Millions of businesses are launched every year worldwide. These businesses provide jobs and a source of income to a lot of people, economic growth to the countries and value proposition to the end consumers. A lot of Investors (Institutions, Angels, Venture Capitalists, Family funds, etc.) invest into these businesses with the hope that they will eventually be able to exit (if at all) with a very high return on their investment. This forms the entrepreneurial ecosystem.
Entrepreneurial ecosystem is spread throughout; however the first place that comes to mind thinking of the opportunities is the Silicon Valley in the US. Lately a lot of countries have become a haven for entrepreneurs with the right kind of infrastructure, policies and learning platforms, which not just guides them with the legal and compliance issues in starting a firm but also helps them in scaling up globally.
A strong boost in the number of technology start-ups has been witnessed lately in Europe. This could be attributed to either the current financial conditions in Europe or the massive growth of technology driven consumers. Since, I handle markets across 6 countries, wherein I interact with SMEs and Start-Ups, I have come across a few fascinating trends that I wish to highlight.
– IT, e-retail, Mobile Apps, Social data based entrepreneurs are increasing exponentially since the last few years.
– Apart from San Francisco and Tel Aviv, Europe is gradually developing hubs across many countries where technology start-ups are flourishing.
– Most Investors in Europe still look for YoY (year on year) valuations, current revenue generation and monetization strategies for investing in a start-up unlike in Silicon Valley, where ideas alone can attract investors.
WHY EUROPE:
As I mentioned earlier, I feel I could attribute the increase in the number of Technological start-ups across Europe to 2 major reasons:
Technology driven Consumers:
Europe has a very diverse consumer base in terms of demographics, languages spoken, culture, financial situations etc. However one thing that unites them all is the need for technology which makes their lives more comfortable. A large segment of consumers in developed cities (if not all) across Europe use smart phones and with it the latest Mobile Applications which are resourceful in its content and useful either for saving money or time. Similarly a lot of e-retail, Social data and IT applications are becoming an essential part to solving some key consumer issues. Catering to these increasing demands and with a consumer base so large, a lot of entrepreneurs come up with very unique value propositions which translate into these applications. These cater to all industries and try and match up as solutions to many of consumer issues.
Financial Conditions in Europe:
Many countries in Europe, witnessed a financial crisis over the last few years. Many of them did declare recession as well. A lot of people lost their jobs as a result of the financial predicament. I strongly feel this led to a cascading reaction, where-in the entrepreneurial spirit grew amongst people who felt that they could be their own bosses and could try to make money through business opportunities. Of course I agree that this is my thought, whether right or not. In countries like Spain, France, Greece etc., the number of Entrepreneurs started to increase significantly in last 4-5 years.
From the point of view of entrepreneurs, the thought that comes to mind is whether having a unique idea catering to a major consumer issue is sufficient in Europe for investors to invest in their organization? Or do they (entrepreneurs) really need to demonstrate a source of income for the Investors to trust them or can the investors actually by mere prior success of similar ventures put their money on such ideas? I look forward to your views on the same.
