SUPPORT | December 20, 2019

Austria's latest policies to boost entrepreneurship

Photo Credit: Florian Fauscher speaking on how innovations will shape the energy system in November 2019.

Following the 2019  European Commission's 2019 SME Assembly in Helsinki, we asked Mr. Florian Frauscher, Director General at the Federal Ministry of Digital and Economic Affairs from Austria, and SME Envoy for his country to the European Commission, to reflect on his country's most recent entrepreneurship policies. 

 

Q: Can you please tell us about Austria's most recent policy or program instrument(s) to bolster the country's entrepreneurial economy? What barriers did you perceive in the entrepreneurial scene and is seeking to address?

A new Startup Initiative - agreed in May 2019 by the Austrian government - includes new actions such as: measures to boost the lackluster Austrian Venture Capital Market, a further extension of the AWS Guarantee program, a reduction of the administrative burden for startups and SMEs in form of ‘regulatory sandboxes’ and new training formats for employees of startups.

In general, access to finance is still not a major concern for Austrian SMEs. Limitations on access to risk-finance (e.g. Venture Capital) are still apparent and have always been considered to be a weakness of the Austrian innovation system. A shortage of skilled labor is a growing challenge for Austrian companies.

The Austrian Federal Government has implemented various innovative policy approaches to stimulate the development of a well-functioning risk capital market. Examples include: public financed Venture Capital Funds, Fund-of-Fund programs and legislative measures, e.g. an innovative Law on Crowdfunding that is recognized internationally as best practice. The lack of skilled labor is tackled with a wide range of different measures. These include the transformation of the national investment promotion agency (ABA) into a location agency and a new apprenticeship strategy was presented, with a focus on digitization.

 

Q: Austria is regarded as having developed key dimensions in its entrepreneurship ecosystem, as shown for example in the Index of Dynamic Entrepreneurship. What does success look like for the government in terms of the recent initiative(s)? What impact do you expect in terms of ecosystem performance?

Startups represent one of the central driving forces to an economy’s competitiveness and growth. Austria has therefore established an outstanding and internationally recognized ecosystem of funding, financing and support measures that enables startups to translate their ideas into marketable services and products. 

Austria has a persistently high level of new company foundations. In 2018, 30.901 new businesses were established. Moreover, high survival rates reflect the sustainability of Austrian Startups: After 3 years 77.0% are still operating (Source: Austrian Federal Economic Chamber, 2019)

 

Q: Many governments struggle to balance the tasks of designing policies and programs for new businesses vs. attending to the needs of existing businesses. How does Austria confront this common challenge? Have you established metrics or data to help guide continuous support?

By improving access to finance, skilled workers and supporting digitization processes we are supporting new businesses and existing businesses alike. In order to gauge our progress, Austria closely monitors the progress that is being made in the area of startup ecosystem improvements. The Austrian Startup monitor represents a longitudinal study of Austrian SMEs. It also offers insights into generic strategies and firm performance. Austria also participates in the Global Entrepreneurship Monitor (GEM). GEM is a consortium of national country teams, primarily associated with top academic institutions, that carries out survey-based research on entrepreneurship around the world.

 

Q: Are there lessons from other governments which have inspired your government’s entrepreneurship efforts?

International cooperation is very important to the Austrian government. Therefore we are always on the lookout for interesting international best practice examples from our European partners and beyond. For example this year Austria was doing a study which describes the promoting and inhibiting factors related to the willingness of young people in Austria to start a business which was related to selected reference countries, namely the Federal Republic of Germany, Switzerland and the Netherlands. Overall the study shows that Austria is well positioned in international comparison in terms of the propensity to start a business.

We also work together with other governments in many different fields, e.g. with the Global Incubator Network Austria (GIN). GIN is the connecting link between Austrian and international startups, investors, incubators and accelerators with a focus on selected hotspots in Asia (Hong Kong, Israel, Japan, Mainland China, Singapore and South Korea). GIN is a program initiated by the Austrian Federal Government, managed by the Austrian Federal Promotional Bank AWS and the Austrian Research Promotion Agency FFG.

Sarolta's work focuses on building relationships between public policy experts around the world via Startup Nations network and managing GBAN,… About the author

Cristina Fernández focuses on integrating policymakers into startup ecosystems across the world, creating platforms for them to exchange… About the author