Scaling Europe
00:00:00 · Sebastian Johnson, Simon Schaefer
[00:00:00] S0: Hello, and welcome back to Scaling Europe Show. Today is a big day for European tech. EU-INC is just launching a brand new campaign to get the policy over the line in the next hundred days. Today, we've got Simon, one of the co initiators of EU-INC joining us to talk us through what is going on. Simon, thank you for joining me. [00:00:16] S1: Thanks for having me. [00:00:17] S0: For those who don't know, can you kind of get us up to speed on where EU-INC is today? [00:00:23] S1: Sure, sure. So probably worth noting it started off as a community driven grassroots movement, we could say, with a huge supporter list, so 26,000 people signed up for it really quickly. Different to what's been done in policy before, we decided to really make it a tangible product and actually handed a legal proposal to the Commission to say this is what we want you to do. And since lots of work behind the scenes, not much going on for a long time, classic European Union stuff, and then in March, the Commission launched a proposal. Now, as the European Union is built on compromise, this now needs to go through a lot of bodies, so it's through the council, which is the member states getting together, the European Parliament, which is the voted representatives of the member states in the parliament, and, of course, the commission, and they will have their famous trilogues as soon as they got closer to a compromise text on what this regulation would look like. [00:01:17] S0: And it was the... Sorry. No. No. You go ahead. You go ahead.
00:01:17 · Sebastian Johnson, Simon Schaefer
[00:01:17] S0: And it was the... Sorry. No. No. You go ahead. You go ahead. [00:01:20] S1: I was just gonna add timeline. So towards the end of this year, we're looking to have a final text. That's what's been promised. And then they're constantly moving the the the goalposts on when the first EU-INC can be launched, end of twenty eight, beginning twenty nine, it's a process. [00:01:35] S0: And there was this real moment of excitement back in March where it sounded like, you know, Ursula was like, we're gonna do it. We... We're gonna adopt it. It's gonna be a thing, and everybody was sort of really excited, but it it fell short in some ways. Can you talk about kind of what they... How they've changed the initial proposal and what they're sort of... What they wanna run with versus what really the community wants?
00:01:58 · Simon Schaefer
[00:01:58] S1: Yeah. Well, I mean, from a perspective of a startup and a venture capitalist, investor, angel, whatever, you really want to have the simplest way to found, fund, and scale a company across Europe. And the concept that was on the table was the so called 20 regime. And you could say that twenty eighth regime conceptualized as a virtual member state. So imagine we have 27 now, let's call it the twenty eighth one a virtual one, in which you can have legislation, have a court, can have anything that you want that a member state would have, and member states can choose to opt in. So it would have been a real European solution. Imagine then the EU-INC is a corporate law framework inside the twenty eighth virtual member state and now, you know, from there member states can say we want to participate in this right now. That's what we wanted because it would have been like a pan European solution, one solution only, no derivatives, no differences, just one thing. And what it is now is at the brink at the at the sort of danger of becoming real 20 seat seven versions of it. There's many aspects to it. Right? We're looking at corporate law, labor law taxation, labor law taxation actively excluded, so we don't want to touch too much of the member state sovereignty because this would make it impossible to pass. But for instance, conflict resolution courts will have to be localized, so the EU-INC would have to have 27 different courts dealing with it. That's how the commission proposed it. For us, that's a downside. The the the real upside would be where we still have one interface, we still have, like, Delaware, the chance to have one, two, or three member states creating the perfect environment for starters. That's where we want to end up with. This is in its current form, it's already a compromise from the original idea, but there's, of course, the proof's in the pudding, devil's in the details. So there's now a lot of these features and functions of the actual legislation that need to be figured out, and that, of course, are on the chop block, so to speak, from member states and individual ambitions and people that are for it or against it.
00:04:03 · Sebastian Johnson
[00:04:03] S0: And this campaign is now kicking off. We've got a hundred days. What is it... What what is those hundred days? Like, what is it a hundred days until?
00:04:11 · Simon Schaefer
[00:04:11] S1: So there's a... The parliament will come to a conclusion, the European parliament, of what it wants this to be. The commission has made the original proposal, everyone follows after and gives their opinion. And with that, the council will do the same thing, and then all three will meet together and negotiate the final regulation. What you see now is that, of course, as a proposal has been released, it's being discussed in many forums, right? And one that is a very important one is COREPER, which is the permanent representative, so to speak, the ambassadors of the member states debating this. And, you know, there's there's there's various degrees of willingness and various degrees of knowledge when it comes to the startup economy or the innovation economy. And that's kind of how we see our role, trying to be at the table and trying to make sure that what the startups really want remains in there. I'm giving you one stark example, which is the main thing that we're pushing for right now, which is a central digital registry. Sounds extremely boring, but if you if you look at it in how nowadays companies house in The UK, the... I forgot the name in German. It's a terrible name anyway, but you have one in every country. Right? They've changed. So in the beginning, this was only the source of truth. Does that company exist? What is its its fiscal number? And what is the name and the address? Nowadays, expect a lot more or you could expect a lot more. Think about life data points. Think about annual reports. Think about cap tables such, you know, as ultimate beneficial ownership. Who are the ones that actually own the company? Which then relates to your business activities operationally, so going to get a bank account, things like that or compliance with certification. So all of these things now require an almost real time live access to that database or to that dataset, and that dataset is growing. And so for us, there's no question on whether we want a single database for all this for Europe or not. Do we want 27? Obviously not. Ask your CTO and or ask anyone who's ever put any code on a staging environment. Would you like to do that 27 times or one time? Right? So it's very clear, but member states don't quite see it as such.
00:06:23 · Simon Schaefer, Sebastian Johnson
If you look at, of course, also previous experience of member states and even everyone with European Union, handing over responsibility to the European Union hasn't always worked in the favor of who's handing that over, right? So I'm not surprised that the first pushback you get is why would we create another complex institution? Yet single economic realm, why would we create 27 versions of the euro? Right? I mean, the euro is also... It works because there's only one. And so that's that's where we're coming from, and there's like a total of five non negotiables. Happy to touch on every one of them. It's quite it's quite geeky. It's a technical matter. [00:07:02] S0: And what what has been the general pushback so far? Has it been, you know, an aversion to the kind of, like, centralizing more power within the EU? Is it a sort of, like, cynicism that actually maybe the EU itself won't want it that well? What what has been the pushback to these proposals?