Step aside Silicon Valley, there is a new tech hub in town

Step aside Silicon Valley, there is a new tech hub in town | World Economic Forum

Deep tech accounted for $1.3 billion of European venture investments in 2015, delivered in 82 rounds, up from $289 million, delivered in 55 rounds, in 2011.

Europe’s traditional industries are now awakening to tech. Two-thirds of Europe’s largest corporates by market capitalization have made a direct investment in a tech company. One-third of those companies have acquired a tech company since the beginning of 2015.

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…many small export-oriented European Union member countries – namely, the Benelux, Baltic, and Nordic countries – rank well above the US in so-called “e-intensity,” which covers IT infrastructure, Internet access, as well as businesses, consumer, and government engagement in Internet-related activities.

These “digital frontrunners” generate about 8% of their GDP from the Internet, compared to 5% in Europe’s Big Five (Germany, France, Italy, Spain, and the United Kingdom).

Weaknesses

•while European tech entrepreneurs find it as easy as their American counterparts to raise startup funds, US firms enjoy 14 times more later-stage capital. That funding gap would disappear, if European pension funds allocated just 0.6% more of their capital under management to venture investments.

•lack of a true European single digital market. In the US or China, tech entrepreneurs gain immediate access to a massive market. In Europe, they still must navigate 28 different consumer markets and regulatory regimes. …Europe’s “single digital market,” they argue, currently amounts “to a jumble of outdated, corporatist, counterproductive industrial policies that favor producers over consumers, big companies over small, traditional incumbents over digital startups, and EU firms over foreign ones.”

•instead of liberalizing, the EU wants to regulate.

But

A new appetite for risk seems to be sweeping the continent; Atomico reports that more than 85% of founders say it is “culturally acceptable” to start one’s own company. Add to that deep research talent – five of the top ten global computer science faculties are within the EU – and Europe’s start-up boom looks sustainable.

Europe’s digital frontrunners are beginning to organize into a potent force, with 16 small EU countries, from Denmark to Ireland and Estonia, having formed a pro-Internet group. Together, these countries have urged the EU to ban data-localization requirements.