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Tech foyer teams urge EU chief to save lots of start-ups from collapse

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Ursula von der Leyen, incoming president of the European Fee, left, speaks throughout information convention on the European Parliament, in Strasbourg, France, on Tuesday, July 16, 2019.

Bloomberg | Bloomberg | Getty Pictures

European tech trade teams are stepping up their lobbying efforts to make sure the EU helps start-ups hit laborious by the coronavirus disaster.

In a joint letter to European Fee President Ursula von der Leyen, a coalition of start-up communities referred to as for the bloc’s chief to “give startups a central function in your options to the COVID-19 outbreak.” 

The group, led by Brussels-based Allied for Startups, warns of the affect a coming financial downturn can have on the continent’s as soon as fast-growing tech sector. The pandemic has compelled many start-ups to rethink their enterprise mannequin and lower prices as gross sales begin to dry up.

“As with previous disasters, this disaster can also be a chance,” the trade leaders stated within the letter. “Within the first occasion it is a chance for higher cooperation and coordination between nations.”

“Past that, it’s also a chance for innovation. When on the lookout for options to fight and resolve the COVID-19 outbreak, but additionally when taking a look at the place development alternatives are coming from after the financial downturn, startups are the important thing actors in each equations.”

It comes after France and Germany introduced plans to offer billions of euros in emergency support to their start-ups. In Britain, Prime Minister Boris Johnson’s authorities is going through calls to take related motion.

‘Liquidity disaster’

To forestall start-ups collapsing, the joint letter recommends the EU fast-tracks public funding to companies growing tech to deal with the pandemic, postpones some tax deadlines and supplies monetary help to already-planned funding offers.

“We hope that you’ll make sure that startup communities won’t be left alone and run into an avoidable liquidity disaster within the close to future,” the co-signatories stated. “Startups make investments their assets into development, together with new markets, headcount and advertising. As such, they inherently have much less liquidity than different gamers within the financial system.”

Europe noticed one other document 12 months of enterprise capital funding in 2019, raking in over $30 billion in funding, in keeping with a number of information trackers. The area has produced a few of the world’s most precious “unicorn” firms — non-public tech companies with a valuation of $1 billion or extra — together with Klarna, Revolut and TransferWise.

However there are worries 2020 start-up financing may very well be sharply hit by the COVID-19 outbreak, with some founders already saying they’ve seen financing rounds pulled because of virus-related panic.

In line with figures from Pitchbook, the variety of enterprise offers within the prime 10 European international locations nearly halved within the first quarter of 2020 to 692, in contrast with 1,363 a 12 months earlier, whereas the overall quantity invested slumped 8% to $8,031 from $7,391.

The EU has already unveiled a raft of fiscal measures aimed toward addressing the disaster. It is proposed a 100 billion euro ($108 billion) fund to deal with unemployment in a few of the worst-hit international locations and a 37 billion euro stimulus package deal to assist companies.

In the meantime, the European Central Financial institution has expanded its enormous bond-buying experiment with a further 750 billion euros in asset purchases to decrease borrowing prices.

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