For those entrepreneurs looking to build successful businesses in Europe, the continent is not without its opportunities and challenges. Diversity, talent and culture all create a melting pot of potential, but the truth is that when it comes to innovation – we’re rapidly falling behind.

Despite the potential for tech giants in Europe, the global landscape is dominated by businesses from the US and Asia. It’s not hard to see why – the infrastructures in those areas are well advanced and funding is far easier to come by than in Europe, leading the gap to widen more every day.

The longer we take to react to the problem, the worse it will get and it’s not just capital threatening to bypass Europe, but workers too – threatening to cause a self-inflicted talent vacuum. What’s needed to ensure the next great tech champion comes from Berlin or Barcelona is for Europe to untap its own entrepreneurial potential and rethink the strategy it takes in helping new ideas thrive.

Europe’s fractured startup strategy

Despite the broader picture, there are examples of how to support entrepreneurs and new businesses in Europe. In France for instance, President Macron launched a $11 billion fund for investment in disruptive companies in 2017. In a bid to create a country that “thinks and moves like a startup”, Macron went on to establish a four-year tech visa to encourage entrepreneurs to come to France, as well as Paris’s Station F – the world’s largest startup campus.

While in the UK, the government has recently announced redirecting 5% of its pension funds into funding tech startups – a figure that could unlock up to £50 billion for fast-growing companies. Spain is similarly encouraging with its digital nomad visa, helping non-EU nationals reside there and still work remotely for a non-Spanish company. While the country’s Startups Law seeks to attract talent  and support tech companies through advantages such as tax incentives and easier-to-access visas.

Given that Spain is set to take over the Presidency of the Council of the European Union this year, there is hope that its own initiatives are a sign of things to come across the bloc. But if Europe is ever set to become a tech innovation space on a par with the US and Asia, more must be done on a larger scale to move from country-by-country strategies to a pan-European one.

The focus points for Europe

To get serious about its support for startups, Europe should be focussed on three things: capital, talent and regulatory frameworks.

Firstly, when it comes to capital, businesses within Europe need to be able to attract it. Funding is the lifeblood of entrepreneurism, and this should be a major focus for the EU. Particularly when the US and Asia outpaced Europe so comfortably in Q2 2023, with the US’s VC investment at $35.3 billion and China’s at $13 billion. What could help is an incentive similar to Spain’s institute for Foreign Trade, Instituto Español de Comercio Exterior (ICEX) – a helping hand for businesses looking to export goods and services and attract foreign investment. With the ICEX helping the export of over €300 billion and attracting over €10 billion in foreign investment in 2021 alone.

Secondly, European talent is ahead of the game globally. Europe’s mix of work and play is arguably unique compared with the rest of the world – with strong labour laws and shorter working hours than the US and China. Further, when you look at cities around the world with the best work-life balance, the continent dominates the list. We can do more to advertise this fact and focus on bringing more external talent in through the promise of better conditions in comparison to the US and Asia.

Thirdly, the EU’s regulatory framework remains too complicated and changes wildly from country to country. The current go-to strategy for the EU to support local startups is to create more regulation in how it restricts US companies from operating – something that is having an impact on EU tech companies too. Regulatory sandboxes are one example of how the EU gets it right, setting the scene for a smoother launch to market, with companies able to test new products and services under the supervision of the organisation expected to regulate them. But such initiatives are the exception.

If Europe is serious about supporting its startups and creating an innovative ecosystem, it needs to invest in these three areas – not just to catch up with the rest of the world, but to overtake it.

Succeeding against the odds in Europe

As a European startup, Glovo ran into its fair share of difficulties early on. But overcoming these developed our business into one that can advise peers and even governments on how to smooth the path to success.

Top of the agenda for us is the need to incentivise and create role model companies. When we founded Glovo, our home city of Barcelona lacked any track record as a vibrant tech hub and required investors to take a leap of faith on what we knew could be a fertile tech landscape. Alongside our persistence, work with investors and the strength of our team, this paid off. But it was not a short or guaranteed process and without more help from the EU to attract capital, the struggle will only get worse.

Another key ingredient for successful innovation is collaboration. Informal mentoring is common in our industry, but I strongly believe that more formalised global connections and the aid of other successful founders can help. For instance, Glovo House is a project that empowers the next generation of entrepreneurs, and helps them scale their business, either through mentoring or funding opportunities. These establishments are pivotal to disrupting the tech landscape, but currently rely too heavily on individual businesses. To change things, more formal ways to promote conversations and collaborations between startups, unicorns and scale-ups are needed.

Europe has a colossal opportunity it can’t afford to waste

An entrepreneurship ecosystem isn’t just good news for businesses, but for the development and growth of cities and communities across Europe. It can attract new and exciting international talent, as well as help stop its own talent drain.

The gap between tech giants and their US and Asian counterparts will only grow so large before the race is over. By failing to act right now, businesses and policymakers will look back on this as a wasted opportunity to make their mark on the tech world stage. The hard bit is getting the appetite and the talent – but we have these. Now we need the right ecosystem to help it grow. The clock is ticking though, and for a lot of entrepreneurs and tech companies, the time they’re willing to spend waiting for the EU to get its act together has almost run out.