December 2, 2023

but there is hope

whenever i spend In the European startup world, a lot of the discussion centers on how to differentiate yourself. One of the recurring questions is: how do we build an entrepreneurial ecosystem? This is a great question.

The ecosystem has sprouted, but unlike the U.S., which has a few major centers attracting a lot of talent and investment, in Europe interest in experimentation has not fully integrated into a coherent whole.

Finding Silicon Valley may be a metaphor, but the San Francisco Bay Area is by far the most mature ecosystem.California Attracted more than $100 billion Total venture capital investment in 2022. New York came in second at around $30 billion, followed by Massachusetts (or more specifically, Boston) at around $20 billion.In contrast, Europe Invest $100 billion 2022. That sounds like a lot, but compare the size of the economies of Europe and California.

Europe may be on the brink of rapid growth, but as an asset class, venture capital is lagging. For every person living in Europe, $134 is invested in the local ecosystem. For California, the same figure is $2,650. Image Source: Hadji Kemps/TechCrunch

Office buildings and fast internet can be found in most places, so how did the sprawling area around San Francisco become a work ecosystem? The history is long and complex, and difficult to replicate: Stanford University engineering professor Frederick Terman focused on radio engineering in the 1940s. Fueled by the Cold War and massive defense funding, he built a department and taught a group of people who founded the first wave of tech startups in the region.

Stanford University created a business campus to match its research activities and keep up with the times. The region finds itself in an upward spiral: More money means more engineering talent flooding into Silicon Valley, which sparks more innovation, which spawns more tech companies, which in turn means more engineering talent. The Valley of Opportunity with the most defense funding and the first private investors looking to Silicon Valley. Lockheed opened a factory in Sunnyvale largely because engineers could be found there. Bill Hewlett and Dave Packard founded HP in 1939, and Shockley Semiconductors was formed in 1956, the same year its namesake, William Shockley, won the Nobel Prize for co-inventing the transistor. Shockley’s early employees left to found AMD and Intel, and from then on, the rest is history: Silicon Valley’s concentration of money, talent, and technology was so concentrated it was almost unstoppable.

Fast forward about 70 years, and Silicon Valley keeps growing. What this looks like for startups is that a lot of people get very rich from tech, and they further accelerate the growth of the ecosystem by launching new companies. But crucially, they also become angel investors and advisors to others in the ecosystem. And since the people who acquire other businesses are often based in Silicon Valley, the integration of technology and employees is made easier.

So what does this have to do with Europe?Well, according to Europe’s top VC firm to be createdof recent reportThere are 514 “tech hubs” in 65 cities across the continent. Of course, it is positive that European startups are evolving and growing, but even after decades of trying to keep the ecosystem thriving, Europe seems to be stuck in the same place. According to the report, “Europe is finally equipped to challenge the US as the world’s leading tech ecosystem.” Sounds good, but there is still a lot of work to be done before a fully functioning, self-sustaining start-up ecosystem can be established. The truth is, every place is trying to do it differently. This means that there cannot be a single, force-of-nature ecosystem; instead, the result is a few promising ecosystems that don’t really get the job done.