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THE STATE OF THE EUROPEAN UNION
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There is, then, a clear disadvantage for the
EU, one that is evidenced by start-up rates, by
the quality and success of those businesses that
are created and, as a result, the volume of in-
vestment that flows towards technological in-
novation when considered in relation to popula-
tion size and levels of wealth.
Risk capital is essential
Any European entrepreneur who wants to over-
come the barriers described above in order to
succeed in other national markets will require
funding. This sort of investment is termed risk
capital and is provided by investors who under-
stand technology, have a vision of the potential
of products and markets, are prepared to take
risks, and have valuable experience and net-
works of contacts. Often, such investors play a
key role in helping entrepreneurs define their
business model.
In Europe, the majority of such investors are
private capital companies, in which until recent-
ly the partners were generally drawn from the
banking sector and had little experience in the
creation of start-ups. This is changing as inves-
tors become more sophisticated, experience of
such ventures is growing, and new European
transactions generate profits, all making the
European market more attractive. Although the
gap between technology risk capital investment
funds in the USA and those in Europe continues
to be huge in both quantitative and qualitative
terms, this gap is gradually narrowing, particu-
larly in the main European financial centres such
as London, Amsterdam or Berlin, where a new
market focusing on this sector is now emerging.
Failure to understand the importance of
intellectual property
Adequate protection of intellectual property
rights has historically been one of the key fac-
tors in the development of the market economy,
guaranteeing a return on investment in innova-
tion, and protecting incentives so that techno-
logical progress can be rewarded. However,
such rights have to be registered by patent pro-
cesses and must be protected by the authorities.
The decision as to which property to protect
is taken by the technology offices of research
institutions or their counterparts in private com-
panies, but this needs to be backed by funding
and talent. In some countries and in many uni-
versities the true value of intellectual property is
not appreciated, whether due to scepticism as
to the ability of the courts to afford real protec-
tion, the costs associated with the process of
asserting such rights, or a lack of business ambi-
tion.
Automation: how great will its impact be?
The impact of digital technologies on work is, in
some senses, similar to that of the steam engine
in the first industrial revolution. Over 200 years
ago, machines began to substitute the physical
labour performed by people and animals, and
have now almost completely displaced it. Today,
our intellectual capacities are also under threat,
and we are seeing computers replicating and at
times surpassing what had hitherto been
thought to be inherently human skills. We need
to recognise that this fourth industrial revolu-
tion looks set to usher in not just a future full of
promise but also threats of the first order:
threats to which we do not yet have a response.