Anybody who doubts Europe’s pool of tech talent and entrepreneurial spirit should have taken a stroll around Web Summit. The annual gathering which drew 50,000 geeks to Lisbon in November showcased Danish online job searches, Portuguese ultra-fast translation services, British cross-border real-estate investment apps and a myriad of other innovative European start-up ideas.
Yet despite the thriving tech scenes in cities like London, Stockholm, Dublin, Berlin and Paris, Europe is lagging, not just behind the established American ecosystem but also a fast-emerging Chinese tech industry. When they do get off the ground, the best European companies are quickly snapped up by outside investors. A study published in September showed that since 2012, American companies bought up 562 European start-ups – compared to 709 acquired by other European companies.
Young entrepreneurs are quick to identify the factors holding Europe back. Lack of finance tops the list, particularly the venture capital needed to move from start-up to scale-up. Then comes red tape – too many European countries impose too many regulatory and administrative burdens; Europe’s digital single market has failed to overcome fragmentation. Taxes are too high and too complicated. Then there are underlying cultural problems – from a multiplicity of languages to a fear of-failure mentality.
What can be done? During Web Summit, the European Commission announced a “fund of funds” designed to trigger at least €1.6bn in venture capital for start-ups. Yet more action is needed. It’s calculated new internet technologies could create up to 1.5 million new jobs in Europe. So why does Europe lag behind and what can be done to unleash its start-up potential?
Curious to know more about start-ups in Europe? We’ve put together some facts and figures in the infographic below (click for a bigger version). We had a comment from Philip who asked why start-up culture is lacking in Europe. To get a response, we put his question to Sunmin Kim, Technology Editor at the Economist Intelligence Unit. What would she say to Philip?
For another perspective, we put the same question to Linda Griffin, Co-Founder & Chair, European Tech Alliance, an organisation that helps European tech companies grow and scale up their businesses. In her opinion why is Europe lagging?
Can Europe shake off the shackles holding back its young tech entrepreneurs? Given that 54% of Silicon Valley start-ups were founded by immigrants, do we risk moving in the wrong direction with growing demands for limitations on labour movement? Given the structural handicaps, can Europe nurture the next Facebook or Airbnb? Where can we find our unicorns? Let us know your thoughts and comments in the form below, and we’ll take them to policymakers and experts for their reactions!