Remarks for World Business Angels Investment Forum

As a former private equity investor and representative of a government keenly interested in promoting entrepreneurship worldwide, I wish I could have attended the World Business Angels Investment Forum in person. Congratulations to Baybars for having assembled such an impressive group. How fitting that you are meeting in Istanbul, the crossroads between West and East.

The United States wants to see entrepreneurship and innovation thrive, not just at home, but all around the world. Why? Because the world desperately needs new ideas, and people to take the risks to turn them into reality, in order to solve pressing economic, social and political challenges.

Of course, we‘re proud of Silicon Valley and of our many other technology hubs, our world class universities, our liquid capital markets, and our spirit of free enterprise – among other things. But we’d like to see other areas of the world enjoy these blessings too: areas of the world that are open to new ideas typically grow faster, are more stable, and make better partners. A rising tide lifts all boats.

Job creation remains one of the key challenges we all share. Small and medium sized enterprises are the backbone of both the US and European economies, creating 85% of new jobs in Europe and 63% of new jobs in the United States. The digital sector can grow seven times faster than EU GDP in the coming years. The internet economy in the developed markets of the G-20 is forecast to grow at an annual rate of 8% over the next five years. According to the European Commission, the “app economy” alone will create 3 million new jobs between now and 2018, with revenues tripling to 63 billion euros.

In my prior life as an investor, I had the pleasure of working with many startups and small firms looking for growth capital to expand. These firms, not government bureaucrats, are the ones who really drive change, progress, increased productivity and job creation. You and others like you are the world’s vital force and future.

As US Ambassador to the European Union, I am following with great interest the European Commission’s focus on facilitating entrepreneurship and creating a digital single market. Europe cannot afford fragmented regulation, 28 times, for digital products and services: the internet is global and digital technologies do not know geographic borders.

The President of the European Commission has stated that “the Internet and digital communications can transform our economies as profoundly as the steam engine did in the 18th century or electricity did in the 19thcentury.” He has made it a priority to ensure that promising new developments such as the cloud, the Internet of Things and big data can thrive in Europe and to help citizens, entrepreneurs and businesses take full advantage of their potential. We think this emphasis is absolutely right.

Countries closely tied to the EU by customs union or FTA, such as Turkey and other close partners, should seek to create the same openings and incentives for investment and scaling up to make themselves the drivers of innovation, not observers.

But these opportunities can only be realized if private capital is harnessed. There are hundreds of billions of euros of private capital sitting in pension funds and corporate balance sheets waiting to be deployed, including into venture capital. Government investment can help in specific instances, such as to catalyze private investments, but this can only be a small part of the solution and should not distract from the effort to improve the climate for entrepreneurs and investors. Governments can help best by setting a regulatory framework in which innovation can thrive.

We are sharing our experiences in the United States with the European Commission in such areas as easing access for small businesses to debt and equity capital, enhancing the liquidity of capital markets, amending bankruptcy codes to enable a second chance for honest entrepreneurs, and promoting pan-European funds and funds of funds to invest in venture capital.

Europe does not have a start up problem; it has a scale up problem, that is getting its start ups to move rapidly to sufficient scale. We also have experience in this regard and we are sharing it with the European Commission.

You and others like you have the opportunity and the responsibility to push for the change and to convince the bureaucrats to unleash the market forces that will drive the growth, innovation and competitiveness upon which our future depends. Don’t give up! I wish you a successful conference.