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EU startup fund overwhelmed by high demand
- ramboldio 5y agoTL;DR "We were surprised by the demand for free cash."
- newguy886 5y agoTLDR cash has already handed out to some buddies. The rest gets a medal.
- newguy886 5y agoThis BS is as corrupt as the SBIR system. Real money is in china.
- edrxty 5y agoCan confirm, used to work for an SBIR farm. Good times... Wouldn't touch China with a ten foot pole though.
- newguy886 5y agoWell, China is an interesting place. With the right gov contacts it can be very productive. Much more open for me than sbir grants and Eu grants. And I know several people who got sbir 2 grants and they told me how they got it and told me not to waste my time applying.
- edrxty 5y agoSBIR is doable, but a lot of rather sleazy people have made it their life's work to drain that particular program so the paperwork burden has become fairly high as a result. As such the contracts tend to go to people who understand how to get them which can make the system frustrating. China is absolutely NOT an interesting place from the perspective of government contracts, particularly for US citizens that don't want to end up in jail, however. Anything defense related will fall under ITAR and associated tech export bans (this includes just working on these programs, not just physical movement of goods). Additionally, if you're paid in Chinese currency it might as well be monopoly money to a foreigner. There's also the massive ethical dilemma of supporting a government that is actively engaged in ethnic cleansing (regardless of the whataboutism).
- pacman2 5y agoSBIR is in my experience done by 1. Companies that made a business out of doing SBIR grants (I think the previous poster may have meant the same with SBIR farms). They write one grant after another and do some BS research, write reports and in the end, trash the results and move to the next SBIR 2. Small Start-up that a basically linked to big military suppliers and since the big supplier is ineligible to appply, they apply for them and among the big big stack of applicants, they are selected for the SBIR. Must be really superior ideas I guess. Or huge luck :-) The SBIR grant was designed for neither, but blue sky ideas that VC don't want to fund. My experience with SBIR has been terrible. Especially A. Idiot reviewers. I can only tell you that an idiot and google are a very dangerous combination. B. Idiot management. One lady that is in charge of giving out the SBIR has emailed me that she has occasionally given SBIR to inexperienced (speak not having done an SBIR before) researchers. So she basically handles the grants to companies mentioned above under "1", the SBIR farms. She has no idea what she is doing. SBIR was not designed for that. In my opinion, and I may be wrong, SBIR were designed to be open to the best blue sky ideas that may be too risky or too early stage for regular VC. This already excludes the existence of SBIR farms.
- edrxty 5y ago> 1. Companies that made a business out of doing SBIR grants (I think the previous poster may have meant the same with SBIR farms). They write one grant after another and do some BS research, write reports and in the end, trash the results and move to the next SBIR This was kind of my experience, though it isn't quite so malicious generally. The overhead in setting up the contract, while not ridiculous, is enough that once you get one, you usually end up getting another, and so on until you become an SBIR farm. The grants come in phases, Phase 1 being research and proposal, Phase 2 prototype, and Phase 3 basically being follow on contracts for production/continued development. You have to get them in order and if you only farm Phase 1 contracts you won't get super far. That said getting past Phase 2 is quite hard as the kind of stuff they generally ask for (weird one off fixes for various government procurement requirements) don't generally commercialize well. They're frequently moonshot type efforts for the size of businesses they're targeting and the ROI is low unless you're using them to build and pay a team for some other goal. That said, if your goal is to build a team/small facility and you know what you're doing, it's not a bad option. It just isn't really anything like what the rest of the software world's VC funding model.
- andai 5y ago> 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.
- c-c-c-c-c 5y agoI dont think politico articles are a good fit for the HN crowd.
- dang 5y agoOn 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&sort=byDate&type=comment&query=%22article%20quality%22%20%22site%20quality%22%20by:dang 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&query=comments%3E10%20politico.eu&sort=byDate&type=story https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que... doesn't look so bad though!
- visarga 5y agoIsn'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 5y agoYes, 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.
- dr_dshiv 5y agoNice analysis!
- hef19898 5y agoWhich means you should include member state budgets, as the EU has no social systems, militaries etc... to find. Comparing EU member states to US states is just plain wrong.
- ben_w 5y agoThis is an EU-as-an-institution fund, so no. EU member states have bigger startup funds: https://www.bloomberg.com/news/articles/2021-06-22/germany-sets-up-12-billion-fund-to-finance-technology-startups https://www.bloomberg.com/news/articles/2021-06-22/germany-s...
- lnsru 5y agoI share your opinion. Printing money and giving it to Lufthansa isn’t better in any way.
- tester756 5y agoI don't think let's remember that decent EU SE salary is 3-5k USD Except Zurich, London hubs.
- bidirectional 5y agoMeanwhile 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.
- barbazoo 5y agoFrom the government though?
- yohannparis 5y agoIn the Silicon Valley it's mostly private money, this is a government fund. Not the same thing.
- azinman2 5y agoWho do you think in part supplies the cash for SV VCs :)
- BobbyJo 5y agoThe larger point is: you can't replace a healthy investment ecosystem with grants. A government fund is itself representative of a lack of ambition. If the EU actually wants its own SV, they're going to have to address regulation, not throw money around. The real problems startups face in the EU are labor and tax laws. Companies can't use equity as compensation (which is a big lure for talent) and it's extremely hard to fire people (which makes pivoting or dealing with general market changes impossible for small companies). Pro-employee policies are necessarily anti-employer. Smaller, more innovative, companies have a harder time surviving such policies. So long as there is greater risk in EU companies, investors will take their money elsewhere.
- jiofih 5y agoIt’s expensive to fire people, it can be done. Money doesn’t seem to be an issue for startups these days. Every company I’ve worked for has given equity as compensation here. Opening a company is insanely easier than anywhere else I’ve been. I can’t relate any of those factors to lack of innovation from my own experience. It must be something else?
- debarshri 5y agoI 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.
- mytailorisrich 5y ago> 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...
- k__ 5y agoI didn't even hear about it until now and the money is already gone?
- MattGaiser 5y agoIn 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 5y agoThe 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.
- lostlogin 5y agoExcept when they could do with getting in the way, but then don’t. Remembering recent stories there have been problems with adtech, spyware (same thing?), tech monopoly behaviour, privacy violations, treatment of workers, dubious automation etc.
- arcturus17 5y agoIn the EU however we think that shelling out a billion - peanuts in the grand scheme of things - and then some certificates which amount to a big thumbs up (“Ursula von der Leyde and 25 others like this”) will create a vibrant startup ecosystem. I’ve been extremely supportive of the EU all my life but I’m starting to wonder if politicians are in any way connected to the ground-level reality of business and personal life.
- cgearhart 5y agoThat might be true for consumer tech startups, but they do have programs to help startups. SBIRs, STTRs, FAST, and other programs (not to mention funding from agencies like DARPA) are all run by the federal government. It’s just that they typically invest in things that likely wouldn’t be funded by VCs due to high risk & limited market (e.g., advanced technology development for the military or space).
- fny 5y agoYes. Certain businesses qualify for grants from the small business administration in the US: https://www.sba.gov/funding-programs/grants https://www.sba.gov/funding-programs/grants
- deleted 5y ago[deleted]
- holoduke 5y agoThe 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.
- secfirstmd 5y agoAgreed. Have applied for EU projects before and it's a costly mess.
- reader_mode 5y agoThere 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 5y agoIt'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.
- cookiengineer 5y agoThat'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.
- mtrovo 5y ago
- jiofih 5y agoDid they just hand out cash freely? 2000 companies is A LOT to do due diligence on.
- raverbashing 5y agoGrants 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)
- spoonjim 5y agoEU creates $1 billion startup fund. China's government probably invests that every day.
- detritus 5y agoWithout even reading the article - "Good!". "Now increase the size of the fund".
- andrewtbham 5y agothe EU needs stock option tax reform. https://www.notoptional.eu/en/ https://www.notoptional.eu/en/
- jiofih 5y ago> 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 5y agoTaxation is not competence of the EU, just the member states.
- streamofdigits 5y agoGreen 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.
- Aerroon 5y agoNeither sound genuine to me. If anything, they sound like a cover for everything else the politicians want to do. Think about the results the EU has achieved in digital. They've managed to: * create pop-ups on almost every website * screwed over regional pricing so that Bulgarians have to pay the same price as Belgians. Somehow region locks still exist though. * tried implementing a system where all ISPs had to save all traffic of their users users * recently the EU adopted a new copyright directive that will force digital platforms to pay money to copyright holders because a user might upload copyrighted content * implemented a digital VAT system that screwed over microbusinesses, because the politicians couldn't be bothered to implement a minimum threshold (they eventually did... After a few years) On the green front more has been done. But I'm not quite thrilled that they banned straws and strong vacuum cleaners. Neither do I like that they seem to be trying to make sure that we end up stuck with confusing USB cables.
- estaseuropano 5y agoA few of your points seem right but several are just wrong or misleading. E.g. GDPR is a great tool just maliciously implemented by companies that have an interest to do so - 90% of the banners you see are purposefully designed to be annoying and delivered by a small group of ad networks. The aim is to grind you down and make you just click anything to get rid of them. But it has also given us Google/Facebook takeout and the right to actually delete your accounts.
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- acchow 5y agoIs a government handout more likely to do good than harm?