Making States More Entrepreneurial
The European Commission is pioneering a new wave of startup support through innovative funding mechanisms.
FundingBox is a dynamic platform leading the digital distribution of government funds for startups going on to leverage 20 times the public funding received by startups into private investments.
Talal Benjelloun moved from Morocco to Spain more than 14 years ago, starting a promising management career in a large hotel corporation. Seeing an opportunity to totally disrupt the travel industry, Talal went on to found GlampingHub, the leading booking platform for luxury camping accommodation. GlampingHub raised 2 million euros of private investment after receiving 100.000 euros of equity free funding from the European Commission (EC). GlampingHub is a classic example of one of the EC supported start-ups making Spain become a more visibly entrepreneurial state.
5 out the 10 most entrepreneurial nations in the world (US News 2016: Germany, UK, Sweden, the Netherlands and Denmark) are part of the European Union — where the EC has become the most innovative supranational organization in the world in funding scale ups (start-ups & SMEs). States become more entrepreneurial as they increase their support to scale ups. Mission Innovation, less bureaucracy and smarter funding are key drivers for scale up support within the EC.
Since 2014, the EC has implemented a new mechanism to distribute grants: cascade funding. In cascade funding, the EC provides millions of euros of “bulk funding” to platforms and accelerators, which in turn distribute smaller tickets of funding (75 to 250k euros each on average) to scale ups. The EC lets the market “pick the winners”, but these winners need to align with the EC’s mission innovation topics. FundingBox estimates that cascade funding from the EC is now worth 1 bn euros, with more than 5.000 scale ups expected to benefit by 2018. By the end of 2018, cascade funding, both from the EC, and also from national and regional governments is expected to reach the 2 bn euros threshold.
A new generation of organizations are making cascade funding available to scale ups. These ‘digitally native’ organizations are expert at supporting millennials launch start-ups and providing dynamic assistance for SMEs to iterate their digital transformations. These new organizations focus on both ‘skills’ and ‘hubs’. These are specialist digital skills that are native for millennials entrepreneurs, but that established SMEs can lack. The hubs are physical co-creation spaces and virtual communities that flourish around on-line platforms. The traditional non-native organizations based on “chambers and parks” do not work anymore. They lack the skills needed. They are closed infrastructures that do not foster co-creation or build communities.
The combination of cascade funding and the “skills & hubs” dynamic means the EC has accelerated the shift to a new mind-set of celebrating entrepreneurship. The EC is propelling scale ups to all the relevant digital “stages” worldwide; in Barcelona and Hannover, but also in Shanghai and New York. Emerging talent gets a global profile to not only celebrate European entrepreneurship, but also to inspire others about the opportunities offered by digital transformation.
WHO IS FUNDING BOX?
FundingBox is one of these next generation intermediates: an online platform focusing on funding entrepreneurial talent and building vibrant hub communities. To do this, we partner with world leaders in skills development and hub delivery: Accelerace, the top European accelerator out of the Nordics; the Mobile World Capital that every February makes Barcelona the global digital stage to celebrate entrepreneurship; and ISDI, the first digital native business school developing talent out of Mexico, US and Spain. Together, we drive scale ups to become venture ready. Together, we help Corporations engage with start-ups. And, together, we help regions track their digital disruptors.
Over the last 2 years, through the FIWARE initiative, the EC has supported 1.000 start-ups like GlampingHub. At FundingBox, based in Poland and servicing all of Europe out of Denmark and Spain, we nurtured 100 of them through our platform. The Top 10 FundingBox supported start-ups went on to raise an average of 2 million euros of private investment 18 months after receiving 100k euros equity free from the EC: a return rate of 20 mobilizing private investment through government funding. This is how FundingBox thrives: helping states become more entrepreneurial; and supporting Governments fund the most exciting scale ups.
Sanyu Karani — Founder of FundingBox.