The OECD applauds EU support for start-ups, but warns that grant funding can lull innovators into a false sense of security
Photo credits: OECDtax / Flickr
Grant funding without business support can jeopardise start-ups’ chances of scaling up, the OECD tells the EU in its latest study.
“This is not to say grants are ineffective per se,” said Marius Berger, OECD economist and one of the study authors. “But overall, it seems to be the case that some companies become overly reliant on these grants.”
Grant funding is useful for companies to test their solutions and get off the ground, but once the time comes to scale up, they need venture capital (VC) funding. Those who only know how to navigate grant funding struggle to get investors interested and so scale up.
In Europe, grant funding is very popular, with a quarter of all start-ups receiving this kind of support. In the US, whose VC ecosystem success Europe wants to replicate, the share is only one in seven.
This is not a bad…
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