Europe learns Silicon Valley’s most valuable lesson


“Why can’t Europe do tech?” asks the latest annual edition of a flagship industry report, before laughing its head off at the premise.

“It’s time to stop asking this question”, insists the report by Atomico, the London-based venture capital firm headed by Skype’s Swedish founder Niklas Zennstrom. We must drop “lazy clichés about the ability of Europeans to build tech companies”.

It was published as Slush, a tech conference in Helsinki, attracted thousands of venture capital investors, and SoftBank’s Vision Fund, the biggest tech investor in history, summoned founders to its London base. This week at least, Europe is the centre of the tech world.

And yet the report’s boosterism fails to convince. In terms of money raised by tech companies, tech investing is growing faster in Europe than in the US or China, the report contends.

But even on these data, the US is still 3.4 times bigger and the number of fundraisings in Europe has dropped by a third over the past couple of years to 983 in the last quarter from more than 1,500 in the same period in 2017.

Of the recipients, the biggest fundraising of 2019 is for Northvolt, a company that makes batteries. Worthy, but more industrial than digital.

The second biggest is Deliveroo, a company that competes with Uber and DoorDash to lose as much money as possible delivering pizza.

Third is UiPath, a robotics software company, with a $7bn valuation. Clearly in the tech sector. Yet not clearly European. Although born in Bucharest, UiPath moved two years ago to New York.

Other “tech” companies featured in the report include Greensill, a provider of supply chain financing. If tech includes any company with an electrical socket, then, yes, Europe is a powerhouse.

Under more standard definitions, Europe lags behind badly. To read the Atomico report, you will probably use an American, Korean or Chinese device and American software.

That is reflected in the public markets, where European tech is such a glaring absence.

Apple and Microsoft duel for supremacy as the most valuable companies on the stock market, with more than $1.1tn in equity value. Beneath them are Alphabet, Amazon and Facebook from the US, two Chinese giants in Alibaba and Tencent and South Korea’s Samsung. There is not a single European megacap tech stock.

The head of tech at the London Stock Exchange appears in the report, noting that more listings came in Europe than the US last year. But most are tiny. While a third of the US S&P 500’s value is tech, there are only two tech companies in the UK’s FTSE 100. While Uber, Lyft and Slack went public in the US this year between $15bn and $80bn, the biggest offering in London was Trainline, a ticketing website. Nasdaq and NYSE get the real bits and bytes; Europe only gets bits and pieces.

There is progress and grounds for hope. Europe’s fintech sector dwarfs that of the US. Swedish music streaming service Spotify listed last year — albeit in the US — at $30bn. Germany’s venerable enterprise software company SAP is performing well and is now worth $161bn.

Perhaps most promising of all for the European tech sector is the level of defiant self-confidence and hype. It shows that Europe has learnt the most valuable lesson Silicon Valley has to offer.

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