Fake support for enterprise, or a €50 million EU money grab

Yesterday saw the report State startup fund gets the green light and will distribute €50 million from the EU. With my startup experience, you'd think I'd be pleased, but I feel exactly the opposite. Put aside that it was announced by Minister Mládek, who described all self-employed people as parasites on the welfare system. What bothers me more is the way our government wants to use our taxes to support startups. I don't know which genius at the Ministry of Industry and Development dreamed up the plan, but I imagine it went something like this.

Hey, X, we have unspent money from EU fund Y. Let's do an analysis. Hm, look at these startups. We're doing poorly, we have too few of them. Look how well they're doing in Berlin, London or Stockholm. We've got at least €40 million we can get through a program to help new companies develop. We'll add our own money, work out how to process it through the bureaucracy so the EU is satisfied, and launch it. It's bound to work, and we can get plenty of good PR out of it. A stroke of genius, I'm telling you.

The plan looks good at first glance, but you know how it goes: the road to hell is paved with good intentions. For a start, we already know the whole bureaucracy will have overhead. Leave aside the hurdles you'll have to get through to draw any support from the fund. Meeting all the compliance requirements will be a challenge, and the paperwork with the EU logo branded onto your and your partners' backsides will be the least of it. I'd expect the funding to be tied to technologies or know-how from similar EU projects. It wouldn't surprise me to be forced to use some obscure contraption for straightening a doodad because an affiliated EU fund needed to justify its existence.

Also leave aside that no civil servant, in Prague or Brussels, can tell whether a startup is worth the investment. If they could, they'd already be making a living as a venture capitalist.

The fundamental problem is that early-stage technology companies should be funded by private individuals or funds. The state should encourage enterprise across the board, whether businesses are small or large, old or new, by shaping conditions such as taxes, the level of bureaucracy and the laws. Incentives for specific sectors are the wrong tool.

The serious debate, which I haven't seen anywhere, should ask how hard and expensive it is to start a company and meet all the legal obligations, what it costs to employ people, and what makes it economically worthwhile to invest here or elsewhere. I'm afraid this government attempt to fund the sector is bound to end in a fiasco. A gang of officials and the leeches clinging to them will burn through everyone's money. That means grant brokers and opportunists looking for the next place to latch onto the state. Yes, it might help one startup or two or five or even ten, but those companies would have made it without this subsidy.

I see no point in entering the program with HotCar.io. From an investor I want money, but above all experience and contacts. No government fund can offer me those.