It’s a lot easier to grow a start-up in Europe than six years ago
The ecosystem is improved, but dedication, commitment and hard work remain the key to success, says Croatian entrepreneur Ivo Spigel, who interviewed 28 of Europe’s most successful entrepreneurs for his book, The European Start-up Revolution
Question: What is the start-up revolution in Europe your book title refers to?
Answer: The title refers to the dramatic change we’ve seen in European tech and start-ups over the past six years. The ecosystem has advanced greatly and more and more of our companies are becoming globally successful.
Q: You interviewed founders of companies including Mendeley, Supercell, TransferWise, SoundCloud, Dailymotion, Prezi, Last.fm – what do you think they all have in common?
A: Well… they are all European! Other than that, one thing revealed in the book is that they have very, very different strategies, trajectories and stories. Some are based in the big hubs, others in the smaller cities, like Edinburgh, Zagreb and Ljubljana.
Some of them saw the need to open an office in Silicon Valley or elsewhere in the US, but most are still largely based in Europe. The one thing that’s definitely common to all is a huge, huge amount of dedication, commitment and hard work needed to succeed.
Q: In the book’s introduction, you write that, “Founding a company in Europe in 2009 was…a lonely and frustrating experience outside leading cities such as London, Berlin, Paris or Stockholm,” the implication being it has become easier. In what way?
A: Back in 2009, you could see a thriving network of ecosystems filled with mostly isolated individuals trying to get a company going. Especially in some of the smaller cities, like Zagreb where I’m from, if you were a founder you had very few people that were doing something similar and there was very little or nothing of the supporting elements you see today, such as co-working spaces, events, media coverage (also by mainstream business media), accelerators and other start up programmes.
And, of course, the availability of funding today is better. Before, there was always some of that in the big hubs and almost none in the smaller cities. Now we can say that London, Paris, Berlin and Stockholm rival global hubs such as New York and Boston, [though] San Francisco and Silicon Valley are still very special cases. We see hundreds – if not thousands – of start-ups in those places. In the smaller, regional cities there are finally support mechanisms, of course not as much as in the big ones but it’s improved greatly.
Q: Europe has not really produced a large technology company to match the likes of Apple, Amazon or Facebook. Why do you think this is?
A: Europe actually has a bigger and bigger amount of very highly-valued companies (I hate the term unicorns). People are always surprised when they see some comprehensive lists. Look at the companies coming out of Berlin’s Rocket Internet start-up factory, such as e-commerce giant Zalando, or the very quickly growing food delivery via app sector, for example, JustEat and Deliveroo.
In the past few years, European companies have come to play on a level field if not even dominate whole sectors such as digital music – I’m thinking of Spotify, SoundCloud, Deezer; gaming – Supercell, WarGaming, King.com, Nordeus; and fintech.
However we have to understand and keep in mind that the US tech sector as we know it, with close cooperation with universities such as Stanford and MIT, innovative funding methods and the focus on rapid growth, was started back in the 50’s or 60’s, so the Americans definitely have a lead time of several decades.
Also, there’s the well-known, documented, cultural and mind-set differences. Many of Europe’s successful and rich entrepreneurs and “industrial families” are still wary of investing in risky companies – in the US it is much more common and expected that once you become wealthy you will actively support and finance the next generation. Things are changing with the culture and the mind-set here, but it takes time.
Q: If you had to pick some governments in Europe that are getting it right, in as creating the right conditions for tech founders to create and thrive, which countries would you choose?
A: It’s good to see governments and especially local government in cities actively supporting start-ups and entrepreneurship everywhere in Europe. Definitely the UK and Estonia come to mind first, but you could look at Amsterdam’s initiative with StartupDelta, Paris co-investing with Xavier Niel to create a 32,000 m2 complex for ‘1,000 Startups’, and many other initiatives. Some are probably more efficient and smarter than others of course.
Q: Do you think the EU helps?
On a macro level, the most important changes needed are the hardest ones to implement – a single, simple unified tax structure throughout Europe, as well as greater simplicity of doing business across the EU. It can still be an administrative nightmare to hire a person across borders, for instance. We still turn off our smartphone data access when crossing borders, unfortunately telecom lobbyists managed to push the deadline for eliminating roaming back by a year or two. So it’s often two steps forward, one step back.
Spigel’s book – published this week – is available to order online here