Only now, some 7 or 8 years after the global financial crisis are economies of the European Union finally reaching pre-crisis levels. Despite self-congratulatory politicians, growth can be best described as tepid, and certainly well below previous peak levels. New deflationary demons lurk beneath the surface and guards are still up. Putting aside political optimism, economic growth is what Europe desperately needs.
However, in search of growth potential, Europe needn't look far. As the European Commission itself estimates, there are now more than 20 million small and medium sized enterprises (SMEs), representing 99 percent of all business across the EU. We continue to believe startups and SME will be potential drivers for economic growth, innovation, employment and social integration in Europe.
While regulation is one vital component enabling sustained growth – a task where both the Commission and the European governments must remain vigilant not to overburden and suffocate business – another component is the SMEs themselves.
Three key elements for growth in Europe are “innovation, innovation and innovation”
This was said by Matti Vanhanen, the former Prime Minister of Finland, in the early 2000s. This, at a time when Finland’s tech industry and economy was booming. Yet without investment, sustained innovation cannot thrive. Now though it seems SMEs are attracting investment, in areas where innovation can be seen to deliver profitable business models - such as in FinTech.
Investment in FinTech
According to an Accenture report, investment in financial-technology (FinTech) companies more than tripled between 2008 and 2013 and grew by more than 200 percent globally in 2014. This compares to a meagre 63 percent growth in overall venture-capital investments. Things are changing, and how the capital is being raised is just as much part of the change. The emergence of crowd investing and online marketplaces is facilitating deal flow and making it easier to spot companies at distinct growth stages.