Europe may be suffering from macro-economic woes, but even this cannot suppress the entrepreneurial spirit across the continent. Tech hubs are flourishing everywhere, from Berlin to Barcelona, Stockholm to London, Amsterdam to Vilnius.
London is pressing especially hard. Just days ago the UK was named the Europe’s most entrepreneurial country in 2015′s Global Entrepreneurship Index (GEI). It’s now in fourth place of 131 countries after finishing 14th in 2012 and ninth in 2013.
And earlier research by TechCity UK revealed that between 2009 and 2012, the number of tech firms in London soared from 50,000 to 88,000. The growth became self-sustaining: accelerators popped up across the locality. And investors paid more attention.
But are they doing enough?
This was the subject of a panel session at Hot Topics’ most recent event in London. Specifically, the question asked was: Can European tech ever catch-up or even surpass the US technology franchise?
It was worth debating because, for all the undoubted growth in European tech, the biggest investments, acquisitions and IPOs are still happening Stateside.
Unicorns just aren’t spotted so much on this side of the Atlantic.
As the US continues to have access to seemingly limitless capital while the likes of Facebook, Google, Apple and Amazon acquire businesses on a global basis, can Europe ever truly compete?
The panel agreed there is no shortage of talent or entrepreneurial ability in Europe. Sherry Coutu, serial investor and Advisory board member at LinkedIn said: “There’s no difference in terms of entrepreneurs spotting an opportunity. In fact, the UK recently passed the US in number of startups per capita. But we need to help them grow their revenues –especially outside the UK.”
She also alluded to the skills gap.
“There a million open jobs right now in the UK and if you ask startups why they can’t fill them they say the people applying don’t have the skills. If we could address that, the boost to the economy would be enormous. So I agree there are differences between the two ecosystems, but I think they can be addressed.”
Rohan Silva, co-founder of Second Home and government advisor, insisted they already are. He said: “We have looked at the barriers such as the shortage of early stage risk capital, and we created SEIS – which is the most generous tax regime for angel investors in world. We also created an entrepreneur visa, which the Americans for example still don’t have.”
One of the obvious advantages the US will always have is a large and homogenous culture. Margaret Rice-Jones, chair of Skyscanner, said we need to accept this. “in the US you can get pretty sizeable without dealing with different languages and cultures and regulations. Also, it’s much harder to get B and C rounds here. European VCs seem more fixated on exiting within the fund lifecycle. Most unicorns take eight years – so there’s always this question of whether the investors will hang on for long enough or take the offer on the table?”
All agreed this was really a mindset issue which a few huge exits could alter. Though moderator Dan Wagner, who has raised around $150m for his Powa mobile payments firm from American VCs, suggested that for the moment investors in the UK “don’t quite get the picture of just how big the (tech) opportunity is.”
That said, Chris Rogers, a partner at Nextel and the only American on the panel, reiterated a belief that Europeans should simply reduce their fixation on emulating the Valley in the first place. Why? Because its practices didn’t cause the success. They came as a result of it.
“Its a mistake to focus on the US,” he said. “Can Europe exceed it? Probably no. But that’s looking at the question too narrowly. i see all these efforts to replicate the ecosystem of the Valley and yet the fact is most of (the success factors) came as add-ons to an ecosystem that already existed.”
Silva conceded this point and stressed that London may be closer to New York in character because it hosts firms from all disciplines while the Valley is a ‘monoculture’.
“Its a centre for finance, art, fashion, advertising…and the collision of different cultures is what makes it so exciting here,'” he said.
Though Rogers did counter with two factors that will always in California’s favour: sunshine and lack of rain.