Ideas to improve the Belgian tech entrepreneurship ecosystem

There’s been a very interesting conversation in our internal members discussion group thanks to a intelligence crowdsourcing question launched by Joren de Wachter: If you had 15 minutes of the undivided attention of a minister of the Belgian federal government, what would be the one thing you would want him to understand about startups and entrepreneurs in Belgium?

The invitation was too tasty to refuse :) Entrepreneurs, investors and tech related professionals got to offer their two cents quickly.

Just to give you an idea of the relative importance in each other’s minds, this is the table that Joren did to capture it:

Here are the main replies:

  • Probably that startups don’t necessarily need that much attention from the government, but that the government should pay attention to everything else around them that (could) affect those startups directly or indirectly (access to capital, infrastructure, workplaces, legislation, labor regulation, media, etc.)
  • Everything starts with the means provided to create. The #1 mean is … capital. Access to capital in Belgium is a nightmare.Other aspects are more than OK (in my view : access to talent, subsidies, co-working, …) Eg : it’s nice to have the ability to create a SPRL at 1 euro ; but you don’t create a business with 1 euro. Belgium boosted the movie industry by tax shelter. France have FCPI funds (you offset investments in start-ups from your tax sheet –> favoring angel investments) / idem London VCT / EIS funds.I’d push for a tax shelter like mechanism for start-up investments
  • They should stop trying to get PR rewards for the success stories and only focus on making belgian environment the best possible to innovate (and thus avoid so many people leaving the country to US.)
  • Promote Brussels/Belgium as a great country for start-ups, due to the total absence of capital gain tax, and keep it that way :) The guarantee of this continued fiscal advantage can attract capital from abroad (hence the recent inflow of French tax evading tech entrepreneurs) and ignite the cluster/ecosystem to support start-ups.
  • Belgium is a haven for big business but tough for startups and freelancers. Make it easier to launch and create companies, not with subsidies, but cutting down taxes & social security expenses at the begining, incentivicing private risk capital investments through a  tax shelter like the UK (they do it for cinema that creates crappy intermitent jobs with no future, startups are longer term, even if they fail, and better quality jobs). Free more government data so that more entrepreneurs can build useful tools and business around them.
  • How about stopping to picture independents as tax fraud specialists? Independents make the best entrepreneurs, SPRLU’s are often the beginning to bigger companies with more jobs and innovation. That, and create a favorable context for early stage incubators ala YCombinator to emerge, instead of redirecting startups towards public investment funds (Nivelles Invest and others) who are simply afraid of early stage startups. We don’t need worms (subsides), we need a nest (favorable context).
  • Finance: Tax Shelter for investment in startups is a good idea.But, on the other hand, too much Belgian money is sleeping in safe investment that produce 0 value for Belgium and for Belgian startups => more tax on capital and less tax on the worksforce. Workforce: Our workforce is much too expensive. An good developers makes 600/day => 10.000 / month ! More education -> better teachers, more money for education. Less tax on the workforce. Simplification: Create a company fast and cheap: no more “notaire” to open a company, faster registration process -> everything should be done online in 30 secs. Tax and accounting: simplify the process, no more time lost at collecting restaurant/photocopy tickets and other dummy stuffs. Technology: Free internet everywhere. Start a culture of Tech savvy kids, like they are doing in South Korea.

  • The issue with a subject like this is that we come with too many requests. One needs to prioritize the bottlenecks / brakes to create.  I made a deeper analysis and benchmark on this in Oct – Dec 2010 vs UK and FR. My conclusion was that influx of early stage funds resolves a lot: you can pay a developer (it costs as much in the US also); you will create an ecosystem; you will favor creation of incubators, setting up funds based on the tax shelter principle (cf scope invest, etc…) So a tax shelter like (easy to implement) seems to me the #1 solution.
  • Give us a True Intra-European Economic Space: same Shipping Costs, same Telecom Costs, same Fiscal Costs, … I know it is a dream for short term … but we in Belgium should then try to HAVE the SAME BEST CONDITIONS than others Europeans already have.
  • I would add one idea which mostly concerns Internet startups: the protection of access to market. It is currently threatened by the initiative of big internet players and Telco companies to kill net neutrality. Today, any startup can open a website, make the buzz, and – if the product is good – get thousands of visitors/customers very quickly, from the whole world. This is thanks to net neutrality, which guarantees that any Internet user will access any website without any speed limit. We are very lucky to have such easy access to customers. What Telco companies want is to allow fast web traffic only to the big players: Google, Facebook, Youtube, Twitter, … but to slow down internet traffic to all small websites. As a startup creator, this means unless you can pay fees for non-speed limited access to your website to multiple ISP groups, the experience of the visitors of your site will not be correct anymore, and you will not be able to get visitors and sales as easily anymore. This would kill potential of small companies. Although in the US politicians got conscious of the problem (read: Obama pledges to protect net neutrality (Reuters)), the European Institutions do not seem to measure the implications of the net neutrality question (Kroes attacks Dutch net-neutrality rules (ZDNet)). Our politicians should get awareness of this point of view, can take action at National level (as the Netherlands have already done (bbc)), and also defend us at European level. Except from this threat which is real and pressing, I am personally satisfied with conditions of running a startup in Belgium. Some things could be better, but we’re not in a too bad position.
  • Drastically reduce the price of the telecoms, this will: increase the usage of mobile services (LBS, 4square kind of apps, etc.), mostly the applications we develop for us or our customers; increase purchase of local products (I travel close to a farm, I buy local products since I am informed by an app). There is a real leverage between those two aspects. Politicians should take them into account. For example: 90+ EUR for 1Go surf + limited communications in BE (e.g. try this page ),  and 20 EUR for 3Go surf + unlimited SMS, MMS, communications in FR. Can’t we have an offer in between?
  • +1 on the absence of capital gain tax as a magnet for money and a reward at the end of the game. A lot of it’ll be reinvested anyway. Reduced financial reporting burden in the first 3 years. Create a nation of crowdfunders. Recognise that many tech startups are exporting services and bringing foreign currency revenue. Make the next generation of Belgian kids arithmetic geniuses. At the moment the cosy arrangement of “I get 50%, you dear government get 50%” doesn’t exercise the brain enough. How about something more difficult to work out like, “I get 72%, Government gets 28%”.
  • I think it would be more effective if we focused on a single pain point / action point: seed funding / tax shelter for “common citizens” (not only specialist seed funds). There are enough professional funds available, govts. are putting lots of money into the market already (like PMV), but that’s not working because they are not risk-prone enough…  we need “foolish” money.
  • No single thing you can say in 15 minutes would make a real difference. It would take at least that long just to read the (very good) ideas people have been contributing in this thread. I think your objective in those 15 minutes of undivided attention should be to secure further sessions of 15 minutes of undivided attention. If you can develop a channel rather than a one-shot to communicate then it would already help a lot the possibility to actually get something done. One idea to pitch could be something along the lines of: 1- there are many ways we could make progress in encouraging startups and entrepreneurialism in belgium; 2- but how do we know if we’re making progress?; 3- we should be measuring key indicators and tracking them over time (e.g. # new companies formed, # jobs created by companies less than 5 years old, etc); 4- maybe we could meet like this every month for a 15 minute session to review how much (if any) progress is being made, and discuss initiatives that could drive things forward. I’m guessing that unless you have a way to regularly check back in it will be hard for any ideas to really stick.
  • Build the ecosystem and environment that allow individual to seriously consider startup as an viable career option. Simplify accounting requirement – for first the 3 years. Reduce, minimum or zero corporate tax – for first 3 years or platform at 500 K euro annual turnover. Reduce, minimum or subsidize employment charge (ONSS, pension, etc) – for first 3 years to make it cheaper to hire. Change the social image of entrepreneur – celebrate the winner and those who tried/trying. Education system – need to promote startup attitude (for those who wish). Have a clear policy to differentiate startup from SMEs: Startup is an investment (not an immediate tax revenue) but it is needed; get the indicators right and measure; Communicate, communicate. For the government, if they can wrap their heads around this and create the right ecosystem – the entrepreneurspecies with grow and prosper. Build it and they will come.
  • The answer is (also) here: lettre ouverte à Elio.

Do you agree? What would you suggest?

Update (11-05-2012):DataNews has republished our blogpost and translated it to French and Dutch

Hopefully it will spark a bigger conversation.

About Ramón Suárez

Tech startups, entrepreneurship, & coworking; @Betacowork founder; @startupsbe & @Betagroup board member; @hsbxl noob; blogger; chocolate ambassador; Brussels lover. Connect on Twitter: @ramonsuarez and Google+ Watch me talk about coworking & entrepreneurship on YouTube

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5 Responses to Ideas to improve the Belgian tech entrepreneurship ecosystem

  1. joris April 23, 2012 at 8:28 pm #

    What would definitely motivate more people to start businesses is making it easier and less expensive to start a limited liability corporation or the Belgian equivalent. Right now I know several people that simply won’t take the plunge in Belgium because of administrative and financial reasons and I can’t blame them! Great article, thanks for taking the effort to create some more awareness around these issues.

  2. Karl April 23, 2012 at 11:38 pm #

    Thanks Ramon, excellent post I should soon link on my own blog…with your permission of course,
    K.

    • Ramón Suárez April 24, 2012 at 9:56 am #

      Of course Karl. No permission needed :)

  3. Filip April 24, 2012 at 10:29 am #

    The #1 concern of any startup should be: “How do we get our money-machine rolling?!” This is not about landing VC-€ or government subsidies (far from it), but getting real customer revenues. After all, customers equal money and money follows success, not the other way around! A hard lesson learned, personally…
    So, the #1 concern of any government, regarding startups, should be “How can we crank a startup’s money-machine?!”.

    That is why I’d like to propose a SBIR-like program, where the government becomes a customer of a startup company, not a mere sponsor requiring lots of overhead to comply with (EU) subsidy directives.
    Moreover, governments should come up with (fiscal) tools to entice large corporates (internationals) to become customers or – better yet – business partners of startup businesses too. I’m pretty sure that, given proper financial incentives, corporates would regard “startup-collaboration” more of an opportunity and less of a liability.

    My 2 cents…

  4. Bart April 27, 2012 at 7:58 pm #

    It all comes down to one thing: Less taxes. The Belgian government thinks it makes better decisions than individuals can make (almost like communism) so they tax the crap out of all of the Belgians. Then they spend all that money supporting only one lifestyle: families who build their own home and get babies. I’m not saying this is a bad thing, but they don’t invest in small businesses at all. The Belgian government only seems to love non-entrepreneurial people. If the taxes would be lower people would have more money left to spend the way they like. This means, either building a bigger house or investing it their startup.