Ireland, France and UK top EU rankings for helping start-ups
Ireland, France, and the United Kingdom have the best tax and legal environments for supporting venture capital in Europe, while Germany, Norway, Sweden, and the EU accession countries still lag behind their peers, according to a study. These are the conclusions of a study by the European Venture Capital Association (EVCA), which looked into the tax and legal environments of the 25 EU Member States. It then ranked the countries according to how well they fared in their support for the development of private equity and venture capital. Over the past two years, Europe has made improvements by putting in place legal structures that encourage venture capital investing. But governments still need to focus more on encouraging innovation, says EVCA Secretary General Javier Echarri. He added that progress is too weak on incentives for young companies to invest in research and development (R&D), for retaining talent, and for technology transfers. France was singled out for praise for moving up from 10th to 2nd place, after Ireland. Mr Echarri pointed to measures such as tax incentives for small and medium sized enterprises (SMEs), the government's encouragement of performance-related incentives, and the lowering of taxes on stock options. 'The French government has made a conscious choice to encourage innovation,' he said. He also pointed to significant improvements in Spain and Belgium. As for Germany, it has fallen further behind its peers since the last study slipping from 14th to 20th place. Although the country measures high on the regulatory side, it still has no policies in place to specifically encourage R&D investment or to facilitate technology transfer, Mr. Echarri said. Germany also still taxes VCs on their management fees. 'If we want to achieve strong impulses for economic growth, such as those countries in the top of the EVCA rankings, we need to do something about it now,' Thomas Pütter, chairman of the German Venture Capital Association, said in a statement on 13 December. Norway, Sweden, and the new EU accession countries were also among the lower-ranked countries, with Romania coming in last. According to the Deutsche Bank, 'A better supply of venture can only do so much. Too many Europeans dislike the idea of being an entrepreneur. It conveys less social prestige than other occupations and people are less forgiving if ventures fail.' The European Commission is keen to promote a bigger venture capital industry in the EU so as to better compete with the United States in creating new firms to boost employment and growth. One network aiming to bring this about is EUREKA, the pan-European network for market-oriented, industrial R&D. Its Valorisation Manager, Pierre Collowald, pointed to its new programme, Eurostars, which aims to boost key European innovators who need a financial boost to bring new products, processes or services to the market quickly.