European Tech - A New Strategy

European Tech - A New Strategy

A glance at the geopolitical landscape in recent years shows us, unequivocally, that Europe’s technological and economic dominance has shifted both eastwards and westwards. That European prosperity, security and, ultimately, sovereignty is increasingly at the mercy of Washington, Moscow and more recently, Beijing is undeniable. There are strong indications that this trend is accelerating, and that the mercy of these three capitals cannot be relied on.

The US dominates the global landscape of internationally successful businesses, further solidifying American technological and economic dominance. Out of the top 20 businesses by market cap, 17 are based in the US. Of the remaining three, only one is European. Extend the list to 50, and the statistics do not improve much. Why is Europe losing ground?

Europe has the skills, the creativity and the business acumen. We have a stable business environment: a politically independent judiciary, reliable transport and energy, and advanced financial infrastructure. We have highly desirable locations: our cities, our mountains, our countryside, and our beaches draw in millions. But our ecosystem is incomplete. With one or two notable exceptions, we don’t have the heavy-weight funds, the risk appetite and the strong academic engagement that combine to promote real growth. Which is why our most successful companies and our most talented and visionary entrepreneurs migrate to the USA.

I have been investing globally for 20 years, with much of my portfolio focused on world class European companies. I know what it's like to get started, to work with investors, and to break into new markets at home and overseas. I’ve done it. This has informed my approach to the companies I invest in. My philosophy is to make long term and deep commitments to support brilliant people to build businesses with the potential to transform their industries. I am not alone. Europe does well to support the generation of new ideas and to nurture early stage (Seed and Series A) investment. But then it falls away. For series B and beyond, we do not have the heft of the big hitters from the US and Asia. Our model stalls, and with it our technological and economic advantage. Our sovereignty is exposed, even as geopolitical uncertainty rises.

If we are to recover lost ground, then we need a cross-European collaboration that matches the significant $1bn+ sums and sustained unity of effort that other mega-investors from the US and Asia can muster. We must pool the resources of both public and private sectors to invest in the huge potential of our successful early stage start-ups before they are snapped up by other funds with deeper pockets. With centres of gravity in Spain, France, Germany, Italy and other European nations, we can build critical mass, and nurture the most promising of our young businesses to promote growth, employment, prosperity and indigenous, world-beating capability. We need to nurture our own bright stars beyond Series A with competitive, long term commitments. And whilst we are at it, we might also look abroad at the best of the US and Asia, and bring them to Europe.