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What is it about European Enterprise Data software companies that they never make it past this stage without either being bought up or moving to the States? My

What is it about European Enterprise Data software companies that they never make it past this stage without either being bought up or moving to the States? MySQL, JBoss, Elastic. The list is much longer.

rapsey 8y ago
The funding options in Europe are abysmal compared to US or even UK. EU response to this is various EU funding programs that are mostly throwing money away for little to no benefit. At least in the tech sector.
- oblio 8y ago
  > EU response to this is various EU funding programs that are mostly throwing money away for little to no benefit. You're framing this as if it's the EU's job. It isn't. The only way the EU could compete if it would become a federal state, similar to the US. Right now the EU, despite being a single market in many respects is far from being a true digital single market. Individual states are actively fighting against this because they would have give up bits of their sovereignty (controlling tax levels, such as VAT, commercial legislation, etc.). You can't both have your cake (a huge single market able to funnel huge amounts of money into your desired investments) and eat it (keep total control of your country's finances).
  - thecleaner 8y ago
    How do these things get realized in the EU system ? I mean hypothetically if Germany, France, Netherlands, the Nordic countries pass legislations for greater integration wouldnt others follow suite ? Should it also not pass easily since most big businesses would probably get behind it ?
    - oblio 8y ago
      You're forgetting that Europeans are overall fiercely nationalistic by modern standards (not-WW1 nationalistic, but still). Every EU country pushes back when there are attempts for more integration. More than that, there's a rising anti-EU current in most EU countries, due to various population movement issues.
  - rapsey 8y ago
    > You're framing this as if it's the EU's job. It isn't. Then what is EU Horizon 2020 for? https://ec.europa.eu/programmes/horizon2020/what-horizon-2020 https://ec.europa.eu/programmes/horizon2020/what-horizon-202...
    - oblio 8y ago
      An attempt. But the EU budget is much, much smaller than the US federal budget: EU: $150 billion for 2014 US: $3000 billion for 2014 And the barriers between national markets in the EU are much steeper than the ones between state markets in the US.
      - kavalg 8y ago
        150 billion i still a good amount of money. The problem with EU funding is in the objectives: - Vaguely defined, so they open a lot of room for lobbying and corruption - It is hard to align them to a startup agenda and the administrative overhead is often prohibitive I wish it was more like a venture fund, but one that doesn't take equity. Just my two cents.
        rapsey 8y ago
        And it is a legal liability as you can quickly get investigated for misspending the funds.
        oblio 8y ago
        Those goals are vaguely defined because they're a compromise. The EU generally works by consensus, they're trying to herd 28 (soon to be 27) cats.
  - badestrand 8y ago
    > Right now the EU, despite being a single market in many respects is far from being a true digital single market I think this is less about regulations and more about language. Most people in the EU simply don't speak english so you would have to have your marketing and sales in 20 languages which is simply not doable. A french startup just can't cold call a romanian company because they can not communicate. Yes, it gets better with each new generation but it will be decades before this is "solved".
jlangenauer 8y ago
One reason is because I think there isn't such an obsession with becoming a billionaire here. If you're a founder, and someone offers you a deal which will personally see you net €10-20m after tax, why wouldn't you take it?
- jamesblonde 8y ago
  I agree. However, I know the Data Artisans founders personally. There like like 6 or 7 of them, and Prof Volker Merkl (main person behind the original project, Stratosphere). Then, they did two funding rounds. Nobody is coming out with near 10m euro. Half that, before tax, probably after a few years of golden handcuffs. So, my guess is 3m euro after 10+ years. Not bad, but you couldn't buy a good house in the valley or SF for that.
  - azag0 8y ago
    For a perspective, 3m euro is about two lifetimes of an average salary in Berlin (north of 2k monthly after taxes)
    - eastendguy 8y ago
      Nobody in IT earns only 2K a month in Berlin...
      - shinryuu 8y ago
        It's after tax. I earn 2.5k after tax.
        deleted 8y ago
        [deleted]
        ChuckNorris89 8y ago
        That seems pretty low to me. Can you buy a house in Berlin with that income? It's almost what a dev makes in Romania and there you can buy a decent house with that income.
tormeh 8y ago
EU capital markets are underdeveloped compared to those in the US. European banks are too small, and mostly national. More importantly, the marketplaces are too small and too national. European stock exchanges are a joke compared to NASDAQ and NYSE. There's also the small detail of pension funds generally being forbidden from investing in stocks. That's the money that's fuelling SV, if my impression is correct. This policy comes from a general risk-aversion that's also evident in all other areas.
- Aethelwulf 8y ago
  > There's also the small detail of pension funds generally being forbidden from investing in stocks. Do you have a source for that? I've not heard that before.
- raverbashing 8y ago
  > European banks are too small, and mostly national. You mean like Deutsche Bank? BNP Paribas? Santander?
  - tormeh 8y ago
    Yes, like those. They are big on a European scale, but not internationally. I think Deutsche used to be pretty big, but it's been going downhill for a couple of years now.
    - raverbashing 8y ago
      https://www.investopedia.com/articles/investing/122315/worlds-top-10-banks-jpm-wfc.asp https://www.investopedia.com/articles/investing/122315/world... This is more up to date but it seems you're right about Deutsche Bank https://www.forbes.com/sites/antoinegara/2018/06/06/forbes-global-2000-the-worlds-largest-banks/ https://www.forbes.com/sites/antoinegara/2018/06/06/forbes-g...
- fastbeef 8y ago
  "There's also the small detail of pension funds generally being forbidden from investing in stocks." Could you provide more info? All my Swedish pensions savings, both private and goverment, are basically stocks-only funds.
devdimi 8y ago
There are lot of reasons: -Europe is fragmented market. It is not given that German software will be gladly accepted and used in France, Italy or UK and vice versa. There are barriers there that does not exist in the US. -The capital market and the stock market are not as developed as in USA in terms of market participants and available funds. Going public is unlikely event. If it happens, it would not get a lot of publicity and it would not raise as much money. Some European companies prefer to go public in the US. -There is public mistrust about big software companies. Many people are afraid that big software companies will steal and abuse their personal data. -There is also mistrust about venture capital and generally big finance institutions that they somehow "control" the economy, exploit small family businesses, and just make money on mistreating normal people. I know that some of this sounds ridiculous, but it is true for astonishing number of people in Germany, France, Austria, and Italy. UK is a little better, but they mistrust everything about the rest of Europe.
- pplonski86 8y ago
  Could you give example of Europe based tech companies that went public in US?
  - devdimi 8y ago
    For instance Sequans Communications is a french company listed on NYSE as SQNS. It is not listed in France or anywhere else in Europe.
  - lolftw 8y ago
    Farfetch comes to mind: https://www.nytimes.com/2018/08/20/business/dealbook/farfetch-ipo.html https://www.nytimes.com/2018/08/20/business/dealbook/farfetc...
  - dkvochkin 8y ago
    Another, more recent example, is Farfetch (FTCH). European startup that went public on NYSE
  - athrun 8y ago
    Criteo is another one.
jamesblonde 8y ago
I wrote a quick blog post outlining my thoughts on the problems with building European Data companies here: https://www.logicalclocks.com/what-is-it-with-european-data-companies/ https://www.logicalclocks.com/what-is-it-with-european-data-...
- jamesblonde 8y ago
  We can continue the conversation here: https://news.ycombinator.com/item?id=18854862 https://news.ycombinator.com/item?id=18854862

rapsey 8y ago

The funding options in Europe are abysmal compared to US or even UK. EU response to this is various EU funding programs that are mostly throwing money away for little to no benefit. At least in the tech sector.

oblio 8y ago
> EU response to this is various EU funding programs that are mostly throwing money away for little to no benefit. You're framing this as if it's the EU's job. It isn't. The only way the EU could compete if it would become a federal state, similar to the US. Right now the EU, despite being a single market in many respects is far from being a true digital single market. Individual states are actively fighting against this because they would have give up bits of their sovereignty (controlling tax levels, such as VAT, commercial legislation, etc.). You can't both have your cake (a huge single market able to funnel huge amounts of money into your desired investments) and eat it (keep total control of your country's finances).
- thecleaner 8y ago
  How do these things get realized in the EU system ? I mean hypothetically if Germany, France, Netherlands, the Nordic countries pass legislations for greater integration wouldnt others follow suite ? Should it also not pass easily since most big businesses would probably get behind it ?
  - oblio 8y ago
    You're forgetting that Europeans are overall fiercely nationalistic by modern standards (not-WW1 nationalistic, but still). Every EU country pushes back when there are attempts for more integration. More than that, there's a rising anti-EU current in most EU countries, due to various population movement issues.
- rapsey 8y ago
  > You're framing this as if it's the EU's job. It isn't. Then what is EU Horizon 2020 for? https://ec.europa.eu/programmes/horizon2020/what-horizon-2020 https://ec.europa.eu/programmes/horizon2020/what-horizon-202...
  - oblio 8y ago
    An attempt. But the EU budget is much, much smaller than the US federal budget: EU: $150 billion for 2014 US: $3000 billion for 2014 And the barriers between national markets in the EU are much steeper than the ones between state markets in the US.
    - kavalg 8y ago
      150 billion i still a good amount of money. The problem with EU funding is in the objectives: - Vaguely defined, so they open a lot of room for lobbying and corruption - It is hard to align them to a startup agenda and the administrative overhead is often prohibitive I wish it was more like a venture fund, but one that doesn't take equity. Just my two cents.
      - rapsey 8y ago
        And it is a legal liability as you can quickly get investigated for misspending the funds.
      - oblio 8y ago
        Those goals are vaguely defined because they're a compromise. The EU generally works by consensus, they're trying to herd 28 (soon to be 27) cats.
- badestrand 8y ago
  > Right now the EU, despite being a single market in many respects is far from being a true digital single market I think this is less about regulations and more about language. Most people in the EU simply don't speak english so you would have to have your marketing and sales in 20 languages which is simply not doable. A french startup just can't cold call a romanian company because they can not communicate. Yes, it gets better with each new generation but it will be decades before this is "solved".

jlangenauer 8y ago

One reason is because I think there isn't such an obsession with becoming a billionaire here. If you're a founder, and someone offers you a deal which will personally see you net €10-20m after tax, why wouldn't you take it?

jamesblonde 8y ago
I agree. However, I know the Data Artisans founders personally. There like like 6 or 7 of them, and Prof Volker Merkl (main person behind the original project, Stratosphere). Then, they did two funding rounds. Nobody is coming out with near 10m euro. Half that, before tax, probably after a few years of golden handcuffs. So, my guess is 3m euro after 10+ years. Not bad, but you couldn't buy a good house in the valley or SF for that.
- azag0 8y ago
  For a perspective, 3m euro is about two lifetimes of an average salary in Berlin (north of 2k monthly after taxes)
  - eastendguy 8y ago
    Nobody in IT earns only 2K a month in Berlin...
    - shinryuu 8y ago
      It's after tax. I earn 2.5k after tax.
      - deleted 8y ago
        [deleted]
      - ChuckNorris89 8y ago
        That seems pretty low to me. Can you buy a house in Berlin with that income? It's almost what a dev makes in Romania and there you can buy a decent house with that income.

tormeh 8y ago

EU capital markets are underdeveloped compared to those in the US. European banks are too small, and mostly national. More importantly, the marketplaces are too small and too national. European stock exchanges are a joke compared to NASDAQ and NYSE. There's also the small detail of pension funds generally being forbidden from investing in stocks. That's the money that's fuelling SV, if my impression is correct. This policy comes from a general risk-aversion that's also evident in all other areas.

Aethelwulf 8y ago
> There's also the small detail of pension funds generally being forbidden from investing in stocks. Do you have a source for that? I've not heard that before.
raverbashing 8y ago
> European banks are too small, and mostly national. You mean like Deutsche Bank? BNP Paribas? Santander?
- tormeh 8y ago
  Yes, like those. They are big on a European scale, but not internationally. I think Deutsche used to be pretty big, but it's been going downhill for a couple of years now.
  - raverbashing 8y ago
    https://www.investopedia.com/articles/investing/122315/worlds-top-10-banks-jpm-wfc.asp https://www.investopedia.com/articles/investing/122315/world... This is more up to date but it seems you're right about Deutsche Bank https://www.forbes.com/sites/antoinegara/2018/06/06/forbes-global-2000-the-worlds-largest-banks/ https://www.forbes.com/sites/antoinegara/2018/06/06/forbes-g...
fastbeef 8y ago
"There's also the small detail of pension funds generally being forbidden from investing in stocks." Could you provide more info? All my Swedish pensions savings, both private and goverment, are basically stocks-only funds.

devdimi 8y ago

There are lot of reasons: -Europe is fragmented market. It is not given that German software will be gladly accepted and used in France, Italy or UK and vice versa. There are barriers there that does not exist in the US. -The capital market and the stock market are not as developed as in USA in terms of market participants and available funds. Going public is unlikely event. If it happens, it would not get a lot of publicity and it would not raise as much money. Some European companies prefer to go public in the US. -There is public mistrust about big software companies. Many people are afraid that big software companies will steal and abuse their personal data. -There is also mistrust about venture capital and generally big finance institutions that they somehow "control" the economy, exploit small family businesses, and just make money on mistreating normal people. I know that some of this sounds ridiculous, but it is true for astonishing number of people in Germany, France, Austria, and Italy. UK is a little better, but they mistrust everything about the rest of Europe.

pplonski86 8y ago
Could you give example of Europe based tech companies that went public in US?
- devdimi 8y ago
  For instance Sequans Communications is a french company listed on NYSE as SQNS. It is not listed in France or anywhere else in Europe.
- lolftw 8y ago
  Farfetch comes to mind: https://www.nytimes.com/2018/08/20/business/dealbook/farfetch-ipo.html https://www.nytimes.com/2018/08/20/business/dealbook/farfetc...
- dkvochkin 8y ago
  Another, more recent example, is Farfetch (FTCH). European startup that went public on NYSE
- athrun 8y ago
  Criteo is another one.

jamesblonde 8y ago

I wrote a quick blog post outlining my thoughts on the problems with building European Data companies here: https://www.logicalclocks.com/what-is-it-with-european-data-companies/ https://www.logicalclocks.com/what-is-it-with-european-data-...

jamesblonde 8y ago
We can continue the conversation here: https://news.ycombinator.com/item?id=18854862 https://news.ycombinator.com/item?id=18854862