative businesses.
By contrast, Europe's venture-capital industry remains small and underdeveloped. Although overall private equity investment levels in Europe approach those across the Atlantic,
The lack of venture capital is a strong disincentive to innovation and enterprise. Germany, for example, boasts some of Europe's more prolific R&d programmes with close ties to business (see below),
but limited access to venture capital can make it difficult for technology start-ups to find funding. Eike Röhling, director-general of technology policy in the federal Ministry of Economics and Labour, cites the shortage of venture capital as one of the key barriers to innovation in his country.
Funding for university and research institute spinoffs is another area where Europe compares*For example Van Ark and O'Mahony, 2003 20 The Economist Intelligence Unit 2004 Reaping the benefits of ICT Europe's productivity challenge unfavourably with the US.
the European Venture capital Association ranks the UK and Ireland as boasting the most conducive tax and legal system for private equity funding in Europe,
The amount of equity capital available for new and early-stage ventures in Europe is beginning to increase and, according to the European Venture capital Association,
Still, fundraising for venture capital remains difficult in Europe. Industry veterans point out that European venture-capital firms are extremely selective in their investments
Such projects help bring together important ingredients in the innovation mix including venture capital, secure networks and skills training in powerful demonstrations of the role that ICT can play in business and society.
and new ventures 32 35 25 5 3 4. Robust legal framework and law enforcement to protect online trade 39 24 27 6 4 5
it is not a purely technical venture. The overall goal of the project is to develop a strategy for research, development and demonstration.
Smartgrids will not be a purely technical venture. It is recognised that commercial and regulatory issues must be addressed in parallel with technical development
and Initial Expansion of Innovation-driven Ventures 24 Scale up: The Collaborative Road to Sustainable Growth 32 Section Three:
and innovation capabilities by expanding the number and quality of serial entrepreneurs and fast-growing, scalable ventures.
and partner to improve conditions for innovative ventures at all stages of the entrepreneurial life cycle. As such, this report will be a useful contribution to policy-makers at the European and national levels,
create and scale innovation-driven ventures. In addition to extensive inputs from the Forum's Members, Global Shapers, Young Global Leaders, Network of Global Agenda Councils and leading policy-makers across Europe, the findings in the report have benefitted from data gathered from over 60 structured interviews
Fostering innovation-driven entrepreneurship in Europe requires a comprehensive view of the entire entrepreneurial life cycle. 1 Section two describes how the life cycle of an innovationdriven entrepreneurial venture can be divided into three phases stand up,
and the ability to create scalable entrepreneurial ventures Start up Gathering the resources to start a business,
with a particular focus on access to capital for entrepreneurs across the European union Scale up Enabling ventures to scale,
in order to harness the innovation capabilities of new ventures and to engage with local communities in new ways.
organization types and sectors to achieve scale and momentum for new ventures and ideas. Supporting the innovations of today in isolated sectors is not enough Europe needs to create ecosystems that will support innovations emerging in unconventional ways across government and business.
which indicates that Europe has the greatest gap with benchmark economies and the greatest divergence between its member states with regard to measures of smart growth, particularly with reference to the digital agenda and innovation.
This report aims to show how to further improve innovation capabilities in Europe by fostering innovative new ventures.
or join a market innovator start-up or SME as an employee Start up Assessing the success factors for an entrepreneur in establishing an innovative organization and making it a viable venture,
and develop a venture. Network access refers to the availability of supporting partners, advisers and enablers who transfer know-how
However, the entrepreneurial life cycle is designed not to end at the successful scaling of a venture. The goal of a healthy and robust entrepreneurial ecosystem is to foster serial entrepreneurs who persevere over multiple ventures and
upon achieving success, continue to support entrepreneurial activities as investors, mentors and role models. 11.2013/45764d 5 Promote starting a venture
or join entrepreneurs Improve access to capital for business foundation Identify and realize mutually beneficial partnerships Stand up Start up Scale up Serial entrepreneurship Individual factors Ecosystem factors 4 5 6 Regulatory framework Market framework Network access 1 2
and 30%had considered starting a venture but not done it yet (see Figure 6). 20 25 17 14 12 12 Western europe (WE) Germany, Austria, Switzerland (DACH) Southern Europe (SE) Other Central and Eastern europe,
-60>60 2 33 19 30 5 13 I am currently running my own venture
and scaling a venture. Overall across Europe, conditions were perceived most positively for the stand up phase,
and labour costs when starting or scaling a venture. A country-wise split of results is given in Figure 9. Perceived conditions for stand up
or join an innovation-driven venture. Three core factors to foster entrepreneurial culture The decision to become an entrepreneur
or join an innovative entrepreneurial venture is complex. 13 This analysis focuses on three categories of individual factors that were highlighted in interviews and workshops:
%Concern about financial benefits is greater among respondents potentially joining an entrepreneurial venture as an employee (37%)than those starting their own venture (29%.
or joining a new venture. Challenges for promoting entrepreneurship Attitude: People are risk-averse and aim less for radical innovation Fear of failure is a key dimension frequently shown to be a roadblock for entrepreneurship,
meaningful experience that encouraged them to start their own venture. Early exposure to entrepreneurship, entrepreneurial thinking and peer-level success stories is
and Initial Expansion of Innovation-driven Ventures 18 Enhancing Europe's Competitiveness Fostering Innovation-driven Entrepreneurship in Europe 19 Figure 12:
Availability of and access to capital Friends and family Regulatory framework 4 Network access 6 Market framework 5 Incubators Business Angels Availability of and access to capital Venture capital
and Initial Expansion of Innovation-driven Ventures In the second, start up phase of the entrepreneurship life cycle ecosystem factors play a crucial role.
finance comes in a number of forms that differ in relevance and accessibility at different stages of a venture's growth.
Venture capital is primarily available in Europe to ventures that are past the proof of concept stage,
venture capital supply has decreased by 56 %since 2007 The EU is home to 19.0 million micro companies (those with less than 10 employees),
venture capital fundraising in the early and expansion stages amounted to only €3. 6 billion in 2012,
venture capital and banks. 20 Enhancing Europe's Competitiveness The challenge of access to capital Mediocre long-term performance dampens capital supply
despite a number of recent success stories The quality of ventures demanding capital and the return expected of them in prevailing market conditions play a key role in determining access to capital.
but there is a lack of appetite to invest in entrepreneurial ventures as an asset class, partly due to a perception of low returns for investors.
venture funds reported an average internal rate of return of only 1. 27, %with the top quartile earning 18.49%.34 However,
in recent years the European venture capital segment has seen a number of notable successes such as Supercell and Spotify.
Many European venture capital experts say the sector is stronger than the long-term data indicate. Today
Matthias Ummenhofer, Head, Venture capital, European Investment Fund Figure 13: New Venture Funds Raised in Europe by Investors,
2007-2013 (Incremental Amount Raised Per year in Billion Euro and as a Percentage of Total) Source:
European Private Equity and Venture capital Association (EVCA) New VC funds raised in EU-28 (in bn. €), thereof:
000) but smaller than the deal size typical of venture capital funds operating in Europe (from €3-5 million up).
39 In the aftermath of the crisis, government agencies provide a key share of venture capital As mentioned above
the supply of venture capital has seen a sharp decline in recent years. Part of it is linked to higher levels of risk aversion following the financial crisis as investors struggle with an increased regulatory burden. 39 This drop in private investment has seen the role of government agencies in venture capital raised from institutional investors increase from pre-crisis
activity of 14%in 2007 to 38%in 2013. A reliance on public funds in this way is not a good sign of the health of the venture market government agencies'financing volumes are limited typically in the case of the German Gruenderfonds, for example, to €500, 000 for the first round and up to
€1, 500,000 for follow-up rounds which can create ceilings for subsequent financing, thereby exacerbating the challenge of accessing growth capital. 40 Fostering Innovation-driven Entrepreneurship in Europe 21 The sources of financing for European venture funds differ strongly between European regions,
as shown in Figure 14. While in Germany, Austria and Switzerland (DACH), as in the United kingdom and Ireland, less than 20%of venture funds have come from government agencies,
such agencies have accounted for over 40%of venture funding in Central and Eastern europe. Banks are particularly important for venture funds in Southern Europe (22%of financing) and Central and Eastern europe (CEE)( 26%
Sources of Funds European Venture Funds by Region41 (Percentage of Total Incremental Fundraising, 2007-2013) Source:
European Private Equity and Venture capital Association (EVCA) Figure 15: Imbalance between Seed and Follow-on Rounds by Number and Region Source:
European Private Equity and Venture capital Association (EVCA; National Venture capital Association/Thomson Reuters Europe's next challenge is to increase the number of highgrowth businesses receiving financing rounds Further financing challenges appear
when start-up businesses attempt to scale their activities. Comparing seed/start-up/early-stage rounds with follow-on rounds between the United states and Europe in Figure 15,
. 0 United states Sweden Finland Luxembourg United kingdom Netherlands India Access to venture capital Access to bank loans Belgium Slovenia Portugal Croatia Spain Romania Lithuania
such as the United kingdom, potential difficulty with access to bank loans is alleviated by easier access to venture capital.
and venture capital reflects Europe's competitiveness divide, with Northern European countries being among global leaders in access to venture capital and loans.
The growing number of legislative initiatives in the wake of the financial crisis has amplified the burden for longterm investors.
and insurance companies out of European long-term equity financing, impacting private equity and venture capital. André Loesekrug-Pietri
Access to Venture capital and Bank Loans in EU-28, the United states and BRIC Countries (Brazil, Russia, India, China), Average of Survey Respondent Scores per Country Survey questions:
Access to venture capital: In your country, how easy is it for entrepreneurs with innovative but risky projects to find venture capital?(
1=extremely difficult, 7=extremely easy; Access to bank loans: In your country, how easy is it to obtain bank credit with only a good business plan and no collateral?(
In venture capital, for example, the fund invests £0. 5-2. 0 million in deals of £2-10 million.
and 14%in the US. 48 We need to strengthen access to capital across the region beyond the early stage by creating a partnership between public and private investors in a new European fund-of-funds for venture capital Dörte Höppner, Chief executive,
The European Private Equity and Venture capital Association (EVCA) We need more of a pan-European mentality, both on the investor's and on the entrepreneur's side.
Chairman, Europe, Microsoft Corporation Benefit for large corporates Benefit for entrepreneurs Risk to one or both partners Company shares in high-potential entrepreneurial ventures Access
The Collaborative Road to Sustainable Growth For Europe to realize the potential of its innovative entrepreneurial ventures,
the ventures must scale well beyond simply being viable, local businesses employing a handful of people and serving a small customer base.
This section therefore examines the potential within Europe to foster collaborations that enable the scaling of innovative ventures to the benefit of all parties concerned.
respondents to the Forum's survey on innovation-driven entrepreneurship had partnered with a large corporation or organization in a former venture.
Miles Kirby, Managing director of Qualcomm Ventures, responsible for investments in Western and Eastern europe To systematically foster collaboration between large companies and entrepreneurs we have to start with specific topics e g. 3d printing around
Young Global Leader Building a database and evaluating data with a clearly defined process Google Ventures uses algorithms with data from academic literature or from due diligences.
Managing director, Global Affairs and New Ventures, Telefonica; Young Global Leader Getting to a draft contract needs to be a question of days,
In this context, a new regulation on venture capital funds has been approved recently: fund managers can now have a European passport and market their funds across the EU. Current and future challenges of high priority on the policy agenda:
and venture capital to SMES and will work in conjunction with Horizon 2020. In early 2013, the Commission launched a public consultation on how to foster the supply of long-term financing
Promoting the creation and growth of enterprises with global ambition Venture funds: Including a fund of funds of €120 million for business angel co-investment, venture capital and expansion capital (of this,
€60 million is public money). In addition, the Baltic Innovation Funds (for Estonia, Lithuania and Latvia) has a volume of €200 million for later stage and bigger investments
including loans, guarantees and venture investments, to help tackle the issue. Furthermore, the Danish regions are exploring the opportunity to include successful serial entrepreneurs and professionals from large, existing companies in networks for entrepreneurs with particular potential.
This should be supplemented by a highly developed market for venture capital, being the second cornerstone, and a strong link between knowledge institutions and the private sector as the third cornerstone.
This has been achieved with a new Dutch Venture Initiative for scaling up successful businesses and a new instrument aimed at the proof-of-concept phase.
The improvement of commercialization activities by academic spinoffs or of the situation for seed and early-stage financing for technology-intensive ventures,
and growth of entrepreneurial ventures of different groups of entrepreneurs within the country and offers targeted support for each of these groups,
Any beneficiary should commit to giving something to a new venture so as to pass on the momentum
compared with 56%of those who currently run their own ventures. While 55%of respondents say they would be willing to provide mentoring to new founders,
on how to partner between large businesses and entrepreneurial ventures Creating more transparency about what new ventures and established businesses are looking for in terms of potential partners Creating more opportunities for entrepreneurs
and large businesses to network Helping private investors"unlock"capital in Europe and direct it towards venture markets Supporting entrepreneurs to access skilled employees to join their ventures Providing mentoring to new founders Providing more opportunities for potential entrepreneurs to obtain practical experience in an innovative business
or start-up Tailoring the education curricula in schools and universities to focus on the skills that entrepreneurs require Raising awareness of entrepreneurial success stories
microfinance institutions, venture capital funds and innovation grants all linked to business mentoring and training of substantial scale and availability for women entrepreneurs who want to take their companies to European markets and beyonds.
the benchmarks for successful entrepreneurial ecosystems and innovation hubs tend to be Silicon valley and Tel aviv.
specialist challengers, yet found it increasingly hard to justify the cost or complexity of absorbing new ventures.
They would be able to minimize the three critical types of risk in any new venture:
and qualify new ventures for disruptive value creation, feasibility and scalability. To achieve this, organizations will need to configure themselves in nodal patterns of many smaller project or programme entities solving discrete problems with the help of external networks and communities of different types in different areas of the Coral reef
Policy-makers, business leaders and civil society actors can help support entrepreneurs by taking a nuanced approach to understanding the different phases of a new venture,
individuals and organizations across many sectors are motivated highly to do more to support innovation-driven ventures in Europe.
and the factors related to the successful growth of a venture. 2. It is important to note that both entrepreneurship
EVCA (2012), Pan-European Private Equity Performance Benchmarks Study, p. 4. 38. Interview with Luis Galveias, Director of Secretariat, EBAN;
New york times (2013), Google Ventures Stresses the Science of the Deal, not the Art of the Deal. 61.
Young Global Leader Kumardev Chatterjee, Founder and President, European Young Innovators Forum, Belgium Start up Supporting the establishment and initial expansion of Innovation-driven Ventures
European Private Equity and Venture capital Association Dörte Höppner Secretary-general Cornelius Müller, Head of Research Henkel Kasper Rorsted, Chief executive officer Thomas Müller-Kirschbaum, Corporate Senior vice-president, Research & development/Sustainability Marc-Steffen Schiedel, Senior
Center Telefonica José María Álvarez-Pallete López, Chief operating officer Javier Santiso, Director, Innovation Funds, Venture and Growth Capital 60 Enhancing Europe's Competitiveness The World
Kirby, Managing director, Qualcomm Ventures, United kingdom Karl-Ludwig Kley, Chairman of the Executive Board, Merck, Germany Neelie Kroes, Vice-president and Commissioner for the Digital Agenda, European commission, Brussels;
, Prime minister of the Czech republic Fridolin Stary, Head, Group R&d, Wacker Chemie, Germany Terence Tse, Associate professor, ESCP Europe, United kingdom Matthias Ummenhofer, Head, Venture capital
the most important goals are to promote the development of the private venture capital industry and associated services,
nor can they accommodate small ventures easily into their organizational structures. Third, it is easier to sustain a fever pitch of excitement in small organization, WK1 8 where the links between challenges, staff,
and a myriad of specialised consulting, market research, public relations and venture capital firms provide technical, financial, and networking services
Examples of this new policy approach include measures to encourage R&d investment, venture capital creation, and the rapid establishment of start-up firms.
and taken together the public SME finance is about two-thirds as large as private venture capital.
Significantly, the SBIR and most public programmes fund early stage research, a stage which is ignored generally by private venture capital.
1. Closer collaboration with the Venture capital industry. In those countries such as Belgium, France, and Germany where venture capital markets are booming,
there should be better collaboration between the R&d granting institutions and the private or semipublic VC industry.
, ANVAR in France and SENTER in The netherlands) are indeed cooperating with the local venture capital industry,
venture coaching--rather than simply public financing (Chiesa & Piccaluga, 2000). Public bodies might provide support for such nontechnical aspects of the innovation process,
as well as government bodies, have difficulty assessing the risk-profit trade offs of innovative ventures. Uncertainties about the technical feasibility, the time period of development, the total financing needed,
and the probability of commercialisation and possible market size, make financial institutions hesitate before funding venture projects.
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