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Finding Belgium’s Startup Barriers

Posted by: Jonathan Ortmans on July 23, 2012 Source: Policy Dialogue on Entrepreneurship

Finding Belgium's Startup Barriers

From an outsider perspective, Belgium has a very diverse economy with dozens of influences coming together at its prime location in the heart of the EU. Being the home to several major European universities, and a mix of service-based economy in the north and industrial-based in the south, Belgium has a diverse market structure that keeps it competitive and one of the highest income per capita economies in the world. However, when it comes to entrepreneurship, Belgium is not thriving.

Solvay Brussels School of Economics and Management (ULB) Professor and Chair of Entrepreneurship Olivier Witmeur explained in an interview with the American Chamber of Commerce in Belgium that it wasn’t until the late 1990s that the country started to pay attention to entrepreneurs, but that his nation has since tried to move fast to make Belgium a good place to do business today. He highlighted that there are 300 grants available for every type of startup imaginable, along with incubators, subsidized office space and government funding to programs in schools. The government has also sought to bridge the gap between R&D and entrepreneurship according to an analysis citing several government initiatives in this regard. For example, in 2004, Belgium passed legislation to establish the Industrial Research Fund to provide grants for research ideas that will develop into easily marketable products.

However, government “programs” do not guarantee success. Belgium’s challenge is more seeding an entrepreneurial attitude. The majority of its citizens still tend to respond in surveys that becoming an entrepreneur had not ever crossed their minds as an option. Meanwhile, the typical person in Belgium is involved in service businesses or public affairs.

Being the EU’s political headquarters, Belgium faces a handicap in developing a vibrant startup ecosystem. EU policymakers in Brussels have been slow to follow the rest of the world in recognizing the importance of focusing on new and young firms as opposed to a more politically expedient emphasis on existing Small and Medium Sized Enterprises (SMEs). For example, despite the fact that all 27 nations of the EU participate in Global Entrepreneurship Week, the EU has declined to recognize it or collaborate preferring instead to build its own taxpayer-funded “SME Week.” The EU was also noticeably absent when 3,000 drivers of the startup ecosystems from 125 nations gathered in the United Kingdom last March for the annual Global Entrepreneurship Congress. With the EU being so wedded to existing replicative entrepreneurship, it is hard for Belgium to focus on exploring ways to unleash new, scalable enterprises.

What a policy agenda could be to promote more startups in Belgium is unclear. More research needs to be done as to why more Belgians do not embrace risk and unleash new ideas. According to some estimates, 98.8% of the companies in Belgium consist of less than 50 employees with 15.7% employing less than four persons and more than 80% of new companies being one-person enterprises. Are high labor costs a barrier to startup growth? Or, as in the U.S. with the Startup Act, is the challenge the effectiveness of Technology Transfer Offices at Belgian universities created by research grants from the Industrial Research Fund?

In the meantime, there are signs that startup communities are emerging and a startup scene is beginning to be noticed, featuring Startup Weekend Brussels, the Betagroup known for its pitch slam, Open Coffee Club Brussels and the recently launched Startups.be which is trying to map the entrepreneurship ecosystem in the country. In addition, the Network for Teaching Entrepreneurship (NFTE), a successful program in the US in promoting entrepreneurship among disadvantaged young, has operated in Belgium since 1998 under the guidance of ëVlaams Economisch Verbondí (VEV). Belgium also imported from the U.S. the concept that is driving Jeunes Entreprises which aims to promote among youth the spirit of initiative through practical experience in running businesses and advisers.

Belgium clearly has great minds, great universities, and enough of the people I spoke with were clearly pushing for cultural acceptance of entrepreneurship as a career path. What is missing is unclear. It is always a formidable challenge to create an entrepreneur-friendly environment where enough people are not only ready to see and work on opportunities, but also are willing to take up the challenge. It is this mix of talent, cultural factors, correct regulatory framework and financial capital that makes a place viable for entrepreneurship. With the future holding more and more uncertainty for Europe’s economies, Belgium would be wise to use the security blanket the EU offers in putting more of these pieces in place for the future. Who knows, maybe local success might prompt more attention to the economic importance of new firm formation among EU bureaucrats.

Jonathan Ortmans

Category:  Global  Tags:  Olivier Witmeur, Solvay Brussels School of Economics and Management, Startup Weekend, Betagroup, Startups.be, Open Coffee Club Brussels,

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