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As technology upends industries and lifestyles at breakneck pace, the Old Continent is not producing any of the online giants like Google, eBay or Facebook. Its best and brightest prefer to emigrate to Silicon Valley, or sell their ideas on to U.S. firms before they have a chance to establish themselves.
The European Union's top executives in Brussels are trying to rectify that with a long-term plan of reforms and incentives but face an uphill battle. The 28-nation bloc is, above all, lacking in the risk-taking culture and financial networks needed to grow Internet startups into globally dominant companies.
Europe's relatively cautious attitude to investment stands out as one of the biggest hurdles—and among the most difficult to change. Investors in Europe want to see that a young company can generate revenue from the start. Europe's many high-technology companies are focused on manufactured goods that can be sold right away to generate revenue—industrial equipment, energy turbines, high-speed trains, medical devices, and nuclear energy.
By contrast, Internet companies often have little to no revenue at the beginning. Twitter and Facebook, for example, first focused on building up their user numbers. Only once they were established as global forces did they put more attention to making money, through advertising and other strategies.
This difference in mentality stands out as one of the key reasons that Europe has fewer venture capital firms and less investment in startups than the U.S. or Asia.Over the past five years, U.S. venture capitalists spent $167 billion on new business ideas compared with some $20 billion by their European counterparts, according to the National Venture Capital Association.
http://phys.org/news/2015-09-europe-isnt-googles-facebooks.html
(Score: 1, Interesting) by Anonymous Coward on Wednesday September 23 2015, @05:28AM
Venture capitalists don't business with their own money: they just convince some others to back the startup and exit asap.
(Score: 2) by Adamsjas on Wednesday September 23 2015, @07:00AM
Maybe some, but by far the most of the VCs are spending their own team's money.
Most of them don't throw money at a project and walk away any more. The trend toward closely managing the grantees is very strong. Taking money from a VC is like taking on a new partner in the firm, a bossy one.
(Score: 2) by Phoenix666 on Wednesday September 23 2015, @12:14PM
I have been advised by venture capitalists, who were friends of a friend, that the last thing you want to do is take investment from a venture capitalist. They'll sell off everything you have piecemeal, jettison you the founders, and destroy anything and everything good about whatever it was you were trying to build.
Washington DC delenda est.
(Score: 1, Interesting) by Anonymous Coward on Thursday September 24 2015, @05:19PM
I have been advised by venture capitalists, who were friends of a friend, that the last thing you want to do is take investment from a venture capitalist. They'll sell off everything you have piecemeal, jettison you the founders, and destroy anything and everything good about whatever it was you were trying to build.
To be a little more nuanced, the VC's job is to find companies they can make a profit from. And generally this means they expect a huge profit in a short amount of time. As long as they make a profit, what happens to the company they are buying is of no consequence. They have a large amount of experience and resources in writing contracts that makes theme the clear winners. Unless, as a founder of a company, you have equal experience in how to write contracts to hose the other side, you are going to be on the losing end of whatever deal you make. If you do have lots of this kind of experience (unlikely unless you are a former VC), you might be able to break even.