Creative Arts Competition Spurs Innovation at MIT

As a respected entrepreneur and alumnus of the Massachusetts Institute of Technology (MIT), Jean-Jacques Degroof sponsors the annual Creative Arts Competition and is a member of the jury.

This years event is set for April 30 and is designed for young entrepreneurs in an effort to generate startup businesses focused on the arts. Teams comprised of graduate and undergraduate students from MIT pitch a panel of judges with a bevy of ideas that represent how art and business can join forces in a collaborative effort. The 2017 winner, Roots Studio, is a perfect example of the competition’s mission. They digitally transform art from rural villages into high-end products, thus taking away the burden of a costly supply chain through licensing.

Co-founded by CEO Rebecca Hui in 2011, they are able to connect rural artists around the world with design hubs who use the authentic designs to reach out to a multi-billion dollar market.

The first place prize for the 2018 competition will receive $15,000. For more information, go to



Entrepreneurship in Europe: Past, Present and Potential Future Trends

Ever since I wrote my Sloan Ph.D. thesis in 2002 on spin-off ventures from universities in the Europe, I have been working to bring a stronger entrepreneurship culture to countries in Europe.  Post WWII Europe, unlike Boston or Silicon Valley, had a weak entrepreneurial culture and infrastructure.


Since I wrote my thesis, the environment has changed a lot at one level. Entrepreneurship has spread all over the world as a recognized model of development and innovation, including in Europe. In the meantime, we have also experienced the rise of the mobile technology, the emergence of the « cloud », and the decrease of the cost of information technology, which has lowered the barriers to start a company. Also, policy makers have recognized the value of entrepreneurship as a mode of development and innovation and have multiplied the programs and initiatives supporting entrepreneurship.


While the context has changed dramatically since the late 1990s, the cultural lens through which people in Europe view entrepreneurship has not changed that much. When entrepreneurs, policy makers, and investors talk about entrepreneurship they still mean primarily self-employment, in contrast to a growth-oriented model of entrepreneurship.


Small and Medium Enterprises (SMEs)  vs. Growth-oriented Entrepreneurship.


In the last ten years, while mentoring young entrepreneurs and helping launch a couple of spin-offs in Europe, and examining multiple business plans, it has struck me how much the SME or self-employment model is still so dominant among entrepreneurs, policy makers, and investors. It is true even among tech start-ups in spite of the diffusion of the growth-oriented model of entrepreneurship imported from the USA since the Internet bubble. It is not only the dominant model of entrepreneurship for entrepreneurs, but it also the reference of policy makers, university administrators, and, most surprisingly, investors. Both models are legitimate of course, but in Europe we need more ventures in order to grow to rejuvenate the industrial fabric of our economies and to create jobs. In terms of policymaking, each model needs different types of support mechanisms, which is why it is important not to confuse the needs of one model and the other.


In order to understand why the self-employment model is still so prevalent, it is useful to briefly consider recent history. In the aftermath of WWI and WWII, with Europe being destroyed for the most part, people aspired for stability. After being the theatre of two world wars, risk taking had a different meaning in Europe than in the US. These decades also saw the building of the welfare state, especially after WWII, which created the expectation that the State should provide for almost everything (e.g. the French government budget represent 56% of GDP). This context explains in part why most people tried to get a job in public service or in a large company. Entrepreneurs were “losers” who had not been able to get a public job or at a large company.


Most of these entrepreneurs operated on a survival mode and, when they did not survive (most of the time), they suffered from a stigma of failure. They were far from being role models!. The logic of these entrepreneurs was self-employment: to start a small firm to provide them (and often their family) with a job and a source of income. Risk taking was kept at a minimum and growth was not a priority. Keeping control of the business on the other hand was key since it was the source of the owner’s income. Opening up its capital was avoided at all cost because it meant loss of control of the vehicle providing income.


In any case, governments and their administrations did not make it easy for small firms to develop. Often regulations incentivized small companies to stay small. For instance, in some countries like Italy there are a huge percentage of firms with 49 employees. Why? Because once firms reach the number of 50 employees, they are submitted to all sorts of administrative burden and mandatory trade union representations. While the small entrepreneurs were not highly considered, owners and executives of large private companies were regarded as “exploiters” in a culture in which many circles of opinion makers were infused with Marxism. This was largely the perception of entrepreneurship until the 1990s.


1990s:  Seeds of Change


A number of changes occurred at this juncture of the early 1990s, which explain the subsequent change in the perception of entrepreneurship. First, the collapse of the Soviet Union discredited Marxism and socialism to some extent. Second, the changing demography of Western European countries made the financing of the welfare state increasingly difficult, including public employment (still nowadays, however, 32% of the Belgian workforce are civil servants and 48% of the workers draw their income from the State). Also, under the pressure of globalization, large companies reduced hiring in Europe, where cost were high, in favor of expanding their operations in developing countries. This highlighted the contribution of young firms to employment. Finally, in the 1990s, European policy makers realized that Europe was lagging in terms of innovation. Except in a few sectors such as pharmaceuticals, aerospace, and nuclear industry, which are fairly old, Europe had no world leaders in high-tech. European world leading companies had been founded for the most part at the turn of the 20th century (e.g. Siemens, Phillips, Roche, Fiat). In contrast to the USA, Europe did not have ten, twenty, thirty year-old companies that had become world leaders in their industry (e.g. Microsoft, Biogen, Oracle, Google). This realization made European policy makers accept (often reluctantly) that entrepreneurship was a valid mode of innovation.


When we compare it to the earlier perception of entrepreneurship, it was quite a change. Governments embarked in the mid to late-1990s in a number of policy initiatives aiming at stimulating entrepreneurship. For instance, they all adopted laws replicating the American Bayh-Dole act of 1980 giving universities the ownership of the intellectual property of academic research financed with public funds and imposing on them the duty of commercializing this research. The Internet bubble of the late 1990s – early 2000, gave another impetus to this trend in favor of entrepreneurship, which, for the first time, appeared to be “cool.” The Internet area introduced in Europe the concept of the start-up with a growth-orientation, which is a totally different type than the traditional small business (SME).  The tables below summarize main differences.





Growth-oriented venture







Pursue an opportunity with high potential to maximize economic value for the entrepreneur and his supporters.






Open (outside funding)




Weak – overlaps with ownership


Growing professionalization – distinct from ownership.






Exit – “liquidity event”





Growth-oriented venture





Working capital


Growth Capital










Personal and bank loans, Public subsidies


Angel investors

Public subsidies


Post Internet Bubble Era


Of course, the Internet bubble collapsed and somewhat discredited the “start-up” model of entrepreneurship, but the seed of this concept had been planted. It got a second chance starting in the years 2000s with the advent of the mobile area, the “cloud” and the lower price of technology, which lowered the barriers to starting a firm. Suddenly a student with a laptop was in business!


Meanwhile, large companies continued to reduce employment. The rigidities of the European labor market institutionalized a two-tier employment market with existing workers enjoying strong employment stability and benefits. It generally is very expensive to fire employees in Europe and it is sometimes impossible in practice. Because of this, companies tend to do all they can not to hire workers. As a result, younger people are largely shut out of the labor market, as reflected by unemployment rates among the younger population that are generally double those of the average population (often 20% and up).


In such a context, a growing number of young people have embraced the opportunity to start or to join a venture as their unique way to start a professional career. In contrast to prior decades, the fear of failure has decreased, because of the young age of most of these entrepreneurs. If they fail, they return to live with their parents. They look at their spell as entrepreneurs as an “experience.” The economic crisis of the recent years, following the financial crash of 2008, has reinforced this trend. Governments, for their part, confronted with high unemployment and eager to stimulate innovation, launched all sorts of supportive initiatives, from financial incentives to incubators. As a result, we have experienced a sort of “start-up mania” since 2007 with a growing number of new ventures being founded. It is a positive development given where we come from, but there are major issues.


Entrepreneurship in Europe still means primarily self-employment or traditional SMEs, in contrast to growth-oriented entrepreneurship. This latter model is still poorly understood by most of the stakeholders, in spite of the Internet and the flow of information. Founders still aspire mostly at creating a substitute to a job or at most a SME. Consistent with this view, their concern is primarily keeping control of the business rather than growing it. We see the same phenomenon at the policy making level. Policy makers now recognize entrepreneurship as a valid mode of development and innovation, at least rhetorically, but their policies primarily support self-employment and SME types of ventures even if it is wrapped into a discourse saying “we want to be the next Silicon Valley.” In addition, these policies fit within a broader policy framework that still puts huge burdens on small and young firms that discourage growth.


Current and Future Challenges and Opportunities


The weak labor market for young people combined with the low barriers to entry due to cheap technology, attract a lot of young candidates entrepreneurs with insufficient skills and/or motivations and weak projects. Since public entities are eager to show that they help entrepreneurship, they make resources and support abundant, but they tend to exercise little selectivity. As I pointed out in my thesis years ago, high support + low selectivity is a recipe for weak entrepreneurial projects. Besides this selectivity issue, the current challenge in Europe is more about scaling up that about starting up ventures.


The few ventures with growth ambitions are confronted with a lack of venture capital. Seed funding is nowadays available (from public entities and from business angels), but there is hardly any venture capital industry in Europe to fund the expansion phase of ventures. Part of the reason for this lack of venture capital is ideological: a majority of politicians are still wary of the market economy, as is the huge public sector and a large percentage of opinion makers in the media and in education. There is also a great lack of understanding of the mechanism of venture capital among policy officials. Another obstacle is the lack of institutional investors who allocate money to venture capital funds, such as pension funds and endowments. In Europe, most pensions are funded publicly. Universities are public as well, and thus have no endowments, and the philanthropic sector is much weaker than in the US because the public sector tends to provide for social and cultural causes. The fragmentation of Europe is also an obstacle to growth of its ventures. Expanding to a new country is expensive, because it means adapting to new rules, others tastes, and different regulations.


Do startups provide better jobs? This is a question of great interest to us all. I have little evidence to answer this question. There is, however, a general trend towards precarious work contracts whether at established companies or at new firms. As mentioned above, because of the characteristics of the job market, employers are afraid of hiring workers based on regular contracts. There is also a trend towards hiring people as contractors rather than employees. However, the growing number of young people joining or starting start-ups seems to indicate some attractiveness, in spite of the fact that some join new ventures because large companies no longer hire. One aspect, however, that I can reflect on based on my experience is the fact that most young people approach jobs at startups as if they were jobs at established companies. I experienced various situations in which people refused stock options or financial incentive mechanisms and requested instead a raise. In other situations workers refused to temporarily lower their wage in return for equity, when the company was going through a tough time. For those workers, going to work for a start-up was primarily getting a job, probably in a more exciting environment, not participate in a venture project.


There is another interesting phenomenon today that reflects the visibility of new ventures that are disrupting existing industry patterns.  I’ve noticed that in the last few years there is increased nervousness in large corporations that increasingly fear there is a start-up out there that is going to eat their lunch, following the disruption created by new technologies and the sudden rise of young companies such as Facebook, AirB&B, Uber, or the “fintech” (technology ventures in the financial sectors). European companies are also afraid of the US technology giants such as Google, Amazon, and Apple. For instance, last fall at the Frankfurt auto show (the largest in Europe if not in the world), the talk of the year was not the new model of BMW, but software. The big car manufacturers are afraid that Google or Apple will control the software in the their car and that they will end up being manufacturers of “boxes on wheels.” Similarly, banks fear that “fintech” start-ups and US tech giants will steal the most profitable businesses in their value chain and they will remain with the costly infrastructure. So, in the last couple of years, large established companies have started to monitor new ventures and have purchased some. A growing number have started incubators for start-ups and venture funds that allow them to be aware of the latest innovations. This strategy also reflects the recognition by large firms that they are poor innovators.


In summary, entrepreneurship in Europe has come a long way in recent years but still has a long way to go.  Let us hope that all the parties—entrepreneurs, investors, policy makers, and existing companies—continue building the culture and infrastructure that will foster an inclusive innovative economy that works for all.