15741574171_775d295669_kAnybody 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). google_startupcultureWe 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!

IMAGE CREDIT: CC / Flickr – Dinnis Skley

83 comments Post a commentcomment

  1. avatar
    Oli Lau

    that’s not the problem. we aren’t less smart than our ancestors who have invented so many stuff. the problem is the incredible amount of paperworks, the zillions of taxes that you have to deal with in most european countries. The only “cultral” problem is how european perceive “capital”, money is almost a dirty word in some countries, yet you need a lot of capital to invest a little of it into risky things.

    • avatar
      Alan Hoare

      Since the UK is part of Europe and many thousands of businesses have started up over the last 4 decades I would guess definitely not

  2. avatar

    Europe is more cautious than the US or Asia. And there are very valid reasons for this. Europeans have been through a lot of lofty promises only to see huge losses due to war or, more recently, the result of misguided EU policies. So startups are interesting to read about in the news but do not necessarily mean investment longevity or sustainability.
    90% of startups fail (see article below). Europe does not necessarily need startups. It needs sustainable business models that address its particular social values and aspirations.

    • avatar
      Monique Taxhet

      I think France has just recently started to wake up to the fact that this is needed :-)

    • avatar
      Radko Shopov

      I have been living in Paris for almost 3 months learning French but I struggle to find a job even I can’t have a social security number. everything in France goes slowly and is very bureaucratic unlike the UK. My first intentions were to settle down in France but now I am not sure becase I can’t find job.

  3. avatar
    Bruno J. De Cordier

    The question is whether the startup thing really is the salvation it is often perceived to be. Have a look at this:. http://www.telegraph.co.uk/technology/11765609/Start-up-culture-is-corrupting-our-youth-and-killing-real-entrepreneurship.html . In any case, much of that so-called ‘new economy’ is a smug hoax. Here’s why. 1) There’s hardly anything ‘new’ in it because it is basically a fragile continuation of/in the old one. 2) It presupposes that everyone is, or should be(come), an entrepreneur, which is a major fallacy since one needs a certain personality and certain skills, instincts and experiences to be a true entrepreneur of the kind that make economies and societies vital. 3) The tralala startup hype is obviously a hip and slick way to accustom youngsters (and not only them) to the fact that the future of labor, for not a few, is probably one of precarious day labor. 4) Much of it is embedded in this ’innovation’ fetishism and in hot air economics, which basically are ways to feed a new bubble and to extend the life-span of an economic model that goes down the drain anyway. It give it two more bubble-and-crisis cycles.

    • avatar
      Federico Nicosia

      Finally someone who thinks this truth … people believes that start-ups are the solution XD

    • avatar

      Start ups are important. But they could never be the full solution. Frankly until such time as we can collectively reject greed then our global society will stagnate. But start ups are still important, as old ideas are proven to be inefficient we need new ideas, technologies and systems of operating to replace those ideas and the jobs they previously created as a consequence. Good new ideas need getting off the ground for the sake of progress, not stamped under foot by those who got rich off the old way of doing things and want to stay rich by removing these innovative alternatives by flexing their financial might in the shape of bribes, lobbyists and so on. Electricity could and should provide us with most of our energy needs, renewable energy should be how we generate our electricity. Everyone knows this, yet we don’t do it . . . . . . . . . How bizarre! That is just one example, there are many others.

    • avatar
      maria uliczki

      Bruno J. De Cordier , very well said!

    • avatar
      Nando Aidos

      The startup failure rate is 90%.
      Why would anyone invest in this type of thing?
      See my comments above…

  4. avatar
    Linda Vvendelbo-Madsen

    Couldn’t agree more. Try starting a business in Spain! The bureaucracy is absolutely Kafkaesque. Worse than a disincentive, it’s more like punishment for anyone daring to start something up.

    • avatar
      Samuel Lisz

      Living in Spain, being from Germany. My friends tell me :whenever you can, do NOT register a business in Spain. Isn’t this insane?

  5. avatar
    José Bessa da Silva

    Europe is a continent with different economies. The EU though is clearly an economic mistake and therefore it is obviously incompetent at everything it deals with in this field, including start ups. Some individual member states are doing better though, thanks to their own efforts!

  6. avatar
    Monique Taxhet

    It depends which country you are in, some have, some don’t, some just realise that it is needed :-)

  7. avatar
    Stefania Portici

    la Commissione Europea e la UE deve smetterla con i fondi europei ( che tradotti sono le nostre pensioni, le scuole pubbliche , la sanità pubblica , strade, asili ecc…ecc…tolti da li e messi di là , che non corrispondono alle nostre esigenze , non si può tagliare l’ essenzialie per avere cosa ? lo Startup ??? Moriamo per lo startup ? ) La UE , la BCE , la Commissione europea devono investire al netto per l’eurozona se vuole continuità altrimenti …..BASTA …..FINE …..noi non siamo più disposti a pagare , pagare, pagare come abbiamo fatto fin’ora e non vogliamo indebitarci per diventare schiavi dei loro crucci . Lo startup mi piace ma da liberi non da schiavi ! La Commissione europea deve aprire le orecchie the European Commission and the EU should stop with European funds (which are translated our pensions, public schools, public health, roads, kindergartens etc … etc … taken away from them and put them there, that do not match to our needs, you can not cut the ‘essenzialie for what? the Startup ??? we die for the startup?) the EU, the ECB, the European Commission must invest net for the euro zone if it wants continuity or else … ..BASTA ….. END ….. we are no longer willing to pay, pay, pay as we have done so far and we do not get into debt to become slaves of their worries. Startup I like but not by free slaves! The European Commission must open our ears

    • avatar

      Grazie a pensieri come il tuo, io e quelli come me, giovani imprenditori, scappiamo dall’Italia verso paesi che ci offrono spazio per crescere e sviluppare una figura professionale nella nostra fetta di mercato.

      Lo sapevi che la maggior parte dei fondi europei destinati alla giovane imprenditoria in Italia manco vengono impiegati? Sai perché? Perché c’è una mentalità stagnante. Start-up oggi = Grande industria domani. Vi lamentate che il ”Made in Italy” è morto, ma poi quando qualcuno propone, voi volete tagliarci i fondi per ciucciare sussidi statali.

      I vostri genitori, che hanno risucchiato fino a farla diventare secca l’Italia, sono quelli che vi hanno inculcato la cultura dello Stato che ”deve provvedere”. Ma non è più così da un bel pezzo. Chi fa da se, fa per tre. Basta elemosinare dallo stato, le opportunità ci sono, ma se aspettate come al solito la manna dal cielo, be, meritate la vostra sorte.

  8. avatar
    Julia Hadjikyriacou

    Maybe the EU should do a dragon’s den style model. Get corporations [in return for a tax break] to fund, train, staff and help the start-up for a stake in the future profits for 5 years then the start-up would become a fully-fledged business and keep its profits. Also, China and other exploited labor countries and the corporations that take advantage of it all need to be dealt with. Either with EU fair trade rules, tariffs, or forcing corporations to form an alliance [like tea companies rainforest alliance] where workers are paid more than a living wage.

    • avatar
      Michael Šimková

      This could help somewhat, but the problem is corporations will never fund things that could be disruptive to their own profit model and so you still get entrenched oligopolies. There is no way to get more market competition while still preserving political privileges and power in one place.

    • avatar
      Etienne Gontard

      Does Europe lack of historical materialism ?

  9. avatar
    Lagana Vinnie

    This article is OK if you are a Capitalist that thinks Europe should be like america or even have a vague chance of competing with American Multi International Corporations that have been taking advantage of the cheapest labor possible! This article is a waste of time and does not reflect the philosophy of life that Europeans have. Not everyone wants to be an “Merican.” Stupid article. Technology? Really? Is that what gives us quality of life and dignity? I think not, it only brings more waste and dumb gadgets. Permaculture, minimum salaries for every citizen whether they work or not, citizen participation in government, JUSTICE, expelling corrupt politicians, eliminating fraud, and especially WASTE in government and in corporations! Screw building more technology plants and so on.

    • avatar
      Michael Šimková

      “Screw technology, screw innovation”. Did you upload this nonsense through WiFi network, by satellite uplink or by LAN? Was it uploaded through a mobile, a laptop or a desktop computer? Why are you here if it is supposedly against your “philosophy of life”?

    • avatar
      Lagana Vinnie

      You don’t understand what I was saying. To constantly think abut “gadgets,” because that is what the article is really pushing at, is ridiculous! There has been innovation in Europe and it is called Podemos and MoVimento 5 Stelle. Innovation muct come through change of government!

    • avatar
      Jacopo Varg Abbruscato

      “Minimum salary wether they work or not”. This is so wrong. It’s justifiable with people who lost the job, but if you just hand out money there will be thousands living off it just being a burden to society and not giving anything in return.

  10. avatar
    Paolo Ortenzi

    Yes. In Europe everything belongs to: a) Government or b) Big Company. It’s impossible to develop new ideas starting from a garage, like in the USA.

  11. avatar
    Tony Cartwright

    Twenty five years down the line I would have thought someone in the EU would have thought this out by now!

  12. avatar
    Pedro Urquijo Rodrigo

    Europe is not one nation, but many different ones. Not even the language is the same. We have high taxes and the economy is not as dynamic as in the US, for instance. It’s a lot harder to start up here than it is in other places.

  13. avatar
    Michael Šimková

    In Spain you have plenty of people with a start-up mentality, but there is nothing they can do. The barriers to entry are immense.

    Entire swathes of the Spanish economy are tightly controlled by a few privileged families from the Franco era with high connections, and the government actively protects their market share and impedes the entry of any ‘new capital’ that could imply a political shift in the balance of power (electrical industry). These protected parts of the economy have very conservative investment strategies and simply do not like to fund anything ‘new’ or disruptive, so there is no way to get access to that money. They lobby for regulations designed to prevent a loss of their market share (punitive tax on solar energy installations) and politicians are beholden to them.

    Other parts of the economy have been run by licensees for decades and opening them up would involve compensating the licensees (incompatible with austerity policies), and even so could lead to the licensees rioting, so political unrest (public transport – buses and taxis).

    The tax regime is nonsensically punitive specifically to young entrepreneurs. In Spain to register as a freelancer while also working in a company you are forced to pay your social security contribution TWICE. You don’t get ‘twice’ the health coverage or ‘twice’ the unemployment coverage or ‘twice’ anything social security provides, but you pay for it twice. So obviously young people with business ideas are dissuaded. Young people generally do not have a lot of money and can’t take a lot of risks, but they do have the ideas and the skills.

    But where parts of the Spanish economy have been prised open, usually due to European pressure (telephony), the Spanish economy is pretty dynamic and you see it respond very quickly. Businesses mushroom into existence and you get a lot of innovation. It really is just self-sabotage, unfortunately. But while the EU has long advocated deregulation, it has been indifferent to the consequences of that in European countries. In Spain deregulation is a political minefield and it is very easy to unite the left and the right against it, because the old licensee systems create middle class privileges and the oligopolies create upper class privileges.

    I don’t know about the rest of Europe, if it’s similar or not, but I think it’s pretty premature to be talking about “Europe” as if it were cohesive. You have to consider the different situations of each state.

  14. avatar
    Ivan Vikalo

    Well let’s start with saying that i.e. stockholm is the most innovative city in the world per capita ;) also, Europe is extremely innovative, even in IT, i.e. BQ (spanish smartphone producer), tesla smartphones (serbian producers), and so on. The difference is just that we dont have a digital single market…

    • avatar
      Adrian Lungu

      Sir you should know the most about our thousands of years of culture

    • avatar
      Paul Sharpling

      Thousands of years of culture are being sacrificed daily. Tell me how much is left.

  15. avatar
    Antonios Forlidas

    Culture does not exist anymore in Europe. The European leaders sold the european ideals and fundamental democratic principles and values to ECB, IMF and to all global banking system.

  16. avatar

    There is no comparison between US and Europe legislation and taxation wise for startups. Compared to Asia doesn’t look good either.

  17. avatar
    Ricardo Costa Silva

    I think is not a lake of startup, or at least there are a lot of verry good ideas for startups in Europe. It seems to me the states aren’t startup friendly. There isn’t a real liberal market in some states. Competition is something that the people who are in market, they don’t want competition.

    • avatar
      Mike Jordana

      of course you cannot have competition in a non free market

  18. avatar
    Ian Upton

    not as techy as UK or USA i don’t think in my exp. but design is excellente’

  19. avatar
    Giorgio Diani

    A balanced and well working society cannot be founded on the principle that everyone must be a startuppers. some are fit to do so others are not. It is an ideological forcing exactly like those that characterized the people homogenisation in the countries of real socialism.

  20. avatar
    Lindo Piccinini

    I live in Europe , especially Italy ,the school system has been socialist from the beginnings ,the children are not prepared ,they have to finish another 5-7 years of study to compete with Chinese counterpart, then when they get there masters they don’t know how to do anything ! And need another 4 years as a apprentice. At 32 years old …they equal a worker from China ,USA or the even Russia. Yes Russia , I seen russia n farm kids in Kazak do everything , I was so impressed, I tried to promote him. Thanks dyma ! This is for you !

  21. avatar
    Davide Calzetti

    It is pretty futile to create “Start Ups” if, when you just start to become a bit successful, you’re immediately bought, or “swallowed” by some great mega-corporation eager to wipe out the competition and create mega-monopolies.

  22. avatar
    Leonardo Acqualagna

    The startup thing it’s just the most recent form of marketing.
    It is not important.
    Europe is filled of culture, and this “startup thing” is only a method of commerce.
    We are not intrested.
    What we call culture, it is not the same thing you mean
    “Culture” is new sense of things, it has to be something new, it is not about diffusion and money, culture is about giving the people the freedom to criticize and express their own ideas.

    Startups are only a way to make people do all the same things, and gain money from thos, instead of inventing alternatives

    Culture is not expansion of buisness,
    it’s expansion of conscience.

  23. avatar

    No we don’t have a start-up problem. The English speaking world says that but itself is slowly sinking into a third world country levels so their patritic propaganda grows ever louder. Lot’s of failed, low level schemes that they create a hype over are not a sign of anything. Well thought out, even if slowly built but sound companies are the core and Europe is like that and it is better then just about any other place in the world like that.

  24. avatar
    Andre Ramirez

    Estoy trabajando para que tengan seguridad los turistas, inversionistas y empresarios.

  25. avatar

    No, but it certainly needs improvement and more support.

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