Comparison Between the European and the US Startup Ecosystem

startup-ecosystem

While the American startup ecosystem is light years ahead of the European Venture Capital Industry, there’s plenty to learn from our European brothers. Silicon Valley has been witnessing waves of inspiration and innovation since 1939 whereas in Europe true innovation took its time to surface.

Not long ago all we knew about big European technology companies is most entrepreneurs outside Europe pointed to MySQL, Skype and few others. Since the last five to ten years the situation has changed with the European tech sector growing at staggering rates. This has been helped by the Venture Capital Industry maturing alongside the influence of many big accelerators and business angels giving startups the much needed mentor-ship and seed capital.

Here’s some clarity into the European ecosystem:

Key differences between the European and US startup ecosystems

Easier to get funding – an important point to note as well as a stumbling block is raising money. Thanks to there being a lot more VC firms and individual angel investors in America, funding is less of an issue there. In Europe, a lot of startups struggle thanks to limited funds especially during the growth phase. London is one such city with enough funding options for startups in the growth stage thanks to plenty of high-level VCs present there.

According to experts, the popular perception is Silicon Valley being the center of all venture capital and startups. However there exist plenty of great European startups too minus good investment in the early growth stage.  A lot needs to be done at the seed stage.

More intellectual capital – a startup’s success is more often than not due to its proximity of a university city area. This is where a concentration of intellectual capital and funders exist that are willing to take risks. Europe’s ecosystem consists of intellectual capital in much smaller pockets.

Smaller ecosystem and fragmented market – the European market is peppered with various languages and is fragmented. Each culture brings different approaches whereas networking circles are a lot more closed than in the US. Once you have a good network in the US, things are a lot easier.

There is an upside to Europe having a fragmented ecosystem and market. European startups learn the tricks of the trade to entering new markets from day zero much quicker than US ones. While European startups learn to conquer each market via a process, many US startups try attacking all fronts at the same time.

The entrepreneurial attitude – experts argue European entrepreneurs tend to outperform their American counterparts as they have a lot more to lose. Americans are seen as being more entrepreneurial, less afraid of risk and ambitious. Europe’s problem tends to be their lack of role models and examples and not courage.

Fintech – A European Strong-house

Europe, like all other tech ecosystems, has its share of strengths and weaknesses. Sectors tend to attract the talent and capital needed to be developed on a large scale. A European example? Fintech.

The latest data from Dow Jones VentureSource startups and companies in the fintech space raised €166 million in the first 3 months.

Time to play!

Perhaps Spotify is one of your top 5 most used apps. You might have heard of Deezer (France) then, now about to enter the US market with a userbase of over 12 million music lovers – 5 million of whom have paid accounts.

As a music lover, you might have also used Soundcloud (Germany) the globe’s most popular audio file sharing platform with a user base of over 200 million. How about Songkick (UK) allowing millions of users track favourite artists providing them personalised news about live music events?

Maybe games are more your thing on your tablet of smartphone – you may be one of millions of users to have downloaded Candy Crush Saga (King, Sweden), Rovio (Finland), Diamond Dash (Wooga, Germany) or perhaps Clash of Clans (Supercell, Finland).

These aren’t apps murking around on the interwebs, they are made by some of the Facebook platform’s most successful developers and have grossed the highest user numbers on the Google store and iOS app store.

Not forgetting online betting and gambling – many of which are growing fast! Not possible to list all of them – however the popular ones tend to be Betable (UK), Akamon (Spain), Betfair, Plumbee (UK) & Ongame (Gibraltar).

If video is more your thing, you’ve probably come across Dailymotion (France) that recently attracted nearly 120 million unique monthly users serving up more than 2.5 billion video views globally. It’s not on YouTube’s scale, however it is nothing to scoff at either.

Not just leisure

Skipping entertainment, here’s a look at what Europe offers the business sector.

When it comes to enterprise file sharing and team collaboration, Huddle (UK) comes to mind with over 100,000 organizations using the software these days. Its rivals Teambox (Spain) and Flowdock (Finland)continue steady growth under Citrix.

You also have popular product management tools such as Blossom (UK) and Readdle (Ukraine). These are both amazing software designed to help you organize your life such as 6Wunderkinder (Germany) and Any.do(Israel).

Apps like Datahug (Ireland) help people inside corporations leverage relationships. Cool tools such as Traity (Spain) help people measure and share their reputation.

Ukraine’s InvisibleCRM is an enterprise application integrator that designs and delivers soltuions for Salesforce, Oracle, NetSuite and many more.

Trendspotting

Let’s turn our attention to 3D printing, one of the tech trends sweeping the headlines across Europe and the globe. European startups such as Materialse (Belgium), iMakr (UK), 3D Hubs (Holland), GrabCAD (Estonia). Reports point to Europe being the world leader in 3D printing by as early as 2020.

The Cloud trend hasn’t flown over Europe just yet. If interested, turn your attention to startups such as Option (Belgium), Tado (Germany), BERG Cloud (UK) and Lock8 (UK).

The leaner hardware and robotics startups in Europe include Valkee (Finland), Jolla (Finland) and Geeksphone (Spain).

Conclusion

While Europe might be very fragmented where the future might not always be so clear, this is no reason to call the continent a giant wasteland for tech companies and startups.

When referencing the European startup ecosystem, remember there exist hardware and software pioneers, innovators and fast expanding startups in cool new spaces all across the continent. By right this blog article is not exhaustive with tons of great tech startups missing from this list. Guess what – that’s the whole point. Feel free to drop me a reply in the comments with the startups you think have been skipped over.

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