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Summary:

Europe has trailed America for decades, partly because of a tricky environment for entrepreneurs. But one investor thinks the continent’s young businesses could be about to see a new dawn.

dawn-cc-vincealongi

Over the past few years we’ve seen a wealth of European technology and entrepreneurial talent migrate across the pond in search of greater opportunities to achieve their dreams. It’s not just the monetary opportunities Silicon Valley can present, but the entire US entrepreneurial ecosystem and the incentives they’re given to succeed.

This is not new.

Since the dawn of the twentieth century, the European business community has had one eye on America, its great rival. But while the US has become more and more dynamic as an economy and led the way across a number of industries — including technology — Europe has gone backwards.

Everyone knows that small growing companies are a key driver of any successful economy, but I think most people would agree that Europe has not created an environment that allows entrepreneurs to flourish. That has left a need for change.

A recent quote in The Economist caught my eye and really drove home that need for change:

“Europe’s culture is deeply inhospitable to entrepreneurs; wanting to grow a start-up into a behemoth is quite as countercultural as piercings and performance art.”

From my experience as an entrepreneur and in my role as an investor, I still think that the best thing governments could do is to just get out of the way. In areas like employment law, regulation and immigration, they could remove so much of the friction and red tape that currently binds so many entrepreneurial hands. However, these things are so firmly rooted across Europe that it’s going to take time – and probably require the economy to sink even further – before these entrepreneurial barriers will be broken down.

From all of this, we’re left wondering if European entrepreneurs will ever be able to make it big by staying in Europe, or whether it’s simply a stepping stone to the US. Can Europe possibly reverse the tide and become one of the global entrepreneurial strongholds?

I think there are a few encouraging signs to say that it can.

There are brilliant cracks of European light breaking through the gloom that could help spark a global shift in entrepreneurial power. Initiatives like Estonia’s Tiger Leap Foundation, which is piloting a project to get six year olds learning to code in schools. Initiatives like this are all about providing the next generation with the tools and skills we think they’ll need for the future. Some of these programs aren’t especially new, and having an arsenal of skills and an entrepreneurial drive is one thing, but we also need to make sure that Europe is creating a better environment for entrepreneurs.

Governments across Europe are finally starting to recognise the need to support and encourage entrepreneurs, which is leading to a wide range of initiatives from funding support to tax relief.

Meanwhile the economy — coupled with limited funding — has led to the costs of starting and growing your own business to be reduced, especially for skilled people. And in the technology industry we’re starting to see people and resources coalesce more and more around central hubs, with the main ones in Europe currently being London and Berlin.

It really could be one of the silver linings from this long and painful recession that being an entrepreneur starts to be seen as an increasingly viable alternative to the region’s more long-standing industries.

There’s still a long way to go but these are all positive steps in the right direction for the European entrepreneurial scene.

It may sound terribly clichéd, but it’s always darkest before the dawn. Although it’s difficult to see right now, I’m confident that a more dynamic, a more mobile and a more risk embracing Europe can emerge from all of this — and there are definitely signs that things are starting to change for the better. Make no mistake; Europe is moving towards a new entrepreneurial beginning.

Jos White is a partner at Notion Capital, a venture fund focused on cloud and SaaS startups. He was previously a founder of three companies, including MessageLabs, which was acquired by Symantec in 2008 for $700m

Photograph of dawn used under Creative Commons license courtesy Flickr user Vince Alongi. School image courtesy of Shutterstock/Monkey Business Images

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  1. “Governments across Europe … starting to recognise the need to support and encourage entrepreneurs … leading to … funding support to tax relief.”

    That is more government, more of its intervention, more Brussels and local stupidity spreading all over the place. European enterprise doesn’t need government support, it just needs government to get out of the way. It just needs less government, not more of it.

    A friend just got a new competitor for one of his sites. It can undercut him because it got EU funding for free. Is that competition? Is that entrepreneur encouragement? Bollocks, that is stifling of the human willingness and the human mind.

    1. “Bollocks, that is stifling of the human willingness and the human mind.”

      It is not. Censorship and brainwashing and enforced doctrine and all that sort of thing is stifling of human willingness and willing mind. What you described is an unfair advantage in business. Completely different.

  2. Educated Chimp Sunday, October 7, 2012

    I feel like most of the new business in this new Europe you describe will be information technology startups. How else are people going to profit from a crisis?

    1. Agreed. I also feel that big,corporates are actually paying attention to start ups and starting to change.

  3. Claudio Mozzacozza Sunday, October 7, 2012

    Who is this guy anyway…

  4. Nothing wrong with the message in the article.
    Although, may I make a small remark about the sentence:
    “…, or whether it’s simply a stepping stone to the US”

    I would no longer see the US as the nec plus ultra, I think you should add the BRIC to it.
    Certainly, if this message goes beyond the scope of High Tech start ups.

  5. I was recently looking at a range of human migration data and this seems to have already happened; e.g. http://awesome.good.is/transparency/web/1103/youth-movement/transparency.jpg. The US seems to be at the end of the line for tallent.

    1. I don’t see how an intelligent person could draw that conclusion from the web page you have linked to.

  6. Remmeber what happen when lights in Rome when dark? The whole world collapsed.
    I think i will be the same – USA is clearly loosing their entrepreneurial mojo – that means only the whole world become more conservative, less entrepreneurial. Only after a dark age a new empire will rise – in our case a new entrepreneurial nation. There is none rigth now on the planet. US still leading but decaying.. Everything else is BS. Politics.

  7. I read somewhere that in France, the No1 bootstrap funder of choice is the Dole! More seriously, its imperfect that Government play a role. But its an imperfect market when comparing seed funding availability US v’s Europe.

    In Ireland, Enterprise Ireland plays a crucial role. I’d wager that the majority of startups in Ireland are EI co-funded. You get the matching funding, and they’ll fund you. Paperwork is a pain, but the terms are fair. They even throw €50k straight off to rapidly develop ideas into startup experiements.

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