Addressing the Impact of the EU Elections on Startups and Innovation Policy

With the European Parliament elections taking place in the beginning of June the results have the potential to impact the world of startups, business angels and venture capital investors. This shift could pose greater challenges in finding common ground on key issues such as the green transition, cross border trade/ investments, and the freedom of movement between countries. Using the findings  from “5 things startups want out of the European elections” (Sifted), “EU Elections: What is at stake for startups?” (Allied For Startups), “From trade to climate, five takeaways from the EU election” (Reuters), and  “European Parliament Elections 2024: Explainer and Policy Takeaways” (Engage), we can get a better understanding of the overall scope of what is set to change over the years to come. Through this article we also want to express the early views of the EBAN board regarding what these results may mean for investors and founders. Furthermore, we will be presenting recommendations to the newly elected EU Parliament on what measures to adopt in order to continue expanding the European startup and investment ecosystem. 

How could the new EU parliament affect the current policy

and decision making within Europe?

As shown in #Use Your Vote (europa), the current state of the European Parliament still sees a majority of pro EU parties, albeit a slimmer one than in previous years. The rise of right-wing parties in both the EU Parliament as well as in numerous European Member States is however expected to have an influence on the direction of both EU level and National level policies in many areas that could affect startups and their investors. 

Though there are no drastic changes within the parliament’s majority, its new composition could alter the course for EU policy, creating new challenges for startups and investors alike. First and foremost, it is evident that topics like the green transition will take less priority in EU policy makers agendas compared to previous years. In EU Elections 2024: What do party manifestos say on key policy issues? (EPC) the compendium showcases the changes on key issues that are cited in the manifestos of all of the major parties. Though we see an overall upward trend in the mention of green policy it is overshadowed by the unanimous increase in concern for energy policy, defence and security, and agricultural development. These priorities are likely to create significant debates around new developments in the green transition to make way for these industries. The emphasis on different policies may even lead to the rollback of some environmental regulations to accommodate these new priorities. 

On a country level, upcoming elections are making individual nations within the bloc more willing to adopt nationalistic measures within their borders, which in turn could constrain economic and social movement within the region. This could have major ramifications for startups, as every aspect of their operations, from cross-border investments to product scaling, will increasingly be constrained by these policies.That being said, Allied For Startups highlights that this focus on protectionism is also simultaneously driving demand for the development of DefenceTech and dual-use technologies. As a result, significant opportunities are emerging for DefenceTech startups, with investors eager to fund projects that can serve both military and civilian purposes.

What is being advocated by EBAN and the rest of the startup community

in regards to these election results?

Given the current parliamentary election results the EBAN board has brought together recommendations of actions EU entities can take to create a thriving startup, venture capital,  and angel investor ecosystem within the region. 

• The importance of maintaining a unified region despite the increased focus on national self interest. Only the combination of invention and innovation made possible through entrepreneurship creates economic dynamism. This can only be made possible through collaboration with the member states and a diversity of ideas made through cross border 

• The harmonisation of regulatory frameworks for cross border investments. Startups are already facing significant challenges in Europe in getting access to the right financial resources needed to scale-up their operations. In doing so it would simplify the access to support from outside investors not only in Europe but also from the US and abroad. 
• We should not lose our focus on the green transition in favour of short term gains on a national level. The green transition has the opportunity to renew the industrial base and should not be taken as a threat to economic growth. It is instead an opportunity to leverage new investments from venture and angel investors to stimulate innovation and development. 

The common consensus within the EBAN board of directors in agreement with is that in order for the startup and investment industry to succeed we need to continue to have a united Europe that promotes economic growth and opportunity. A harmonisation of regulations and focus on reducing the barriers for innovation will give way to a more prosperous region. We echo also the recommendations suggested by colleagues in the Venture Capital community (see: Invest Europe calls for bold action to drive innovation and transition ahead of European elections” (Invest Europe)) regarding the priorities newly elected EU officials should be focusing on to improve the investment ecosystem.

For more information about the elections and what’s next in the process, you can read here: https://elections.europa.eu/en/after-the-elections/