4 ms·

> Most of this money doesn't come from banks or venture capital funds, however. "Newly founded companies are mostly financed by the founders' own funds" Ah the

> Most of this money doesn't come from banks or venture capital funds, however. "Newly founded companies are mostly financed by the founders' own funds" Ah the typical European startup dilemma. The governments recognize that in an age of difficult unemployment and stagnating growth, new avenues of entrepreneurship need to be embraced, and so they set up all sorts of programs to encourage new startups. But then these startups get beyond the very early stage, and need to raise capital to continue their growth. And the look to institutional money in Europe. And no one will give them any. Because the European investor mindset is so risk averse, that only those who already have money are considered safe enough to start real businesses (continuing the old guard). Personally, I think that's great. You folks in Europe are just reasserting that we in the US have the more opportune climate for startups. And so we'll continue to steal all your good ones ;)

donw 14y ago
I'm from California and currently work as a traveling circus monkey, otherwise known as a consultant. I've worked with startups in Europe, Japan, and the US, and while I don't consider myself an expert, I do at least have some idea of the differences between the various markets. Europe is a big place, with lots of different countries, and much like states in the US, they work differently. True, the investment climate makes raising money much harder than for companies in the US, but on the other hand, there are sometimes fewer regulatory hurdles for companies looking into exploring new business concepts. Take FundedByMe. They're fulfilling the promise of equity-based crowdfunding in Sweeden, and because they're not a US-based company, don't need to deal with the SEC and FINRA. The US has tried to set up something comparable via the Jobs act, but major players have kept all the regulatory hurdles in effect, and so for-profit crowdfunding is still a few years off, if it ever really happens at all. Don't get me wrong -- we still have a big lead in the US, especially in the Valley, but don't get complacent about how quickly that lead can evaporate through the missteps of well-meaning regulators and politicians, or through the negative effects of software patent law.
- greghinch 14y ago
  I will not disagree with any of that. The US regulatory minefield is still a problem, though I do feel like the patent issue is going to become non-existent over the next several years. Laws and regulations are often simpler to change (although still difficult) than the mindset of a bunch of old men sitting on the majority of investment capital.
rmc 14y ago
The situation is probably more complex than that. If European banks were so risk averse, as you suggest, they probably wouldn't have imploded.
- greghinch 14y ago
  I should probably have phrased it better, I meant risk averse to new businesses. The market problems in recent years you're referring to were internal to the long existing institutional establishments.
skrebbel 14y ago
I'm not sure. Certainly, if you want to spend $10M now on the next social local public transit pancake revolution, you're better off in California. If you want to bootstrap decent tech and not get sued by someone who patented the double click, maybe Europe's not such a bad market to start in.
- greghinch 14y ago
  Pretty easy to be dismissive of the startup scene from the outside. Reality is almost no one who raises something like $10mil is making a "social local public transit pancake revolution". Occasionally someone does raise a lot on a bunch of BS, and it makes a bunch of news sites, but ironically those are usually founders who have proven themselves successful before (and probably could raise money in Europe with that record). No one is going to give a first time founder, California or not, that kind of money for their hipster startup.
  - deleted 14y ago
    [deleted]
  - skrebbel 14y ago
    I know.
ig1 14y ago
> Most of this money doesn't come from banks or venture capital funds, however. "Newly founded companies are mostly financed by the founders' own funds" Also happens to be true of the US as well. VC funds only fund a minority of tech businesses, and for a good reason too, many tech businesses are simply unsuitable for that type of investment. VCs typically need to seek a 10x return over 3-5 years for the maths to work, and most tech companies aren't going to grow that fast.

donw 14y ago

I'm from California and currently work as a traveling circus monkey, otherwise known as a consultant. I've worked with startups in Europe, Japan, and the US, and while I don't consider myself an expert, I do at least have some idea of the differences between the various markets. Europe is a big place, with lots of different countries, and much like states in the US, they work differently. True, the investment climate makes raising money much harder than for companies in the US, but on the other hand, there are sometimes fewer regulatory hurdles for companies looking into exploring new business concepts. Take FundedByMe. They're fulfilling the promise of equity-based crowdfunding in Sweeden, and because they're not a US-based company, don't need to deal with the SEC and FINRA. The US has tried to set up something comparable via the Jobs act, but major players have kept all the regulatory hurdles in effect, and so for-profit crowdfunding is still a few years off, if it ever really happens at all. Don't get me wrong -- we still have a big lead in the US, especially in the Valley, but don't get complacent about how quickly that lead can evaporate through the missteps of well-meaning regulators and politicians, or through the negative effects of software patent law.

greghinch 14y ago
I will not disagree with any of that. The US regulatory minefield is still a problem, though I do feel like the patent issue is going to become non-existent over the next several years. Laws and regulations are often simpler to change (although still difficult) than the mindset of a bunch of old men sitting on the majority of investment capital.

rmc 14y ago

The situation is probably more complex than that. If European banks were so risk averse, as you suggest, they probably wouldn't have imploded.

greghinch 14y ago
I should probably have phrased it better, I meant risk averse to new businesses. The market problems in recent years you're referring to were internal to the long existing institutional establishments.

skrebbel 14y ago

I'm not sure. Certainly, if you want to spend $10M now on the next social local public transit pancake revolution, you're better off in California. If you want to bootstrap decent tech and not get sued by someone who patented the double click, maybe Europe's not such a bad market to start in.

greghinch 14y ago
Pretty easy to be dismissive of the startup scene from the outside. Reality is almost no one who raises something like $10mil is making a "social local public transit pancake revolution". Occasionally someone does raise a lot on a bunch of BS, and it makes a bunch of news sites, but ironically those are usually founders who have proven themselves successful before (and probably could raise money in Europe with that record). No one is going to give a first time founder, California or not, that kind of money for their hipster startup.
- deleted 14y ago
  [deleted]
- skrebbel 14y ago
  I know.

ig1 14y ago

> Most of this money doesn't come from banks or venture capital funds, however. "Newly founded companies are mostly financed by the founders' own funds" Also happens to be true of the US as well. VC funds only fund a minority of tech businesses, and for a good reason too, many tech businesses are simply unsuitable for that type of investment. VCs typically need to seek a 10x return over 3-5 years for the maths to work, and most tech companies aren't going to grow that fast.