Startup Europe is coming to Silicon Valley. Hopefully it will lead to a better understanding of the scope and quality of European startups.
Startup Europe Comes to Silicon Valley (SEC2SV) next week, aiming to bring together European policy makers, a load of high-quality European scaleups, and major players in Silicon Valley.
Inspired by Silicon Valley Comes to United Kingdom (SVC2UK), and funded by the European Commission's Startup Europe initiative, SEC2V hopes create collaboration and share good learning, for everyone's benefit.
The week starts on Monday September 21st with 'European Innovation Day', held at the Computer History Museum in Mountain View.
The location is appropriate, given the tremendous European - and especially British - contributions to computing.
From Charles Babbage's Difference Engine and Ada Lovelace's first programming, though George Boole's Boolean algebra and Konrad Zuse's mechanical binary programmable computers, to the colossal work at Bletchley Park and the creation of the Web by Tim Berners-Lee, European innovators laid many of the foundations.
Hopefully, this first day will reinforce the tremendous innovative potential of Europe and set the tone for the rest of the week as an event of mutual benefit.
I emphasise that since there is a strong tendency, especially when talking about IT and digital startups, to presume that Silicon Valley has all the answers. There are literally thousands of critical articles along the lines of 'Europe needs its own Silicon Valley'.
Some of this criticism is valid: Europe has not really produced its expected share of digital 'Unicorns' (billion-dollar startups); scaling and exits are more difficult; valuations are typically lower; European attitudes to risk are more cautious; Europe is not (yet) a Digital Single Market like the US. On multiple measures of entrepreneurship, the US leads the world.
Many European cities can therefore learn much from the Valley, adopting some cultural attitudes and adapting specific initiatives - just as the seed accelerator model, developed by Y Combinator a decade ago, has been widely replicated across Europe (and continues to evolve).
Yet on the other hand, the quality of a startup is not necessarily a reflection of the richness of the ecosystem which produced it. And Europe has still produced a number of significant digital startups, like Skype, Klarna, Prezi, SoundCloud, Zalando, BlaBlaCar, Trivago, Skyscanner and Zopa, with a huge increase in ‘Unicorns’ since 2013.
There has been a huge increase in European Unicorns since 2013
Unfortunately, many great European startups are not recognised as such - in part because successful firms often emigrate in search of easier fundraising and higher valuations.
This has a negative impact back home, reducing the numbers of role models and mentors. However, it is often a sensible move for the firm, given that the US venture capital industry is much more developed than Europe.
For instance, data from startup intelligence firm Funderbeam shows that, so far in 2015, the US has produced roughly twice as many startups as the whole of Europe - but those startups have collectively received around 10 times as much funding ($62 billion total investment, compared with just $6.6 billion for European startups).
This gap is a reflection not of quality (US and European tech startups have roughly the same likelihood of a successful IPO), but of the relative size of the US VC industry, its willingness to place bigger bets on US firms, and the fact that many VCs remain quite geographically-focussed.
In the medium to long-term, then, developing Europe’s startup ecosystems (ideally, in their own ways, playing on their individual strengths) and growing the European VC industry is clearly essential.
But in the nearer-term, European startups need to become more visible to American venture capital firms.
This is what I hope SEC2SV will deliver: a better understanding of the scope and quality of European startups among US VCs, and hence greater numbers of VCs who are prepared to invest in Europe. This, in turn, might have the beneficial effect of stimulating more startups & scaleups in Europe, and helping more grow here - rather than feeling the need to emigrate to the US.
Image: Unicorn by Yosuke Muroya, under Creative Commons licence