Europe boasts a wealth of talent, world-class researchers and skilled entrepreneurs but many new firms do not make it beyond the critical first few years because they cannot get the finance to scale up into global businesses. The Juncker Commission wants to give Europe’s many innovative start-ups every opportunity to become world-leading companies while remaining in the EU.
Comparing the innovation ecosystems of the EU and the US, there is a striking difference in the amount of venture capital (VC) available. In 2016, venture capitalists invested about €6.5 billion in the EU compared to €39.4 billion in the US. The lack of VC at sufficient scale does not enable funds to keep pace with the investment needs of firms as they scale up.
Europe has fewer high-growth companies “unicorns” (start-ups that have reached a market valuation of over $1 billion) than the US and China. In 2017 Europe had 26, compared to 109 in the US and 59 in China.