With technology, several competitors often work on the same idea and race to get out their product first and make it stand out. That figure is set to surge further this year, with $23 billion invested already by the end of August.Įarly investment is crucial for startups to be able to get their products to market quickly. (AP Photo/Vince Bucci, File)Īsia, which has seen the rise of Internet retailer Alibaba in recent years, also outshone Europe, with venture capital totaling $22.5 billion in 2014, according to Preqin, a data analysis company. European success stories include online calling service Skype, which started as a Swedish-Estonian venture, and the Swedish commercial music streaming service Spotify, which has over 60 million users worldwide. 11, 2012, file photo, Spotify CEO Daniel Ek arrives at the Pre-Grammy Gala & Salute to Industry Icons with Clive Davis honoring Richard Branson, in Beverly Hills, Calif. 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. 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. Only once they were established as global forces did they put more attention to making money, through advertising and other strategies.
Twitter and Facebook, for example, first focused on building up their user numbers. 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.īy contrast, Internet companies often have little to no revenue at the beginning. Investors in Europe want to see that a young company can generate revenue from the start. "Successful businesses often come from crazy ideas."Įurope's relatively cautious attitude to investment stands out as one of the biggest hurdles-and among the most difficult to change. "In the U.S., especially in Silicon Valley, they are up for any crazy idea," said Benoliel, 43. 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. 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. firms before they have a chance to establish themselves. Its best and brightest prefer to emigrate to Silicon Valley, or sell their ideas on to U.S. "I knew the only way to change the world was from here," says Benoliel, the CEO of Open Garden, the maker of the FireChat messaging app.Īs technology upends industries and lifestyles at breakneck pace, the Old Continent is not producing any of the online giants like Google, eBay or Facebook. So when he came up with an idea for a smartphone app that could send messages without Internet or cellular connections, he went back to California in 2011 to pursue his dream.
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