For some time, the EU economy has been lagging in competitiveness, innovation, creativity and job creation. To tackle this, the EU is investing in start-ups and new enterprises by providing diverse supports including business advice and services, capital grants and loans.
Research shows that new enterprises positively affect the economy by boosting growth and employment. Although new enterprises create around 4 million jobs in the EU every year, this figure could be higher: only 37% of people in Europe prefer self-employment to being an employee. In the US and China this figure is over 50%. European businesses also seem to grow more slowly than their overseas counterparts. To enhance overall competitiveness, the EU must improve the rate of creating new enterprises and the ecosystem supporting them.
EU support to new enterprises
EU support to start-ups is broadly twofold:
- Improving the start-up environment: a range of EU level initiatives address simplifying administrative procedures, creating networks for entrepreneurs, investors, and academics, and organising events to identify and spread good practices.
- Funding: the EU also provides funding for new enterprises. One major source is the European Regional Development Fund (ERDF). New enterprises can access funding through national, regional and inter-regional programmes, in particular under dedicated budgets for improving SME competitiveness: https://cohesiondata.ec.europa.eu/themes/3
Many EU countries invest heavily via the ERDF in small and medium-sized enterprises (SMEs). The 2014-2020 ERDF programmes have allocated around EUR 34 billion to SME competitiveness. The targeted enterprises can benefit from various initiatives ranging from support to high-tech start-ups (or spin-offs) to more basic self-employment schemes. The nature of the support is equally diverse, ranging from business advice and services to capital grants or loans serving different objectives.
As new enterprises are mixed in with the many other enterprises benefiting from such schemes, the monitoring system does not allow us to identify a precise budget for new enterprises at EU level. We do, however, have information of the number of reported new enterprises targeted and supported.
What are the national targets for supporting new enterprises?
In the 2014-2020 programmes, the targets for common indicators show support planned for more that 150 000 start-ups. On average, new enterprises represent around 14% of all enterprises targeted to receive ERDF support.
The targets vary significantly by country. You can us the filter provided in the chart below to examine specific national targets and progress in implementation.
The diversity in the targeting of new enterprises is driven by factors such as the size of the national economy, company size profiled across targeted business sectors, the policy priority given to new enterprises (as opposed to existing enterprises) and experience in running start-up support initiatives.
Use the filter in the graph below to see the progress in each country.
New enterprises are predominantly supported under the thematic objective supporting competitiveness of SMEs.
Which programmes plan to support new enterprises?
Of the 227 ERDF programmes proposing support to SMEs, 133 have set targets for new enterprises. The chart below lists those programmes that have a high focus on start-ups and show the target, decided (selected projects) and implemented values.
Why are there differences in support to new enterprises? It is not clear from these numbers alone why some regions appear to invest heavily in start-ups when many do not. It is likely that amongst the 1.1 million enterprises targeted overall new enterprises will number well above 150 000 firms.
You can interact with the chart as follows
- Float your cursor over the bars or the programme titles to see the available values;
- Use the filter to see the cumulative values year on year;
- Grab and drag the chart upwards to see the values for more programmes.
- Find out more about ERDF support to small and medium sized enterprises;
- This Smart Guide to Innovation Based Incubators (IBI) presents 20 case studies;
- An earlier version of this post appeared in this 60th edition of DG REGIO's Panorama magazine.
We are REGIO's research, business & digital team. Contact us at: REGIO-G1-HEAD-OF-UNIT@ec.europa.eu
European Commission, Directorate-General for Regional and Urban Policy, Smart and Sustainable Growth