Europe: 30 years behind Silicon Valley?
Over the last few months it has been disappointing to hear the somewhat one sided commentary over the sale of Technology companies, such as ARM, and most recently Skyscanner. The view that we should not be selling successful business to overseas acquirers is short-sighted. The reaction appears to be a throw back to the 1980 and 1990’s when such a sale equated to a ‘brain-drain’, with jobs and talent moving abroad.
Today, quite the opposite occurs. In a radically changed global economy acquirers now recognize the short sightedness of uprooting a team from their country of origin and instead are much more likely to keep the team in place and use them as a foundation on which to build.
The re-circulation of wealth created by these sales is one of the key drivers of every successful entrepreneurial ecosystem. It also recirculates talent into new ventures with bigger, bolder ambitions and is all part of a healthy progression.
We have seen this phenomenon in the US, with the sale of PayPal, which sold to eBay in 2002. PayPal alumni have gone on to found LinkedIn, YouTube, Tesla and SpaceX, as well as invest in Facebook and payments business Stripe.
Europe’s technology and investment space is 30 years behind Silicon Valley, but is maturing at a faster rate and rapidly catching up. The British team behind LOVEFiLM, for example, which sold to Amazon, has seen the management team go on to create companies like Zoopla Property Group – now a $1billion, listed business, the healthy snack food business Graze and the online travel business Secret Escapes. The same can be said of the multitude of entrepreneurs in Germany who have undertaken their “training” at Rocket Internet, prior to running their own businesses or starting venture capital funds.
Europe has created 47 so called unicorn businesses, those startups now valued at more than $1billion. But recently the UK Government highlighted a lack of later-stage venture capital which is a barrier to Europe creating the next Google or Facebook. This is a fair assessment, but really it is a reflection of how far the European entrepreneurial ecosystem has come.
It was only a few years ago that there was a lack of early stage funding for businesses starting out on their journey but due to the success of countless startups, Venture Capital Funds have been providing great returns giving investors the confidence to put far larger sums of money to work.
If I look back at our first fund, raised in 2008 we were investing about $15m a year into early stage technology companies. This year we will be investing $150m from seed to series C. We’ve seen a similar trend across the market, and with it has grown the ambitions of entrepreneurs who now have the confidence and experience needed to aim higher than ever before.
Phenomenal business successes like Skyscanner should be seen as another step along the road giving Europe the talent, the funding and the ambition to create and keep a new generation of businesses that will truly shape the World.