EU start-ups battle with 'unnecessary friction'

Stripe survey finds over 30% of EU start-ups said they considered starting their business elsewhere due to the scale of the regulatory and compliance burden in Europe

The survey claimed that the level of regulation for start-ups in Europe has caused “unnecessary friction” for EU-based entrepreneurs. Picture: Yorgos Karahalis/Bloomberg

Stringent compliance practices for EU start-ups is one of the biggest threats to early-stage businesses, according to entrepreneurs that took part in a survey by Stripe.

Over 30% of EU start-ups that participated in the survey said they considered starting their business elsewhere due to the scale of the regulatory and compliance burden in Europe.

The survey claimed that the level of regulation for start-ups in Europe has caused “unnecessary friction” for EU-based entrepreneurs.

The survey by Stripe, the financial services and software firm created by Limerick brothers John and Patrick Collison, was conducted online between March and April 2022 and was completed by 172 Stripe users from the UK, France, Spain, Ireland, Italy, the Baltics, Benelux, Scandinavia, Greece and Eastern Europe.

No understanding of realities facing businesses

One of the main findings in the report was that the minority of start-ups believe that policymakers understand the realities of the issues the businesses are facing, while 83% said that structures that are in place are designed for large, established businesses.

Despite EU start-ups feeling like there is a lack of understanding about their position in relation to heavy regulation, the report also found that early stage companies are not engaged with policymakers and are not typically voicing their concerns.

“Rather than calling for a huge shake-up in regulation, start-ups needs appear to be linked to saving time and resources,” the report said.

Lack of guidelines around compliance

Another key finding from the report was that while compliance is an issue, the lack of clear guidelines around how to comply in certain areas is also a problem.

One example of this is GDPR as the report suggested that the lack of guidance in this area and poor execution in some countries has led to frustrations among small businesses.

The EU could become a more attractive destination for for star-ups as the European Commission recently adopted its New European Innovation Agenda which is aimed at growing and scaling EU start-ups, especially in tech.

"Deep tech innovation will reinforce Europe's technological leadership and generate innovative solutions to pressing societal challenges, such as climate change and cyberthreats," the Commission said.