On the 8th of February 2022, the Scale-Up Europe Conference took place in Paris and online and was attended, among others, by Christian Lindner, Germany’s Federal Minister of Finance, Bruno Le Maire, France’s Minister for the Economy, Finance and the Recovery, and Cédric O, France’s Minister of State for the Digital Transition and Electronic Communication. As its website reveals, “Scale-Up Europe is a call to join forces around startups: to reinforce Europe’s sovereignty, develop the prosperity of [its] economies and societies, and achieve the objectives of social cohesion and climate transition that are at the heart of the European project”.
Whereas the latter has not directly been emphasized through the joint European Tech Champions Initiative (ETCI), the support of migrant founders will arguably play a role in making sure that this initiative truly is a step towards social cohesion – at least looking towards job creation in the future. Both Germany and France have committed to support the initiative with €1 billion each – as a kick-start. This article will provide background information on the Scale-Up Europe Conference and the ETCI to inform migrant founders about the most recent developments on tech and funding in Europe.
The Scale-Up Europe Conference and the ETCI: Tech Cohesion in the EU
As mentioned above, the Scale-Up Europe Conference took place on the 8th of February to discuss how tech start-ups in Europe can be supported with scale-ups. Key challenges, which were mentioned in this regard prior to the conference, were related to the fact that: 1) funding in late and exit stages is not accessible, 2) European tech start-ups have been sacrificing diversity to ‘opt for the best talent’, 3) Europe has not yet stepped on the deep tech train, respectively deep tech is not yet that developed in Europe, 4) collaboration models between start-ups and corporates could be improved and their cooperation could be strengthened, 5) investments need to be more directly targeted at building up a thriving and dynamic European tech community in line with the vision of the Scale-Up Europe Manifesto. As further illustrated in the Scale-Up Europe Report, the Scale-Up Europe Initiative was established by Emmanuel Macron in December 2020. The overall aim of the initiative is “to become home to 10 technology companies each valued at more than €100bn by 2030″.
Until now, 170 tech leaders and 30 start-up associations have made a commitment to the initiative, which explains why the Scale-Up Europe Conference was also attended by founders and representatives from regional start-up associations such as Christian Miele, the head of the German Startups Association, Alice Albizzati, a founding partner at the Revaia growth investment fund, and Marie-Avril Roux Steinkühler, the founder of the boutique law firm Mars-IP, which focuses on intellectual property, communications and new technology law. Especially because Mars-IP represents a start-up with a French-, German- and European approach – founded in Paris and currently located in Berlin, it certainly has to be emphasized that the promotion of enhanced mobility within the EU is (no longer) bound to immigration policy and law alone. The intersection of migration and business certainly will have to be understood much better in the future in order to also make it easier for non-EU citizens to start up and scale up in Europe.
If non-EU citizens want to start up a business in Europe, they certainly need to prove that their business idea is viable – that is, that it will have a positive impact on the German economy. Otherwise, it can be difficult to obtain a residence permit, which is further bound to already being able to prove that a sufficient amount of funding has been allocated prior to coming to Germany. Especially for tech start-ups and entrepreneurs, who are affine with doing business digitally, the latter could work as long as German companies are interested in them. However, for the average person – or even for quite some tech nerds – it may be difficult to obtain funding without having a pre-established network in Germany and without knowledge about the German tech scene. Arguably, policy-makers should fill this gap by seeking for talent to build these ten gigantic technology companies in and outside the EU and stimulating remote start-up networks in the field of tech and deep tech.
Whereas non-EU citizens can alternatively apply for a business visa to come to Germany for a period of 3 months, obtaining a residence permit for self-employment can be a bit more complicated. As the IHK Berlin points out, applicants also need to prove that their business (idea) will have a positive local impact with the application procedure being somewhat lengthy. In a nutshell, it may not be the easiest to start up a business in Germany as a non-EU citizen from scratch, which emphasizes the argument that venture capital firms and other investors should seek for talent online and cooperate with SMEs to understand, where opportunities to enhance mobility in business are not yet exhausted. As Christian Lindner said during the Scale-Up Europe Conference, “good financing opportunities throughout all the stages of a ventures’ growth [are important and] it is key for the entire European Union that the European entrepreneurs can access enough capital from Europe”.
Whereas the latter may sound like it is only European entrepreneurs who can receive funding under the ETCI, it should also be considered that non-EU citizens and founders can make a huge contribution to the EU market, especially if they already established a successful business abroad and are seeking to relocate their headquarters with the right support. The ETCI, as Lindner laid out, is mainly targeting scale ups, because Europe loses tech giants and other huge and successful start-ups to other countries as it lacks attractive venture capital funds and other forms of funding for later stages. In a nutshell, the ETCI is not for founders in early stages – but for migrant founders in later stages, it could be an attractive option. Arguably, Lindner failed to emphasize correctly that the ETCI is more about allowing tech champions to carry out business from Europe and for the benefit of Europe than to support ‘European entrepreneurs’. Indeed, the latter should not be confused.
To sum up, the emphasis on diversity was somewhat lacking during Lindner’s speech despite that diversity can in fact be one of the keys to transformation. Especially because people with different ideas, backgrounds and skills can help a company stay successful, relevant and productive; job creation, migration and mobility are topics, which will have to be discussed in relation with the ETCI. If this initiative will in fact succeed, the 10 technology companies with a worth of more than €100bn might also be interested into supporting the establishment of subsidiary companies – which could, if policy-makers decided so, also constitute an opportunity for non-EU citizens. Whatever the future holds, it is important to understand that ‘tech cohesion’ requires social cohesion. Only by promoting mobility and entrepreneurship, including in later stages, can it be ensured that the right teams are set up to promote innovation with dedication and the commitment to contribute to tech growth fromout the European Union.
Centurion Plus
If you are an entrepreneur, a start-up or a company with a background in tech, then we would be very happy to support you with questions related with the relocation to Germany or Europe – also if you are already located there, we of course are here to support you on your journey! We employ legal experts with knowledge across various African jurisdictions and have long-standing experience with giving advice on topics such as labour and immigration, tax and customs, contracts and negotiations, corporate governance and compliance as well as data protection. Next to our African offices, we have an office in Germany since 2020. Feel invited to contact us for an initial consultation today!
