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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: 2, Insightful) by brocksampson on Wednesday September 23 2015, @10:28AM
It is also hard to build a monolithic Facebook in Europe because the population is fragmented culturally. Each country seemed to have its own version of a social media whatever until Facebook eventually bought them and/or destroyed them. That is where some of the conservatism in European investments come from as well. It's hard to back a startup promising some killer app written by some kids in Sweden or whatever because it is unclear how it will scale and how localization will affect it, but the markets for trains and medical devices are self-evident. But Americans by-and-large participate in a monoculture; they watch the same TV shows and movies and buy crap they don't need from the same national chains. That and taxes. The US gives strong tax incentives for investors to take risks in a variety of ways.
Of course, European companies don't shy away from making money selling off people's information (or setting up tax shelters for giant tech companies). They might not start the companies, but they are happy to mine data and sell it off to whomever and to buy into all the Big Data trends. I can't even go food shopping now without my mobile company and grocery chain tracking my movements and shopping habits. Good thing small outdoor markets are still a big thing here.