One way to make Europe more like Silicon Valley

IN SILICON VALLEY, running one or two startups into the ground is an essential step on an entrepreneur’s journey to success. For their European counterparts a single bankruptcy can derail a career. Being branded a failure once is all banks and other investors need to steer clear for ever. A new study shows the extent of the stigma a past failure can have on potential business-builders—and how it can be remedied.In the past, French public authorities often “flagged” top managers of firms that had gone bust for all to see. The blot featured prominently on records for three years and was readily available to banks, which used it to avoid once-failed managers. In 2013 the policy was changed: the flagging system was abolished, and the 143,000 erstwhile entrepreneurs informed of their newly cleaned slate. The overnight shift gave researchers a chance to see what impact the flagging system had had.