Certify your Startup: subjetive aspects that you must prove

Certify your Startup: subjetive aspects that you must prove

The Startup Law is causing a great stir and is once again on everyone’s lips. The reason, as we already told you in this blog, is that ENISA has opened its process of accreditation as a startup.

Since the ministerial order regulating the criteria and procedure for the certification of start-ups was published, countless companies are rushing to obtain their accreditation and enjoy the benefits of Start-up status.

These benefits are mainly important tax incentives and recognition within the entrepreneurial ecosystem as an innovative and scalable company and, therefore, attractive for possible investment.

In order to be considered as a startup, we must prove that we meet a series of requirements. Some of them are relatively objective, such as having headquarters in Spain, a maximum age of five years (or seven, depending on the activity), or not having distributed dividends.

However, there are a series of requirements, of a more subjective or evaluative nature, which must be documented in the application to ENISA. These requirements are essentially that the company has an innovative project and a scalable business model. Below, we explain how to prove these requirements:

How to prove that we have an innovative and scalable project?

When we are preparing the application for accreditation as an emerging company before ENISA, one of the most important aspects that we must document is how and why our company should be considered as a Startup. This involves proving that our project is sufficiently innovative and scalable.

ENISA, in charge of evaluating the applications, will analyze the degree of innovation and scalability of the project according to the following criteria:

Degree of innovation

In order to accredit the innovative project, beyond correctly expressing the idea, the object and the purpose of the company, we can document many other aspects that give added value to the project and help us to complete the application.

Among these aspects we will take into account and add to our application a list of the expenditure invested in R+D+I, as well as the relation between these in the total expenditure of the project during the last two fiscal years.

Logically, we will also provide any trademark, patent, software, license or any intangible asset that our company has and that is key to the development of the project.

We can also include a list of the CVs, accreditations and profiles of the company’s team, whether they are founders, collaborators, mentors or employees. In this sense, it will help to have researchers or people with high specialization, experience and trajectory.

Finally, having received any type of public aid or funding in the last three years will also be positively valued.

Degree of market attractiveness

Another criterion that we must defend is the degree of acceptance and projection that our project may have in the market.

To this end, we will evaluate, among other aspects:

• The potential volume of customers and users that can be reached
• The segmentation of our target audience,
• The traction of the project,
• The ratios of customer acquisition, repetition and loyalty.

General aspects of the market will also be taken into account, such as the overall supply and demand of the sector, the level of competition in the same market and the degree of differentiation of our project with respect to these competitors.

Project maturity

The next criterion that we must prove is the maturity level of the project. To do so, we must provide any development we have previously produced, whether it is a software demo, a prototype, a proof of concept or the minimum viable product (MVP). It is also convenient to prove the level of validation obtained in the market.

Project scalability

Finally, the scalability of the project must be documented. ENISA will analyze aspects such as the potential internationalization of the company, the number of operations that can be assumed, as well as the expected turnover projection.

Likewise, the independence of the company in the development of the project will be positively assessed, taking into account the dependence on the use of other suppliers and collaborators, the need for software, licenses or third party rights, as well as the dependence on the know-how of any of our employees or key collaborators and the risk of their premature abandonment of the project.

Application process

From the time the application is submitted, ENISA will have a period of up to three months to carry out the evaluation of the above points. Once this period has expired, if it has not issued a resolution in this respect, the Law provides for the application of the positive administrative silence.

In other words, if these three months have elapsed and we have not received a response from ENISA, we may consider the application to have been granted.

In Letslaw by RSM we have lawyers specialized in commercial law and Startups Law. Do not hesitate to contact us and we will put our experience at your disposal.