12 November 2014

Digitally Disrupted Europe: What’s in There for a Startup?

On Tuesday, November 18th, 6pm at the European Parliament we will launch the Disrupt Europe Year and the Euromentors Association! Find the full agenda and register here.

 

“A business like Google would have never existed in Europe”, says Ander Michelena. He is the co-founder of Ticketbits, an online platform to buy and sell tickets, and is speaking at one of those-many-start-up-events that Europe has seen on the rise in the last five years. Right after the roundtable finishes, and the questions start, someone in the audience asks: how do you, start ups, feel about new regulations on intellectual property, collaborative economy or crowdfunding campaings?

“It’s not something specific to Spain. It is Europe. In general, sectors are over regulated. In the U.S  the regulation comes after, while here it comes in advance”. And so, Google would have been impossible in our continent.

Starting a digital business up in Europe comes with different challenges. From education and less risk-taking mindset to the fragmented market (we are 28 countries!), red tape problems or lack of venture capital money, the reality is that nowadays USA and China take the most part of those successful digital companies rankings. See, for instance, Atomico’s, a venture capital firm that invests in companies all over the world, research: there are 82 billion dollar software companies from the US, 36 from Asia ones and… 22 from our continent.

“In spite of more than 20 years of research and innovation funding”, wrote EYIF’s director Kumardev Chatterje Founder and President for EU Digital Minds book, “and much talking about the vibrant startup ‘scene’ in Europe, when it comes to global top ten lists, Europe usually merits just two major hubs”. And just 22 big tech firms.

The reasons are a varied and one can not just blame regulation as such. However, people already-in-business are optimistic about how the future looks like.

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Crisis, opportunities and money (!)

The economic crisis, for instance, has had something to be and not only for the unemployed youth. “Scary environment because of the crisis? We thought it was an interesting moment”, continues Michelena. Leaving his job in a bank, he decided to start. “Crisis always bring opportunities although the market is never going to be that big. And we did not do it thinking it was going to be a one or two year thing. We thought more in the long term”

Even the VC’s agree on that. “The first years of the crisis made it difficult to survive as VC. It was an awful period, no other firm wanted to invest. Every company was closing and we had companies with real traction that went under. In a normal state of the market they would have survived. But I think it changed us in the way that we managed our portfolio”, tells a spoke-person from Adara Ventures firm. “During a crisis, you become much more aware of the decisions you made, the mistakes and the word ‘success’”.

There are also changes in education, where more and more schools are encouraging entrepreneurship as a transversal skill, mindset, a reduced salary cost in some european countries (so it’s cheaper to start here than in other continent) and even more money: new financial firms are looking at european start-ups.

“Since the collapse of the dotcom bubble, European venture capital has had a bad reputation. Institutional investors do not want to touch it with a ten foot pole, meaning that most European venture capital comes from government sources. Raising money for a new VC fund on the old continent can take years and often fails. As a result, Europe has spawned only a few new venture firms in recent years. That may be about to change. A new group of European VC firms is emerging”, wrote The Economist some months ago. There is also more international money: for instance, Google Ventures just landed.

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“We don’t need more re-configurations”

As the risk-taking mindset and entrepreneurial approach continues expanding, start-ups grow and money keeps coming in, the space becomes more mature and ready to take off. However, as Chatterje also noted “we don’t need more re-configurations of existing non-functional systems and ways of doing business”

By putting digital first in regulatory bodies, educators, investors and ultimately citizens, every step we noted above would be smoother for innovation to take place. A young person would never start a project just because he or she does not find a job – but because the entrepreneurial approach comes from scratch – and an answer about regulations as a challenge to start would never be answered, since they would not come in advance, but after innovation.

“I’m so happy they come”, an entrepreneur tells us. He is referring to Uber, a transport-app company coming from USA that faces regulatory problems in Europe entering the taxi industry. He is trying to launch a transport start up to connect users and their neighbors so they can pick up their deliveries and thinks there are economic sectors that need to be revamped. He welcomes them.  “The taxi sector is over regulated. If they come and, even being illegal, open the space, I’d be happy”.

This “Innovation first” approach is what Disrupt Europe sees as core. “We need disruptive change and one that puts digital first and at the heart of the European endeavour”.

 

Don’t forget to join us on Tuesday, November 18th at the European Parliament! Register here.