We were all caught off guard when the crisis came. Since the government announced its first economic measures for businesses, there has been panic at every level for startups and independents. How can I survive economically during this period? What helps am I entitled to? Which organization takes care of loans? How am I going to pay my taxes?
by: Charles-Louis Machuron
photo: Anna Katina
featured: Charles-Louis Machuron
Listen to article
The almost EUR 9 billion announced to save companies will not benefit everyone and the startup ecosystem will most likely undergo a serious lightening in its ranks.
Many startups are in the early development stages of their products and services while others are still fundraising or bootstrapping. Yet, with this pandemic, we are all in the same boat.
When speaking with many entrepreneurs over the last few days, many shared their concerns about being able to overcome the next few weeks – or perhaps even months. Yet, by riding through this together and agreeing to share a portion of our income, I’m convinced we could collectively save most of us. How? Let me explain.
The principle of a virtual “business incubator” – or virtual “self-employed incubator” – could make sense. Essentially, this would be a supra-entity that brings together companies and/or the self-employed to a single branch. No grants, no debts, no loans. These “incubators” could be managed by the Chambers of Commerce or Industry – as this is the common practice for the “couveuses” like in France – to allow early-stage companies to benefit from the administrative support (accounting, taxation, etc.) of “incubators.” By doing so, they would be able to develop their activities in a “secured administrative environment” in return for a percentage of income paid. We could also add a “common pot” in which a part of each company’s income would be paid back to all members, as a bonus.
Bringing all the startups together “temporarily” under a single “incubator” would make it possible to pool all the income generated for 1-6 months, while the crisis passes and economic activity resumes its pace. This way, mutual aid between startups and more mature companies would strengthen solidarity between entrepreneurs and promote an “entrepreneurial spirit”.
Bringing all the startups in Luxembourg within a single common project seems quite feasible because the ecosystem currently includes around 400 companies. All the existing incubators, accelerators and support programmes would also have a role to play by making their services available within this incubator. Finally, it would also be an opportunity to work towards a common mission rather than have multiple participants competing against one another.
The virtual incubation model could – in my view – be copy-pasted to any branch and industry. Imagine having the 35,000+ self-contractors in Luxembourg “incubated” and working together towards a common goal to support each other financially?
I’ve not dealt with any of the legal implications here. That is not the purpose of this article. The implementation of such an initiative could be explored if the crisis lasts more than a month and a half or two in total, either now or in a potential future crisis, which hopefully doesn’t happen.