American investors looking for more startup opportunities in Europe.

A lot has been said about American investors interest in spending more time and money in Europe.

In general competition is good for consumers aka founders, especially since the American way of doing business is more pragmatic and risk-taking oriented - in Europe the VC investor job is still a very young profession, as (tech) startups as a class started to get serious traction only in the past 10 years or so.

Inevitably the effects will be felt at the seed and pre-seed level, once the competition for later stage deals will lead to high level valuations and everybody will look for undervalued assets down the value chain.

The early stage infrastructure in Europe is incredibly fragmented and unprofitable, supported by high subsidies of local governments and EU.

Add also the fact that the knowledge is also scattered and rather local than global, inefficient and insufficient for the founders’ quest to get to the next level until the exit.

This is probably the biggest vulnerability of the European ecosystem, startups growing make it in spite of that not because of that.

And this rather than the lack of capital access makes European startups to flee to US/Silicon Valley. There’s never been so much investment money available in Europe.

Besides a more homogeneous 300m ppl market, the US offers entrepreneurs access to a concentrated area of investors available, knowledgable and experienced, three attributes that are still difficult to find aplenty in Europe.

It is as easy to book a ticket and fly to the East or the West Coast as to go to London, for example, in order to internationalize and raise money. And yet the US investors are more available, easier to talk to and sell to. They get it and their risk appetite is different than that of the Europeans.

And hopefully this is where a more active US VC presence will impact by doing business directly in Europe. Competition creates market efficiencies.

No comments yet

CAPTCHA