Ursula von der Leyen, president of the European Commission, wants the Union’s start-up tech companies to become American-style giants. However you look at it, that dream is fulfilled is far away. However, a new report from Atomico, a venture capital firm, suggests reasons to be hopeful for the next ten years or so.
The figures published yesterday show the road ahead for Europe. Its startups will attract $ 41 billion this year, Atomico estimates after adjusting for the difference between published data and actual deals. Even that sum, a maximum for Europe, is a fraction of the 141,000 million in the United States, and it would be higher if the differences between what was real and what was published were also adjusted. Investment in Asia will decline 37% from its peak in 2018, but is still around double that of total European investment.
On the other hand, the largest companies based in the region are still tiny compared to the norm in the United States. Sweden’s Spotify Technology and Ayden, the Dutch payments group, together are worth $ 127 billion. Amazon.com’s market capitalization rose about that amount in just two days in early November. European software giant SAP, valued at $ 150 billion, has lost 16% of its value on the stock market this year.
However, today’s data often reflect yesterday’s reality. This is due to the gestation period to go from being a newly created company that is taking its first steps until it goes public, to later become a technological giant. takes many years. For this reason, comparing the aggregated European and US data shows us how things were. In any case, the figures for newly created companies are more promising in Europe. Atomico estimates that this year the European region will receive 40% of all capital invested globally in amounts of less than 5 million dollars, compared to 35% taken by the United States. Europe’s share is almost double that of Asia in the next tranche, that of investments of between $ 5 million and $ 10 million.
In other words, the Union is absorbing a substantial proportion of investments in small start-ups, which are the potential giants of 2030 and beyond. The next question is whether these companies will stay in Europe when the time comes to go public. Spotify, for example, was registered in New York. There’s good news on this front: UK’s THG and Poland’s Allegro.eu, which combined are worth $ 30 billion, went public this year, showing that European tech companies can achieve US-size valuations without leaving home. Von der Leyen’s dream has a very solid foundation, but he may no longer be in office when it comes true.