Orange Magazine

Elephants do not nibble – European Countries can show equal competition to the US in developing SMEs

Text by Triin Ilves, Estonia
Photos by SME Assembly 2017


Small and medium-size enterprises are the “backbone of the economy” in Europe as 90 percent of the registered companies belong under this category. Recently, start-ups and rising tech companies have had the spotlight adjusted to them but Commissioner Elżbieta Bieńkowska assures that this is just complementary.

Namely, first time after 2008 and the following economical crisis, European SMEs surpassed pre-crisis level level of employment, states the Annual Report on European SMEs for 2016/2017. The overall environment has steadily strengthened for three years now, and to continue with this growth, more attention should be given to start-ups and scale-ups, as they are important drivers of economic growth, Bieńkowska said.


Estonian Minister of Entrepreneurship Urve Palo noted, that now it is a good time to ask whether we’ve done everything and what could be the next steps for the progress to continue. Addressing many current buzzwords such as flexible work-hours, no-routine jobs, and life-long learning, Palo mapped the key agendas for the EU to keep up with the changes and stay competitive.


Data is the new oil
Secondly, almost no-one can escape the digitalisation. Today, Europe is constantly compared to the US and Silicon Valley, its ability to produce new global success stories and keep the industry thriving. Whereas many start-ups succeed, the worry childs are mid-size enterprises, said Commissioner Bieńkowska.

The fear of brain drain must make the EU to take concrete action in keeping the partners and stakeholders in Europe and not let them ‘escape’ overseas.

“We have less fast growing companies and less companies in general,” Irmfried Schwimann, Deputy Director-General of the European Commission said.

Just like automotive industry is pushed, so needs to be done for the others in the industry, Bieńkowska added.

Mapping the key competences that many European countries have today, Estonia as also the host of the SME Assembly 2017 has been brought as an example for providing digital solutions to citizens of the country and beyond. Many see the e-residency program as a way to connect SMEs and other companies in Europe but they need to be tied down by other aspects. Understanding the cruciality of digitalisation is just one aspect.

“I don’t believe that digital is a new industry,” said Alberto Onetti, Chairman and President of Mind The Bridge Foundation. He added that today, the other alternative is only to “crash and burn”. It allows the companies to grow and get exposed to new opportunities, thus partly explaining the reason why tech start-ups have become the center of the limelight.

From start-ups to scale-ups
In order to establish gradual growth over time, Europe can’t only rely on becoming the essential hubs for the start-ups. As important as it is to have new and emerging ideas, the surrounding environment has to be ready for the enterprises to move forward.

However, as noted in the Annual Report on European SMEs for 2016/2017, there were only 4200 scale-ups. “Clearly that is not enough,” Onetti said.

Here, start-ups can be the leading force in understanding on how to move up and expand. As the co-founder and Managing Director of Karen Boers explained, they offer a good insight to a small-scaled universe that is capable of expanding and access the market in a very fast and wide way, especially if you compare it to the number of staff.

Why isn’t there a middle-way? Why are there only SMEs that either become big or crash and burn? As per Onetti, small company is a company that is not able to grow. An entrepreneur, however, has to be ambitious, he said.

“Anytime i see a small company i see that some opportunity was lost there.”


Post-Brexit ecosystems
Even though London is still considered as one of the European economical centres and many companies find it essential to establish an office there, there are other as well as new and upcoming centers that have the potential of becoming a similar-scale competitors.

Karen Boers noted that next to Berlin and Paris, cities such as Lisbon, Stockholm and Tallinn have a similarly good environment. Pulling the talent from neighbouring countries and expanding the region means that these locations have the chance to become part of the innovative start-ups deltas that more than one city can benefit from, she explained.

Screenshot 2017-11-26 22.19.02

This can also lower the bottleneck of being recognised on an international level, even when the origins of the enterprise lie in one particular European country. Many start-ups still need to escape the bottleneck of being recognised only when they are a European company, not from country X, might affect many success stories of today’s starting enterprises.

After all, European startups should already have the upper hand next to their US competitors – they’re made for international markets, Boers added.

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About This Edition

SME Assembly 2017
Tallinn, Estonia
Nov. 2017