Europe has a problem with scale-ups, which are giants that already have a successful track record behind them but don’t have the latest effort to become “unicorns” i.e. giants like Sweden’s Spotify that can have a market cap of more than a billion dollars. There are currently close to a hundred unicorns on the continent, and none of them are in Italy. The US is definitely ahead and moreover they have more scaling on the launch pad along with China. One of the main reasons is the lack of funds. And just to fill this gap, five EU countries, including ours, signed an agreement with the European Investment Bank EIB to give 3.7 billion euros in funding to European technology champions startup ETCI.
The fund aims to support companies seeking private investment. From the beginning of 2021 to May 2022, more than 280 European technology companies from different sectors raised large investments (i.e. investments from private funds) in excess of € 100 million, but 67% of the funding for these rounds is European from non-investors. “European tech startups – explains the EIB – often do not have enough capital to compete globally and are turning to move abroad. Closing this expansion gap could create many high-skilled jobs and stimulate growth.”
unicorns in europe
ETCI will receive €1 billion each from Spain, France and Germany, while Italy and Belgium will receive €150 and €100 million respectively. The EIB closes the circle with 500 million. Our country’s lower investment compared to Madrid, Paris and Berlin is also due to the delay in the creation of scaleups (or “sooncorns”, that is, companies that may become unicorns in the short run). Between unicorn soon and unicorns, according to a report from i5Invest, in mid-2022 there were 77 companies in Germany, followed by France with 54, Spain with 10 and Belgium with 9 (to stay in ETCI countries). Italy stuck with 6 scale-ups: One of them became a unicorn at the end of 2022, namely Scalapay, a company that provides installment payment solutions for e-commerce.
The example of Scalapay, created in 2019 by a thirty-year-old Italian who grew up in Australia, shows that it is possible to leap into the world of technology giants in a relatively short time, even in our country. But capital is needed to prevent the most promising companies from expanding abroad. It applies to Italy as well as the EU. “Providing support to innovative European companies in advanced development as they seek to expand their business is crucial to maintaining the EU’s strategic autonomy,” said EIB chief Werner Hoyer. “Europe has strong innovators, but companies need to improve the environment to move from startups to trusted competitors and market leaders,” he adds.
“Comes soon” in Southern Europe
Source: Today IT
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
