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I take offense at such massive overgeneralizations as "Europe lacks imagination." What it lacks is freely flowing funding such that risky enterprises can be fu
by pilsetnieks 5y ago
I take offense at such massive overgeneralizations as "Europe lacks imagination."
What it lacks is freely flowing funding such that risky enterprises can be funded even if 1 out of ten or 1 out of hundred actually are successful. This kills business models which cannot show any profit whatsoever, and a large portion of the remainder are killed by data regulations forbidding "alternate paths of monetization" (to put it charitably.)
Rather, a problem is that once a European project becomes successful enough, it soon becomes an American project, either by acquisition or by moving to where the investment money is.
- MangoCoffee 5y ago>risky enterprises can be funded even if 1 out of ten or 1 out of hundred actually are successful correct me if i'm wrong, Europe is dominated by legacy business/banks that normally won't take such risk. legacy business like BMW. European and Asian want to see you have some success or already making money before they invest. while American will throw money into something that just an idea.
- BlargMcLarg 5y agoThe entire culture is based around "legacy" and "experience". Truth is, Europeans are extremely risk-averse and favor legacy, with grants, laws and such reflecting that. That said, Europeans will throw money at an "idea", as long as that idea is approved by peers. They'll even die with that idea, once invested.
- HPsquared 5y agoThree problem is, these institutional investors lack the ability to evaluate risk:reward on entrepreneurial projects.
- fvdessen 5y agoIt's dominated by businesses where network effects are not in play; commodities, specialist equipment, medicine, biotech, hardware, etc. If there's a cultural, legal, or network element to the business, then the fragmentation of the European market puts it at a massive disadvantage. Investor knows it and thus avoid investing in those sectors because they don't want to fight uphill battles
- throwaway210222 5y ago> I take offence at such massive overgeneralizations as "Europe lacks imagination." Why then did Airbus put their VC arm [1] right slap-bang in the middle of Silicon Valley? Note. In this case, its Europe bringing/managing the capital - they are choosing - all by themselves - where to find the talent. [1] https://airbusventures.vc/ https://airbusventures.vc/
- pjc50 5y ago.. and if you look at the list of companies, it looks fairly global. Some, but far from all of them, are in SV. You'd have to ask them, but I'd posit that it's simply because SV is where all the meetings are.
- jpttsn 5y ago> What it lacks is freely flowing funding such that risky enterprises can be funded even if 1 out of ten or 1 out of hundred actually are successful Might this be a flip side of regulations that combat economic inequality? If so, the two should not be addressed as separate issues. But frontpage HN posts tend to be "Applauding Europes' long vacations and progressive taxes" and "Bemoaning Europe's lack of VCs with fuck you money".
- whimsicalism 5y agoMaybe, but I might need actual evidence as to that being the case.
- jpttsn 5y agoEvidence is hard: a double blind randomized control trial would be unrealistic and at a high level there would be innumerable confounders. However, the mechanism seems simple: 1. Regulation is designed to combat inequality 2. Lower inequality is achieved thanks to this regulation 3. As inequality is lower, fewer people have spare capital for risky investments Meanwhile, if this mechanism doesn’t work as above, that might imply we don’t (yet) have an effective way to regulate inequality down.
- coryrc 5y agoSweden has more billionaires per capita than the USA. Similar to the US, they also pay less in taxes than the middle class. I wonder if Sweden has higher funding than the rest of the continent?
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- preordained 5y ago> I take offense at such massive overgeneralizations... Boy, you would make one offended American...
- tasogare 5y agoNot to mention a lot of very skilled European engineers move to US (sometimes Canada). It's easy to brag about talent when being on the receiving side of the brain drain.
- goodpoint 5y agoLarge US companies to have offices over the world. It's extremely common to siphon the most promising projects or ideas to the HQ. Keep the golden egg hen close to home. Once the project becomes successful people will ignore or quickly forget where the idea came from.
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- pelorat 5y agoIn some countries, if your startup fails you're legally obliged to pay back all money that was invested in it, and you won't be able to start another until you've done so.
- jcelerier 5y ago... it's not the case in the US ? Wtf
- pwthornton 5y agoIt's not a loan from a bank. It's an investment, and the nature of investments are that some fail. It's pretty wild that founders would need to pay back this money. That would have a massive drag on any risk taking or innovation. The entire point of venture capital and similar funding mechanisms is that in exchange for a potential massive return on investment, funders are willing to lose everything.
- siscia 5y agoWhich countries?
- bennysomething 5y agoWhich countries? I've never heard of this, sounds insane!
- qznc 5y ago
- fvdessen 5y agoThe reason the US has freely flowing funding is because the VC has an immense amount of cash from the previous generations of successful Unicorns. So why was it (and still is) easier to raise unicorns in the USA ? The thing that separate the internet economy with the traditional is the massive network effects that makes it a winner take all game. And at that game the USA has a massive home advantage with a huge cultural, legal and financially unified market. In Europe you start in a small country then face big barriers to expand out of it, which slows growth enough that you never get to get competitive by the time the much better funded American competitor comes to crush you. And then it's game over, because you only get one shot at being the monopoly. Once you have a Facebook, you can't have a second one, even with all the VC cash, talent & creativity in the world. Notice that the USA did not succeed in building a competitor to Google, Youtube, Facebook, or Amazon, so how could Europe, or anybody else ? Well the Chinese and the Russian could, by banning American monopolies from their own markets, which let them built monopolies on their own, & then attempt to conquer the rest of the world with them. The USA is perfectly aware of this dynamic because faced with TikTok, their first reflex was to try to ban them. And that's what Europe should do, ban American Monopolies. If we would ban facebook, instagram, youtube, etc, we'd have solid equivalents in a year, and from there enough cash flow to fund a next generation of startups.
- myfavoritedog 5y agoAs another comment pointed out, the small countries vs US Network effects excuse doesn't really fare well when you look at the successful startup environment of Israel. The USA is perfectly aware of this dynamic because faced with TikTok, their first reflex was to try to ban them. And this take is just hot garbage.
- atq2119 5y agoHow many unicorns are from Israel, though? Israel should be lauded for managing to be an intensely vibrant and high-tech country, and European countries should try to learn from that, but even that is apparently not quite sufficient. So I think GP has a point.
- hutzlibu 5y agoAnd I take a bit offense with selective quotes, because the original: " For one, we lack the imagination and vision to launch something without knowing how it might eventually make money. " tells a different message, than just "Europe lacks imagination."
- odiroot 5y ago> Rather, a problem is that once a European project becomes successful enough, it soon becomes an American project, either by acquisition or by moving to where the investment money is. That's not a problem, that's the solution. There's some other problems causing the need for this solution.
- goodpoint 5y ago> I take offense at such massive overgeneralizations as "Europe lacks imagination." It also strikes me as really inaccurate. If anything, a lot of Europeans value creativity and cultural interests over raw productivity or money.
- varispeed 5y ago> What it lacks is freely flowing funding such that risky enterprises can be funded even if 1 out of ten or 1 out of hundred actually are successful. Or that people pay great % in tax and they cannot afford to save their own money to start a business. They need to apply for government grants instead (which people who decided about them can be corrupt) or share their business with someone from the start. That's a buzz killer. Funnily big corporation are free to avoid tax as they please, because the high earners won't even turn to the streets to protest so they can be taxed through the nose.