What does it take to build European Tech Giants ?
Key Indicators about US versus EU
- Venture Capital is about five times bigger in the US compared to EU (accounting for the 7 top countries in Europe)
- The market cap of internet companies relative to GDP is about ten times larger in the US compared to the EU (10% in the US, 30% including the GAFAM versus 3% in Europe)
- US captures more than 90% of the unicorns’ value between US & EU.
Europe at large…
- The past 15 unicorns valued above 2 billions have emerged from the UK, Nordics and Germany.
- Only Index, Accel and Rocket Internet have successfully invested in all those companies beyond the seed & series A stages.
- There is no legendary companies in latin countries.
Specificities and consequences !
- UK is english-first, non risk averse by default. The nordics are forced to think international from day one because of the specificities and the size of their domestic markets, Germans have always been great exporters and have always spoken a great english.
- Germans, even though they lacked venture capital initiatives, have successfully fuelled their self-fulfilling prophecy thanks to the Samwer brothers, and despite their mixed reputation, they have shaped the German startup ecosystem.
- Venture Capital in France has been built in the late 90’s on the wrong ground with limited tax discounts (unlike the UK) that fostered opportunistic and risk averse behaviours instead of ambitious moves. Many mediocre people from this era, currently mocked by international investors and entrepreneurs, are unfortunately still operating as French VCs. That’s the issue of a non meritocratic industry…
What does it take to build tech giants ?
- Ambitious founders, something that we need to encourage within the right environment, that’s why concentrated bold initiatives matter.
- Diversity, as it fuels an international mindset but also communication as a basis for empowerment and tolerance, allowing great teams to perform at scale on the long run.
- Capital, as ambition must be fuelled. No one can reach Mars by train. The best teams can’t keep the right level of velocity and excellence without capital.
- We must fuel our companies with real ambition. We can’t let all the great firms from abroad come over, feel at home and win deals, I’m talking about the Insight Partners, DST, KPCB. We are soon going to look ridiculous.
- We must increase our capacity as investors to help founders go from one country to another (the right ones), connect to the best people in our network, and hire the best talents from abroad to build the greatest companies.
- Last but not least, we must play bold and long term. Unicorns are boring, we must build empires, a new kind of great equity stories for founders who want to build companies that want to become the new category leaders of their industry and not the next M&A target or nice-to-list portfolio company.
Voilà, in short.