Why do Nordic and Baltic startups constantly look towards the U.S. after getting established in their home country? The U.S. is a big homogenous market where it’s fairly easy to expand if you get established right. In Europe we’ve got language and culture issues, but there are clear steps to be taken on a governmental level, according to a group called Allied For Startups, which has called on European Vice President Andrus Ansip to “put innovation at the heart of the digital single market,” and cautioning against burdening digital entrepreneurs with new regulations.

Here’s the text of the letter, sent 4 May 2015

Dear Vice President Ansip,

With just a few days to go until the unveiling of the Digital Single Market package, we are writing on behalf of Europe’s digital startups to ask you to put innovation at the heart of the proposals.

Between us, we represent the startup communities in the United Kingdom, France, Germany, Italy, Spain, Greece, Sweden, Denmark, Hungary, Portugal, Netherlands, The Slovak Republic, and Poland.

The onward march of Moore’s law has led to plummeting barriers to entry for digital businesses – with todays chips over a million times faster than forty years ago. Startups are now cheaper to start and can scale up more quickly than ever before. This is a hugely positive trend, but it also means that they run into international barriers much earlier in their lives.

The good news is that digital startups in Europe are thriving and in the last decade, Europe has created more than 30 ‘unicorns’, those elusive billion dollar tech companies. Companies like Spotify, TransferWise, Klarna and BlaBlaCar – all startups themselves not long ago – have become household names across the world.

But too often digital companies struggle to grow in Europe, and make the leap westwards to the US in search of a large market, uniform regulations, a more positive culture towards risk, and easier access to finance. 28 sets of regulatory requirements present a barrier even to big players, and can be insurmountable for startups.

We hope that the Digital Single Market package will aim to identify tangible barriers, and tackle those problems directly. It should be about encouraging innovation and reducing the barriers to growth.

That means things like a common set of consumer rights and a clear set of rules on data protection that give consumers confidence, but don’t stifle innovation. We need to make one-stop-shop systems work so that startups only have to deal with one regulator or tax authority.

We would like to see simple, single, and online processes for:
-registering a web domain
-forming a company
-paying VAT
-hiring resources
-manage small equity investments

It means going toward a 29th regime, for pan-european companies, to have really simplified management of contracts, operations, resources, and intending the proposed SUP scheme only as an intermediate step in that direction; but also copyright reform to help make content portable, and cross-border licencing simpler – letting the next Spotify scale up more quickly.

The package should be aimed at reducing the regulatory burden to allow high growth companies to thrive, rather than levelling up across the continent. This will require some tough choices that may upend some existing business models, but regulations should always be about protecting consumers from harms, not incumbents from competition.

We would also urge caution before embarking on attempts to regulate and create new laws for each technology in the digital market. For innovative and evolving companies to emerge and thrive in Europe it is key to avoid imposing strict horizontal regulation that may apply differently to each startup and place further burdens on entrepreneurs seeking to scale up within Europe.

We are optimists about the European digital economy, but this depends on leadership from policymakers to embrace innovation.

Yours sincerely,

Guy Levin, Executive Director, Coalition for a Digital Economy, United Kingdom
Virginie Lambert-Ferry, Campaign Director, France Digitale, France
Simon Schaffer, Founder, The Factory, Germany
Gianmarco Carnovale, Chairman, Roma Startup, Italy
Carmen Bermejo, CEO, Tetuan Valley, Spain
Miguel Arias, President, Chamberi Diego, Spain
Socratis Ploussas, President, Hellenic Startup Association, Greece
Nils-Erik Jansson, President, Young Entrepreneurs of Sweden, Sweden
Christian Walther Øyrabø, Chairman, Danish Entrepreneurs Association, Denmark
Veronika Pistyur, CEO, Bridge Budapest, Hungary
Ricardo Marvão, Co-founder and Board Member, Beta-I, Portugal
Bastiaan Zwanenburg, Managing Director, Young Creators, Netherlands
Ivan DebnárFounder, The Spot, The Slovak Republic
Przemysław Grzywa, Young Entrepreneurs Forum, Poland
Dimitris Tsingos, President, Yes For Europe (Young Entrepreneurs of Europe)
Melissa Blaustein, Founder, Allied for Startups

We’ve been saying for some time that European Startups need to play politics better, so look into the Allied For Startups group or start your own movement.