EU startup fund overwhelmed by high demand

[andai]

> Having run out of cash, an EU fund meant to boost promising tech companies will hand out certificates instead.

> Companies who are left without any money will get a "seal of excellence," meant to tell private investors that the EU likes the company.

[cpach]

Now this is cringeworthy for sure.

As someone living in the EU, this makes me embarrassed. We should be able to do better than this.

[stanlarroque]

My startup received this "seal of excellence". It hurts because I'd rather have the money instead of a piece of paper, but hopefully we might be selected for the next round. They do this startup selection every 6 months or so.

[qwertox]

TÜV Rheinland approves this message.

[mrweasel]

They should have issued them as NFTs.

[bitL]

This must certainly be a joke, right?!

[Apocryphon]

Ah, digital dividends from the government.

https://www.youtube.com/watch?v=Ei9iM_zzzQk

[karmasimida]

I prefer EU to just say 'We give up' LOLL

[duxup]

What the heck is that 'seal of excellence' supposed to mean?

That they applied for something?

[spoonjim]

Using the government as social proof

[holoduke]

The problem with these EU funds in Europe is that when you apply you need to spend half of the funds on enormous application papers which contain heavily regulated requirements for you to implement in the company. In many cases it just doesn't add up. Too much effort.

[cookiengineer]

That's why when you look up who received the funds you'll immediately see a pattern where large scale enterprise corporations have 100% owned subsidiaries that do nothing more than receive state funds, live for like 2 years without hiring any talent that is specific to their "research" area, and then get declared insolvent because the managers got themselves a big payout.

Most of the funds don't go to startups, and that's exactly what I hate about this paper pushing goldberg machine.

The big consultancy companies like accenture are also heavily involved in this scam. Founding AI startups without a single data scientist or engineer is what they seem to do for a living.

[reader_mode]

There are agencies who do nothing else but deal with bureaucracy of applying for these funds and they are a justifiable expense when looking for funds... Next level job creation right there

[marto1]

It's also just plain bad business that leads to loads and loads of corruption. It's come to the point where a lot of people apply to essentially get a boost to their own spending power while parading to be entrepreneurs and then go back to usual with no repercussions.

This is also the small kinds of financial swindles. There are others that are much worse and involve already established companies.

[secfirstmd]

Agreed. Have applied for EU projects before and it's a costly mess.

[debarshri]

I might sound a bit naive, but what is the vetting process for distributing funds? This sounds more like a grant than traditional VC funds.

Raising capital from a good VC firm is hard. period. If you do not have track record, you have to go through a lot of due diligence, it is selective. I can also understand why, because it is some LP's money so you want to invest in a startup that is risk-aversed.

[bidirectional]

Meanwhile in Silicon Valley, single companies can raise the same amount of money in one round of funding. It's quite pathetic in its lack of ambition.

[onion2k]

The only funding that's equivalent to the EU's $1.1bn this year has been GoPuff's $1.2b series G round, in a company that's been going for 8 years and has absolutely proved its market. Last year there were some bigger ones, Rivian's $2.5bn round for example, but even that wasn't exactly in a startup considering they'd already raised $3bn before. The VC funds in SV are definitely bigger and better than anything on this side of the Atlantic, but even in SV they're not exactly throwing huge bundles of cash at seed rounds any more. I wish they were. It was fun when people got a couple of mil to prove an idea. Reading the daft things that founders did (on Fucked Company) was a good laugh.

[yohannparis]

In the Silicon Valley it's mostly private money, this is a government fund. Not the same thing.

[estaseuropano]

Isn't that the problem? SV has too much cash going around so lots of bullshit is funded or companies run for decades on VC with the single mission to drive out all competitors and then hike prices.

SV has given the world a lot but what actually usually innovation has come from there in the past 10 years (not companies that moved there for easy money, but rather actual innovation creation)?

[barbazoo]

From the government though?

[visarga]

Isn't the investment too small? I think 1B or even 4B are pocket change when you want to boost a whole economy sector.

[ben_w]

Yes, but the EU as an institution is (ironically) exactly the sort of small hands-off interstate-trade-focused organisation that the American right wish the USA federal government was.

Total GDP for the USA and the EU was fairly similar before Brexit, but the 2019 EU budget was €148.2 billion in both revenue and expenses compared to the USA federal budget of $3.5 trillion revenue and $4.4 trillion expenses.

Most of the budget and power is in the hands of member states.

[lnsru]

I share your opinion. Printing money and giving it to Lufthansa isn’t better in any way.

[tester756]

I don't think

let's remember that decent EU SE salary is 3-5k USD

Except Zurich, London hubs.

[MattGaiser]

In the USA, are government grants for startups a big thing? As in Canada, it seems like half the startups are heavily built around them.

In the US I would imagine they are drowned out of relevance by VC funding.

[paxys]

The best thing the US government does for tech startups is completely staying out of their way. There is, however, a Research and Development (R&D) Tax Credit which pretty much every company makes use of.

[sethhochberg]

It depends a lot on what you're doing. Things genuinely close to the bleeding edge of technology often get DARPA funding, and the list of DARPA alumni companies is pretty long - even for stuff that at face value might not have military applications. But what most people think of when thinking about the "startup scene" is mostly private VC funds. There are various other small business grants from federal and state governments, but they're generally dwarfed by the private investors.

[gilbetron]

The US has (amongst other things) Small Business Innovation Research (SBIRs) Grants/Contracts, that the DoD plus various other gov orgs (NIH, NSF, NASA, FBI, etc) put out once or more a year that looks for research ideas for lots of things. I worked for a company for almost a decade and a half that dealt with them, and it lets you work on lots of fun stuff!

https://www.sbir.gov/sbirsearch/topic/current

There are some startups that actually launch using them, but they are relatively rare because when you are a startup you want to focus on finding your product or service, and not spend a lot of time filling out grant proposals and progress reports and going to governmental meetings. So they can be a big distraction. Still, it is an option.

[fny]

Yes. Certain businesses qualify for grants from the small business administration in the US: https://www.sba.gov/funding-programs/grants

[ecshafer]

There are grants for Defense related start ups.

[mytailorisrich]

> Companies can ask for a grant of up to €2.5 million, or a combination of a grant with an equity investment, ranging from €500,000 to €15 million, with returns on the investment to go back into the program. "The huge demand clearly shows the interest of the community for this kind of support," a Commission official said.

You bet. 2.5 million in free money is bound to attract interest...

[spoonjim]

EU creates $1 billion startup fund. China's government probably invests that every day.

[jiofih]

Did they just hand out cash freely? 2000 companies is A LOT to do due diligence on.

[streamofdigits]

Green and digital are the major pillars of the EU vision. Its a genuine and positive vision, certainly distinct from the US/Chinese versions. There is some skepticism that the vision will ever translate to an alternate proposal. Politicians jumping on bandwagons, talking a good talk, distributing some funds in scatter gun fashion and hoping something will stick... In the end the innovation and breakthroughs will come probably more on the green than the digital side. There is very strong engineering tradition whereas digital somehow was always basically outsourced to the US.

[andrewtbham]

the EU needs stock option tax reform.

https://www.notoptional.eu/en/

[jiofih]

> these companies simply can’t afford to pay the higher wages of more established businesses.

HAHAHA. Right after news of a $400M funding round.

What exactly is the problem - the letter doesn’t mention it?

[isbvhodnvemrwvn]

Taxation is not competence of the EU, just the member states.

[raverbashing]

Grants are limited (even with a budget of 1Bi EUR). News at 11

Being overwhelmed by applicants is a good problem to have (as opposed to having few applicants. That would have been worrying)

[acchow]

Is a government handout more likely to do good than harm?

[k__]

I didn't even hear about it until now and the money is already gone?

[detritus]

Without even reading the article -

"Good!". "Now increase the size of the fund".

[c-c-c-c-c]

I dont think politico articles are a good fit for the HN crowd.

[dang]

On HN we try to go by article quality, not site quality. Sites that mostly produce bad and/or offtopic articles for HN sometimes still produce good and ontopic ones sometimes.

https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...

We do put a standard downweight on major media sites, though, especially ones focused on politics. politico.com has had that for years, but politico.eu didn't. I've done that now.

https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que... doesn't look so bad though!

[newguy886]

This BS is as corrupt as the SBIR system. Real money is in china.

[edrxty]

Can confirm, used to work for an SBIR farm. Good times...

Wouldn't touch China with a ten foot pole though.

[ramboldio]

TL;DR "We were surprised by the demand for free cash."

[newguy886]

TLDR cash has already handed out to some buddies. The rest gets a medal.