European startups raised $6,9 Bln in the first half of 2015, 86% more compared to last year. BlaBlaCar, Adyen, Delivery Hero etc. made headlines with their large financing rounds and IPOs. And the total worth of European unicorns got to 110Bln at the start of 2015.
Europe is waking up. Larger and larger companies are being created at a faster pace. Surrounding them, a growing number of incubators, accelerators, ecosystems and networks are developing, especially in the european capitals.
In other terms, Europe is writing it’s own startup history, setting itself apart from the Silicon Valley. With different dynamics, de-localised networks, and growing successes, the business culture is developing is taking it’s own shape, finally quitting the imitation game.
So as the supporting systems develop in the right direction, it is time to talk about the characteristics that can set European startups apart.
How can we sit on top of the (american) competition?
USP #1 — Talent, Education and Research
A large number of innovations stem out of universities, and Europe is full of them. Top level education is performed in several EU cities and capitals, providing not only a large talent pull, but a diverse and spread out one. Several institutions then are present beyond the university level. Institutes like the CERN in Switzerland, are among the most advanced in the world and drive innovation forward on a worldwide basis. The quality of education is also creating diverse backgrounds for expertise that is not limited to computer science, but touches all the ramifications of engineering, data science, and biology.
As software gets easier to build, future innovation might not come from automation of tasks, but on innovation in other areas. European diverse education system will then be a huge competitive advantage.
USP #2 — Lower startup Costs
Especially in the short term, cheaper hiring, rent, and generally company development are competitive advantages. Lower valuations, capital required, and similar global opportunity (if the scaling challenges are overcome) are already luring investment firms like Sequoia and other prominent American VCs. This price arbitrage situation might boost European startups in the coming years and give them a competitive advantage.
USP #3 — Internationalisation Experience
European startups are (or should be) born with internationalisation in mind. They know how to scale a product behind their borders and tackle small markets well. Looking at the growth of Asian and African economies, the internationalisation skill built in into european startups could be an interesting capability to monetise on these nascent (but huge) markets.
Education, costs, and internationalisation experience are peculiar characteristics of European startups that might come in handy in the future and project european companies to the next level.
These forces are still based on the assumptions that trends in networks, fragmentation and government will move in the right direction, allowing, not blocking companies from scaling.
Secondly, they are still based on European companies finding and systematically process international growth with a small home market. I personally believe these trends are moving in the right direction. But we all have to stop looking for role models in other parts of the world, acknowledge that our environment is unique, and learn and create strategy specifically designed for it.