A friend just shared this from Bloomberg: "Why Can’t Europe Do Tech?" It's interesting, but honestly as an economist and as someone involved in helping Central European startups enter the US market, I think Bloomberg misses a big point: the world today is global. The article argues that a key problem is that Europe is lagging behind the US and China in investing in and launching innovative startups.
They argue “3,500 European companies received a combined $19 billion in venture investment. Although that pales next to China’s $40 billion and America’s $67 billion, it’s a record for Europe and four times greater than the figure from five years ago.” (Bloomberg).
What I think they miss though is that part of the US VC money though goes to non-US startups. Every year as a business consultant, university professor and program director, and Honorary Hungarian Consul, I talk to tons of startups from Hungary that are coming to the US either to do what I call “the tour” – meaning New York, Boston and Silicon Valley – or coming to a conference like SXSW to meet investors and potential partners.
Then you have the big investors who travel to Europe and invest. Again, I know Hungary best. As an off-the-cuff example, google “Ashton Kutcher Hungary”…yeah, that’s right, the actor. I actually met him by chance in person at the Déryné Bistro last summer in Budapest. Okay, we just shook hands, but I can confirm he was there. Anyway, I’ve since learned that he got into the startup/innovation world while in Budapest and is apparently going to invest in some local companies. I also know there were several firms from the US East Coast in Budapest soaking up local talent on several occasions.
And this is Hungary! Hungary is small. About 10 million people.
My point is simply that it’s a global market today. China is still a relatively closed economic system, so they have to invest into their own tech and eco-system. But I’m sure there is European money flooding into American startups and American money flooding into Europe. If what I saw in Hungary is any indication, there’s a lot that these official numbers in Bloomberg are missing.
And we didn't even discuss that despite Bloomberg's quote from someone that "“You could be the No. 1 company in Germany, but in France people won’t have heard of you.”". I'm sure that can be true, but my experience is that every single company I've met launches with an international mindset. In June this summer I met with a Polish start up, spinning off from a larger Polish software company. Sure the main software company might not be globally known but the startup launched in English and despite some minor sales in Europe, their first client was Uber's headquarters in the USA. So, I just don't believe that starting in Europe is somehow a disadvantage. This Polish company might never be known in Germany and France because they're focused on the US market now, not because Europe is some how silo-ed.
As a final point, to be fair, Bloomberg mentions that Americans bought up some of the European startups. So they recognize this. It's just not clear to me that they made the connection. And they do point out – and I totally agree here – that Europe has some amazing universities. Scientific knowledge, hard science (physics, math, computer science, materials science) talent is through the roof. So the raw stuff for innovation is there. The only thing missing is the commercialization talent that somehow flows through American veins…which is exactly why I spend most of my time connecting Americans and Europeans. IMHO, the two together can do amazing things!