Why Europe Needs Its Own Innovation Model: Professor Rudy Aernoudt on Growth and Global Competition

The Innovantage podcast, hosted by Sigli’s CBDO Max Golikov, aims to offer its audience diverse perspectives on business and technology. While most episodes focus on specific themes or sectors, this one takes a broader approach as it explores a variety of interconnected topics through the lens of an exceptional guest.

In this episode, Max is joined by a person who uniquely combines academic insight, political experience, and entrepreneurial vision. That’s Professor Rudy Aernoudt, renowned author, speaker, and founder of EBAN.

He teaches geopolitics and monetary policy at the University of Ghent in Belgium and at BMI, one of Europe’s leading executive MBA institutes.

Professor Aernoudt has also held prominent political roles, serving as Chief Economist at the European Commission and Chief of Staff at multiple levels of government, including European, Belgian, Walloon, and Flemish. This achievement earned him a mention in the Guinness World Records.

But his career extends beyond politics and academia. He also managed a non-governmental organization, a spin-off of MIT, dedicated to educational technology. He led projects such as the Hundred-Dollar Laptop initiative that distributed over four million devices across schools in South America and Africa.

As founder of the European Business Angel Network (EBAN), Rudy continues to bridge theory and practice. He often describes himself as a “pracademic”. Of course, it is an unofficial term. But it perfectly reflects his dual identity as both a thinker and a doer.

Work-life balance: Does it really exist?

When asked about the idea of “work-life balance,” Professor Aernoudt is quite skeptical. For him, the very notion of balance suggests a divide between work and life that should not exist.

According to him, work should be a passion. It’s not about finishing at five o’clock so life can begin. If you truly enjoy what you do, every hour of the day can be fulfilling.

In his latest book titled “Entrepreneurship”, Professor Aernoudt mentioned a provocative idea that “life is too short to work for a boss”. Too many people get stuck in their mid-thirties or forties as they have mortgages, children, and a lot of obligations. All this traps them in work they don’t enjoy. 

As Rudy highlighted, the solution lies in cultivating a culture of choice and flexibility. These values are reflected in the startup world, where people can pursue what excites them and change direction when it no longer does.

Professor Aernoudt defines his main goal in simple terms: to have influence and change lives. That’s what guided his work in European institutions, where he could improve citizens’ quality of life, and shaped his role as a professor. 

Is AI dangerous for education?

According to Rudy, the rise of artificial intelligence presents profound challenges for education and society. Today, young people face constant exposure to screens, including television, smartphones, and computers. This fosters dependency and reshapes how they learn. Just as GPS has eroded people’s ability to navigate without digital assistance, AI can create a generation of individuals who outsource critical thinking to machines.

In this context, the role of professors is not to be providers of ready-made answers, but to help students reflect on what knowledge they truly value, how dependent they wish to be on technology, and what direction they want their lives to take.

While some educators criticize younger generations for lacking discipline, Rudy disagrees. He views youth activism as proof of strong commitment and potential, even if expressed differently than before. At the same time, he acknowledges the difficulty of growing up in a world where friendship and learning increasingly occur through digital platforms.

The deeper issue lies in the way society anthropomorphizes AI. Just as earlier societies turned to religion for answers, people now risk treating machines as partners or substitutes for human judgment. This dependence raises pressing ethical questions. 

Europe’s unique model

Professor Aernoudt believes that Europe should resist the temptation to imitate the United States or China in its economic and technological strategies. The European region has the opportunity to define its own path.

In his view, Europe’s strength lies in building an ethical framework for growth and innovation that reflects its cultural and social values.

At the same time, Professor Aernoudt highlighted that Europe is not lagging behind the United States in startup creation. In the past decade, it accounted for 35% of global startups, compared to America’s 42%. The main challenge is related not to starting companies but to scaling them efficiently.

Two main barriers hinder growth in Europe: limited access to capital and a conservative entrepreneurial mindset. Pension funds, for example, allocate less than 0.8% of their assets to venture capital. It is far below what is necessary to drive scale-ups. Culturally, many European entrepreneurs prioritize ownership control over expansion, whereas successful global founders often thrive with smaller stakes in rapidly growing companies.

For Rudy, scaling is essential because high-growth firms drive innovation and employment. Europe must cultivate both financial mechanisms and a growth-oriented mindset to compete globally. 

AI, crisis, and entrepreneurship

Professor Aernoudt warned that the AI sector may be heading toward a bubble, as reports suggest that up to 95% of AI startups will fail. However, according to him, this situation shouldn’t be viewed as a catastrophe. Instead, a crisis can be perceived as an inherent and even positive element of economic life.

If we turn to the Greek root of the word, we will see that crisis also means decision and opportunity. For Rudy, the economy is never flat or permanent. It constantly shifts. This requires businesses and leaders to adapt and rethink models.

This perspective also shapes his definition of entrepreneurship. He recalls Machiavelli’s notion that a true entrepreneur is someone who can make a difference between obstacles and opportunities and turn both to their advantage.

The role of venture capital in Europe

Traditionally, European entrepreneurs favor bank loans over venture capital. This culture limits the growth of fast-scaling companies.

Professor Aernoudt believes in the power of mezzanine financing (such tools sit between loans and equity), which allows firms to access growth capital without excessive dilution. 

At the same time, he mentioned structural issues in Europe’s venture capital market. In this region, 42% of funds come from public sources. Such dominance risks crowding out private investors who are reluctant to sit alongside government representatives.

In this context, smarter public–private collaboration could be a game-changer. These schemes presuppose that public funds absorb more risk in case of failure, while private investors gain stronger returns when ventures succeed. 

How business angels can drive startup financing

Professor Aernoudt explained that business angels remain the backbone of startup financing. Around 60% of startups in Europe receive initial funding from business angels. Meanwhile, 30% come from seed capital and 10% from crowdfunding. Unlike large venture funds, angel investors typically provide smaller amounts (from €60,000 to €500,000). But they also bring experience, networks, and mentorship.

As the founder of the European Business Angel Network, Rudy played a key role in developing this ecosystem. When he launched EBAN 25 years ago, continental Europe had almost no angel networks. Today, there are more than 350. Many global success businesses, from Skype to Spotify, began with angel funding.

For startups seeking their first €100,000 to €500,000, angel networks can become the best entry point. 

Why female founders struggle for funding

Meanwhile, there is a persistent challenge in European venture capital: gender bias. While roughly 30% of European startups are women-led, only 2% of venture capital funding flows to them. One key reason is the reliance on referrals. 87% of VC investments come through personal networks, which remain overwhelmingly male.

Nevertheless, female-led startups often outperform their male counterparts in accuracy and execution. Additionally, women’s business plans are generally more realistic and can offer investors potentially better returns. But unconscious bias continues to hinder access to capital.

Raising awareness, promoting female angel investors, and actively supporting women-led ventures are essential steps to correcting this imbalance.

Regulation and bureaucracy as the key innovation barriers in Europe

Excessive regulation and bureaucracy are Europe’s biggest obstacles to innovation. Instead of numerous new laws, the region should have smart and stable regulations. Laws should provide a predictable framework that encourages investment and business planning. They shouldn’t be frequently changed, as it often happens in Belgium. In contrast, highly competitive economies such as Switzerland and Singapore maintain stable policies that make long-term planning feasible.

Rudy is also skeptical of subsidies. Financial engineering tools like venture capital, business angels, and reimbursable loans can be much more efficient. Europe already has abundant capital, but the challenge lies in channeling it effectively into startups and scale-ups. Innovative instruments (like public–private funds) can unlock this potential without printing more money. 

Why is it vital to invest in defense and dual-use startups?

Professor Aernoudt also stressed that defense and dual-use technologies represent a critical and largely untapped market for European startups. While Europe once excluded defense from investment funding, recent shifts recognize its strategic importance. And it is important not only for military applications but also for research and training.

There are opportunities for Europe in emerging sectors such as space and defense. The region can’t rely solely on foreign suppliers. It needs startups capable of producing innovative solutions domestically. Programs like the BMI Capstone Project already encourage students to develop entrepreneurial ideas in the defense field.

Despite the existing concerns, technologies themselves, including artificial intelligence and military systems, are inherently neutral. Their ethical dimension depends entirely on how humans choose to use them. That’s why, according to Professor Aernoudt, it is important to maintain human oversight and decision-making so that people remain in control,

The development of EBAN

The European Business Angel Network was launched with just two founders. It was started as a small feasibility study costing €40,000. Its aim was to connect startups with early-stage investors, business angels. Such people often have money and experience but no structured way to invest.

EBAN’s early efforts included seminars across Europe to educate potential investors and encourage the formation of local networks. Today, the created networks collectively support nearly 5000 companies per year.

One of the main things Rudy learnt from his experience is the fact that the quality of a business angel network depends entirely on the quality of its members.

And the second lesson is that if you want to attract genuine, high-quality business angels, you must recognize that joining a serious network shouldn’t be free. Members need to contribute financially because they gain access to curated startup opportunities. A good business angel network should be self-sustaining. When deals are successful, the network should earn a success fee.

To improve investor skills, EBAN also established Business Angel Academies, which offer training in company valuation, shareholder agreements, and syndication.

Syndication in Europe

The average business angel can invest around €60,000. It means that startups need to convince multiple angels to meet funding needs. For amounts between €200,000 and €1 million, companies are too large for individual angels but too small for traditional venture capital. That’s a gap that is best addressed through syndication.

Syndication allows inexperienced angels to co-invest alongside more experienced investors. This helps them gradually build expertise and share risk. This approach aligns with European entrepreneurial values. Business angels typically seek moderate returns and focus on supporting promising startups.

According to Professor Aernoudt, most startups will not deliver blockbuster returns, but they will still bring reasonable gains. Together with strategic support, they can successfully sustain innovation. 

Overcoming Europe’s venture capital challenges

There are two major challenges in Europe’s venture capital ecosystem: fundraising and exits. While Europe has around 850 VC funds, many struggle with liquidity and raising sufficient capital.

Here is where the US Small Business Investment Company (SBIC) model can be a solution. In this approach, government-backed labels allow private funds to access cheap, leveraged financing without subsidies. This can dramatically increase returns and minimize public risk. Public support at the fund level can unlock larger VC funds and create a robust exit market. 

A similar system could stimulate private investment and enable European startups to grow without depending solely on limited government grants or small-scale funding.

ESCALAR (European Scale-up Action for Risk capital) is Europe’s adaptation of the US SBIC model.  Under the system, if a fund invests €50 million, Escalar provides an additional €50 million on a non-pari passu basis. It means that public money absorbs first losses, while private investors claim the majority of gains. 

The Zebra economy: New approach to building long-term value

Another concept that was discussed in this episode is the Zebra economy. This concept was introduced by Professor Aernoudt. It challenges traditional profit-driven business models. Unlike conventional companies that prioritize short-term gains or purely social enterprises, zebra companies aim to generate profits and deliver meaningful societal impact at the same time. This approach encourages long-term thinking and value-driven decision-making.

Rudy believes the venture capital sector must adapt and shift from short-term, 10-year investment cycles toward models aligned with long-term growth.

There are some real-world examples of zebra companies, which combine profitability with strong social and environmental commitments. One of them is Ben & Jerry’s. Such businesses employ people with disabilities, prioritize local sourcing, and actively support local economies.

This is what defines the zebra economy: businesses should thrive within a community rather than trying to dominate it. 

Professor Aernoudt believes that Europe should embrace this approach as it strongly aligns with its core values.

Want to learn more about the business world and the role of technology and innovation in the future of our society? In the Innovantage podcast, you can find thought-provoking insights and real-world perspectives from the leading experts. Don’t miss the upcoming episodes where its host Max Golikov will discuss trending topics with his new guests!