In September 2016, I traveled Europe with OneRagtime, a new venture platform. We did so to get a vibe of what is happening in Europe, we wanted to hear real stories, not reported facts in another media. Here are our stories.
Numbers usually don’t lie but they can’t be taken in bulk, otherwise, they are meaningless and can even become dangerous. Ask any political journalist how easy it is to tell a made story from vague or stand-alone numbers. I am not here to describe numbers one by one. I am here to tell you the stories coming straight out of the European tech hubs. But if we put them in perspective to the global environment, they will be meaning much more. To be honest it’s also quite difficult to get consistent numbers about the European VC funding. Depending on the sources, the scope, the targets, you can just read about anything… This is partly why I prefer stories. But good stories have to rely on truth, so let’s get down to it. We will make it quick don’t worry.
First, let’s talk about the global context. Since the beginning of 2016, and while the gap between the two is almost a 5x factor in terms of startup funding, Europe and US seems to have engaged a dangerous game of “would you dare”. Usually seemingly much more down to earth and rational than its American offshoot, the UK wanted to prove everyone that, them too, can go jackass. Hence we got Brexit. This new uncertainty in the European ecosystem is hurting the startup ecosystem. Uncertainty is always damageable to investment, therefore there seems to be a huge hit to post-Brexit funding in the EU. Seemingly a 38% decrease compared to the same quarter last year. However, this number is to be taken with care. Indeed, H1 of 2016 was actually promising, with both Q1 and Q2 exceeding 2015 in volume and number of deals.
While this Brexit thing (which actually may not even happen…) is bringing uncertainty on the entire Eurozone, the UK alone is widely responsible for this hit. On the other hand, the number of deals actually rose compared to last year, and France surpassed the UK in the number of deals for the first time and got very close in volume. So it’s not all that bad, yet at least. Then recently in a game move saying, “haha UK you thought you could be dumber than I am”, the US elected president Trump to the office. While the effect will probably take a year or two to be visible, Trump presidency could be profoundly harmful to the US tech. Indeed, the US startup ecosystem, and the Silicon Valley even more prominently, built its success on globalization and immigration. Those are two things that the President to the wig will severely impact, and if he stands by his words, it won’t be for good. Add that to tax plans hugely unfavorable to tech companies and you can expect the odds not being in favor of US leadership in the startup world. In case, you missed it, a huge proportion of the US tech leaders were against Trump. Of course, we will need more than that to see the US tech ecosystem falling apart, though this is likely to create opportunities for Europe to bridge the gap. However there isn’t any precedent to a Trump-like president, so we cannot but just wait and see what will happen. Will he take actions for his words, or will he do completely different things? Who know the odds…
Man, those times are exciting to live as much as they are stressful. Who knows what will happen next?
But let’s talk about actual stories.
Saying that Europe has talents is an understatement. Europe is full of talents, so full that we have to send to the US. Did you know that immigrants founded 51% of US unicorns? And this includes many Europeans. This is something, we create and we have great talents, but we are having trouble at retaining them.
European universities are among the best in the world, even though they don’t look as prestigious as some of their US counterparts just for a matter of rankings (legit) and fame (less legit). Though European universities are awesome (and more accessible…) and surpass the US ones in many topics. France has been long known to create some of the best engineers; Swedish school system is the best in the world; Oxford University is older than the US, and its prestige isn’t something to debate, and I could go on and on. With this much talent all over the place, all you need to do is to give them the tools to empower them, and allow them to develop themselves in great entrepreneurs. Most universities in Europe either have or are developing great programs to nurture their entrepreneurial talents. Though this is great and very pleasing, this is not what strikes us the most.
As good as universities can be, and as good as entrepreneurship programs are getting, something still feel broken in the education system. Many graduates don’t know where to go or what to do when university is over. It exists new programs that what to offer new kind of education to millennials. I would say specifically to millennial entrepreneurs but millennials are by definition entrepreneur minded. The objective of these new programs is to give those kids truly valuable experiences for their lives. One of these is The Team Academy in Amsterdam. It works like a normal university, instead, students are put in teams and have to work on a common project during their 4 years together. To have met some of the students, most of them just carry a few entrepreneurial project outside of those they “have to do for schools”. In Barcelona, there is a similar university called the Harbour Space. To enter students have to present a solid entrepreneurial project. These new models don’t rely on traditional education and value experimentation to theory. To do so they have replaced teachers with mentors. In the case of the Harbour Space, they even have mentors coming from some of the best companies in the world, to teach them about the topics they are working on on a daily basis. Not only these programs nurture local talents, they also attract young from all over the world wanting to participate in this kind of experience.
I think millennials know that they have to steer the wheel if they want things to move their way. In Europe, talented young folks are working to make it happen. There are a lot of talented young in Europe and they are all eager to join in. The only drawback if they don’t have the tools to make it happen. So other millennials are coming to the rescue, to provide them what they need to shake things up and build great things. One of these programs is Supa Academy based in London. Their objective is to empower millennials through programs they have designed to help find their path, acquire the skills they need to succeed, and apply what they have learned, so they can have an impact. Programs like this one show wide open how much talents are available right here and willing to roll their sleeves up to contribute to the greatness of the European ecosystem.
To be honest with this much talent Europe can’t wrong. And as it’s becoming more listening, it will also help a great deal to retain them.
Fact #1: it’s difficult to succeed as a startup. Fact #2: it’s a little bit easier when you get support from your university/state/country/continent. Fact #3: Europe is actually good at doing that.
Indeed, if there is one thing Europe is actually much better at doing than the US, it is on how to support their startups. Not only the local one’s folks but any startups wanting to mingle in Europe and build stuff there. When we talk about fostering innovation and helping entrepreneurs to get on their path, Europeans know what’s up. Grants, credits, sponsorship, programs for entrepreneurs, education, you name it! There is always a way for you to receive help from European governments to help you succeed in your entrepreneurial projects.
Let’s start from the beginning. It’s well known that it’s really easy for anyone to receive a world-class education in Europe. Most Universities are funded by governments, and as said in another story, European universities produce great talents, even though they often don’t rank as high as the North American or Asian ones. During our trip, we met with a couple of Universities, and more often than not, they had built solid programs to support entrepreneurs. In the vast majority of the time it concerned primarily the students of these institutions but it’s not unusual to see entrepreneurial university programs open to everyone.
Even though we often hear about the success stories of college drop out, they are the special case and far from the norm. And I am saying that while more and more of my successful entrepreneur friends haven’t even bothered going to college. They still are the exception.
Supporting entrepreneurs at the source is one of the best ways to help them build up the skills they will need to go on their entrepreneurial journey.
The best example of programs we got to see was in Stockholm. It’s the Stockholm School of Entrepreneurship. It regroups all the entrepreneurship programs of the 5 best universities of Stockholm and enables more collaboration between entrepreneurs as well as a widening of the skillset.
What’s next? Once you have crafted the best entrepreneurial talents, how can you help them out to get on their way to create successful startups?
From funding to their first clients, going through their first home, startups and entrepreneurs need about everything to get on their way the right way.
Through the intermediary of the BPI (Bank Public for Investment), the French government has become the biggest support for European startups, albeit the French ones. The BPI is the most active investor in Europe supporting the early days of the French startups. The best thing with that? It’s completely free money! Indeed, when a startup receives money from their government in Europe they don’t have to give away any equity like they would to a more traditional investor. This money comes with almost no requirement besides the fact that you need to develop your startup in the country. Investment isn’t the only way governments will help you fund your startup. To help startups with their research and development, the French government set up the tax credit for research enabling companies to pay fewer taxes to fuel their development. There are many grants available and as many reasons to obtain them, education, R&D, social, environment, once again, you name it.
Obviously, the French government isn’t the only player supporting startups and was far from being the first. This award goes to Barcelona Activa. Barcelona Activa is a program supported by the government that has been supporting startups since the 80s. What is the one thing that’s almost unlimited to a government? Resources. And that’s exactly how programs like Barcelona Activa contribute to startups development. They commit all their available resources to help startups thrive, spaces, business resources, connections…
Netherlands is on top of its game when it comes to supporting startups. And they even got the royal family involved in the matter (the royal family is at the origin of Startup Delta, an organization that promotes and supports Dutch startups locally and connect the main Dutch hubs). The Startup Amsterdam program has been built to help Dutch startups thrive, and help them to develop internationally. There is a multitude of programs that belong to Startup Amsterdam, including B-Amsterdam, the largest incubation/co-working space in Europe (until La Hale Freyssinet is finished in Paris), which is expanding to the US. The city of Amsterdam is very focused on the environment. Through one of the programs of Startup Amsterdam, Startup in Residence, they help smart-city and environment startups getting contracts with the Dutch government to prove their technology and get the much-needed cash flow to develop their technology and company further.
In Sweden, and specifically Stockholm, there isn’t any shortage of talents, great startups, or capital, though they lack investors, and partners able to help them expanding internationally. So the answer of the government was Invest Stockholm, a program aimed at supporting Swedish startups, but mostly promoting them to foreign investors. Doing this the government help ensure a flow of capital to help Swedish startups in their early days, but also giving them partners that can help them develop.
The last one on my list, for now, is the Portuguese government. If you didn’t know, Portugal tech ecosystem is booming, and I personally won’t be surprised to see Lisbon becoming a major European tech hub in the coming years. Startup Lisboa is the main support for startups building up in Portugal. They would do anything to help Lisboans startups thrive. One thing they are really good at is communicating about their startups (I have to confess that I didn’t hear about any before actually going there), and promoting them. And it’s paying off. Every year, more and more Lisboans startups are getting accepted into Y Combinator. This is not a sure fire of success but I consider it’s still a pretty big deal…
Fact #4: we can bash on Europe as much as we want, there is something good going on. Fact #5: nowhere else on earth it is easier to start a company. Fact #6: European countries are the most supportive of their startups in their early days.