IT start-ups frustrated by red tape and lack of funding, EC says

Posted by Louise Tate

IT start-up firms are being hampered by funding issues and red tape, according to the European Commission (EC).

The body's digital commissioner for the digital agenda, Neelie Kroes, noted that Europe is some way behind the US in nurturing new businesses and urged action to be taken to allow innovative start-ups to acquire funding.

"Facing a fragmented venture capital market and risk-averse public procurement policies means that finance is often 'missing in action' when you need it," she said.

At present the EC ploughs EUR 10 billion (£8.2 billion) each year into research and development innovation, with IT-related work receiving around EUR 2 billion of that.

But bureaucracy continues to blight firms of all sizes, as Ms Kroes explained: "Red tape is not part of the recipe for your future success.

Getting involved in government funding has to be worth the effort."

Many small to medium-size enterprises may consider IT outsourcing as an ideal business solution as it can help increase revenue and add expertise.