For a long time, I’ve been interested in entrepreneurship. In how companies get started and grow over time; and in the people that come up with an idea and actually decide to make that idea into a business. It’s simply amazing to see what people can do when they decide to start a company.
But the reason why entrepreneurship is interesting is not just because of some crazy ideas like Elon Musk’s space travel plans. Entrepreneurship in itself is tremendously valuable. Valuable for the person starting a company and valuable for society at large. Nonetheless, it seems that entrepreneurship — particularly in Europe — is not always seen as such. So in this article, I’ll take a look at why entrepreneurship is so important, and why and how we should value entrepreneurship in Europe.
Value of Entrepreneurship
How important is entrepreneurship? Well, we can’t answer this question quantitatively, but we can take a look at what makes building businesses valuable. First, becoming an entrepreneur brings a lot of value to the person starting the company (which may be you). Often, you willingly put yourself outside of your comfort zone, which is where you learn the most. And this learning, this personal development, is what makes this such a valuable career path.
Perhaps more important is the value of entrepreneurship for society. For example, if you’re an employee at a company, someone sometime had the crazy idea to start that specific company. Indirectly, because of him or her, you now have a job. Perhaps to you, it doesn’t feel like you owe someone anything. After all, you got the job because of your skills and experiences. Nonetheless, without the person that started that specific company, you would have been working elsewhere. So without those willing to take a risk and start something, our society wouldn’t function the way it does.
The story of entrepreneurship is essentially a story about innovation
And this doesn’t just apply to jobs specifically. The story of entrepreneurship is essentially a story about innovation. From Thomas Edison to Steve Jobs, millions of entrepreneurs around the world have created new inventions; inventions that have been spread to consumers worldwide, by the companies these entrepreneurs built.
Considering all of the effects (personal development, creating jobs, innovation, etc. ) that entrepreneurship can bring, it should be clear what the value of entrepreneurship is, and that our society, governments, infrastructure and people should encourage entrepreneurship at large.
Facilitating Entrepreneurship in Multiple Ways
However, this ‘encouragement’ of entrepreneurship is not a given. And encouraging entrepreneurs to start businesses can happen in different ways. Through facilitating regulations, creating pro-startup infrastructure, or even by the general pervading ‘startup culture’. In that sense, just like with differences in work breaks, we can look at how we can encourage and value entrepreneurship on multiple levels.
International & National Laws and Regulations
Starting at an (inter)national level, we see that certain regulations can make ‘life’ easier for both startups and those wanting to start a company. For instance, the European Union works hard on what it calls the Digital Single Market — an initiative that aims to “tear down unnecessary regulatory barriers” for digital products and services.
Another example of this is the Dutch law regarding capital requirements. Before 2012, you could only start a BV company (an LLC equivalent) with at least €18.000 on the bank. This minimum capital requirement has since been abolished, making it much easier for people wanting to start a business (as a BV) to do so.
Infrastructure for Startups
Alternatively, we can look at facilitating infrastructure, such as other companies that provide services for startups and starting entrepreneurs. In Europe, the amount of money that European venture capital (VC) firms have available to invest in startups has grown quite a bit over the last years. In 2016, VC companies in Europe invested around €6.5 billion in startups, a sizeable amount. Unfortunately, this amount pales in comparison to their American equivalents, who invested around €39.4 billion in that same year.
Another very interesting example of current pro-startup infrastructure in the US is the so-called Thiel Fellowship. This fellowship was founded by Peter Thiel, famous entrepreneur and investor (e.g. founder of Paypal, investor in Facebook, Airbnb, etc.). According to the website, “the Thiel Fellowship gives $100,000 to young people who want to build new things instead of sitting in a classroom.” In other words, this initiative actively encourages university students to drop out of university in order to found a company.
However, in Europe such a fellowship does not exist. And dropping out of university to start your own business is not something we commonly see. In Europe, failing is less of an option; Why should you drop out of college to pursue a risky dream? Or why would you “throw your life away” over “an experiment”?
Different Startup Cultures
These are just a few examples of how we can enable entrepreneurship in Europe. But as you can see from the last example, it’s not just about laws or infrastructure. It’s in our culture. Interestingly, encouraging entrepreneurship is simply a given in the United States. For Americans, there is no reason to read or write a blog article like this. In the US, if you tell others you work for yourself, you’re met with awe. And even failure (which is of course common among entrepreneurs) is seen as a success.
In contrast, in my experience here in Europe, entrepreneurs are seen as risk-takers. And risk-taking is something Americans do well, but Europeans — not so much. In 2014, >50% of Europeans preferred to work as an employee, while >50% of Americans preferred to work for themselves. Certainly, also in Europe there is some prestige to being an entrepreneur and they are seen as ‘cool’ and ‘exciting’. However, considering the risks and existing red tape, entrepreneurship is not often considered a viable career option.
That is not to say that the situation for European entrepreneurs is improving over time. Access to capital, non-restrictive laws to start a company, etc. are much better now than they were 10 or 20 years ago. But it’s interesting and important to face the legal, infrastructural and cultural divide that still exists — and which results in a brain-drain of startup companies who move to the US (and create jobs and innovation there instead of their home country).
A Call to Value Entrepreneurship in Europe
This article serves as a call to value entrepreneurship, specifically in Europe. And it’s very clear what entrepreneurship can bring. As an individual founding a company, you’ll learn more than you have ever learnt. And if we take a look at entrepreneurs more generally, we see that their contribution to society (in terms of economic development and innovation) is unparalleled.
And so on EU and national levels, we should promote regulations (such as the Digital Single Market) that make it easier for entrepreneurs to start a business and sell their products wherever they want. In terms of infrastructure, we should further support European venture capital firms, or even start ourselves as angel investors. And as individuals*, we should meet with and support entrepreneurs in our social circle. To encourage them in pursuing crazy ideas, even though they may fail — and change our culture bit by bit.
*And if you’re interested in entrepreneurship yourself, start thinking about an idea! Not just because it ‘has value’ for yourself and for others, but also because it’s an incredibly rewarding pursuit. Sure, there are obstacles on the road, and sure, it’s not easy. At first you will fail, but the rewards you get from trying are much more valuable. And if you don’t know where to start, start with the problem space and solution space.