Startups from every corner of the map had a tough time in 2022, with global VC funding down 69% from $70 billion in November 2021. In the European Union (EU), the aftershocks of this financial hit were felt unequally amongst its member countries, however, on account of an imbalanced startup ecosystem.
The majority of fundraising for EU startups takes place in the West, accounting for 60.4% of private equity in 2021, with Central and Eastern Europe (CEE) only receiving 1% of funding, according to the most recent data from Invest Europe. Widening the gap are structural disparities in access to technology and digitization amongst member countries.
According to a report by the European Commission, the EU needs to stay vigilant in its regulation of competition amongst its member states, especially in the current post-crisis rehabilitation.
BEYOND, a consortium of investors and accelerators backed by the EU Horizon 2020 research and innovation program, is spearheading an initiative to help close the funding gap in Europe and establish a more cohesive and prosperous economic network.
“We recognize the importance of balancing the opportunities provided to startups across the EU. If we don’t act now to narrow the gap between mature and emerging startup ecosystems, Europe’s business ecosystem as a whole will suffer,” said Jesus Tapia, Head of the ISDI Accelerator and one of the BEYOND partners.
“BEYOND is a platform that connects startups, investors, accelerators, and business mentors from across the EU and provides a framework for trust, collaboration, and sharing resources that will uplift emerging players, making the whole ecosystem stronger,” he said.
Europe offers a startup landscape much different from the US because its hubs of entrepreneurship aren’t concentrated in select cities, such as Silicon Valley. According to McKinsey, only 30% of European startups have located their headquarters to hubs such as Paris or Stockholm.
With a completely decentralized startup space, a huge opportunity for new hubs to be established exists. This allows startups to establish themselves freely across locations and invites the opportunity for programs that encourage entrepreneur mobility.
One such program is BEYOND, which was created by a consortium of partners across Europe, including:
BEYOND is a platform where leading influencers from more developed ecosystems in Europe can help to create stronger pathways to lesser-known but still thriving startup ecosystems.
Through its Virtual Accelerator Marketplace (VAM), the BEYOND platform directs investment flows from more developed ecosystems toward emerging ones, according to a press release shared with The Sociable.
The VAM performs a variety of tasks to increase the effectiveness and dependability of investment between EU nations, thereby promoting a healthier, more diverse, and more inclusive network of startups within the larger EU business ecosystem.
Startups have had their endurance tested by a multitude of factors in 2022, but none more so challenging than the funding lull. According to the consortium, filling out applications for funding opportunities from organizations such as the European Commission, as well as publicly available funding opportunities from VCs and corporations, can take founders as much as 150 hours.
To try and mitigate this, some of the BEYOND program’s initiatives include:
OnePass will serve as a centralized platform, allowing startup founders to submit a single application to gain access to curated financing and funding opportunities, as well as customized mentoring, training, and acceleration while lowering the barriers to securing investment.
Additionally, the OnePass funding passport provides investors with access to vetted, trustworthy entrepreneurs from all over Europe. Meanwhile, it assists accelerators and incubators in matching their programs with qualified applicants, providing certificates upon completion, and significantly reducing the amount of time applicants must spend on the application process.
Cross-integration between Europe’s mature and emerging markets will be vital for the future of entrepreneurialism in the union.
By helping local startups secure funding from larger EU investors, initiatives such as BEYOND can inspire capital holders from Eastern Europe who have traditionally refrained from funding to be motivated to get into the VC game. This will encourage and attract founders to launch companies in more countries and can facilitate a more cohesive yet diverse ecosystem.
Furthermore, the BEYOND program will help startups in the EU to achieve greater exposure and connections, while also enabling investors to get to know promising young businesses — helping to build synergy amongst all of the EU’s players.
Disclosure: This article mentions a client of an Espacio portfolio company.
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