In late June, I was honored to be invited to the Elysée Palace by President Emmanuel Macron as part of the Scale-Up Europe initiative, which attracted more than 170 of Europe’s leading tech founders, investors, researchers, corporate CEOs, and government officials.
At the gathering, I shared our recommendations and support of the ambition to make Europe the leading tech region of the world, together with Virginie Morgon, CEO of Eurazeo. Happy to share some of these thoughts with our wider network of friends and followers as well.
President Emmanuel Macron’s Scale-Up Europe initiative formulated a bold ambition, creating 10 European-headquartered technology companies that are each worth EUR 100 billion or more by 2030. Europe has a great platform from which to launch this effort. Unarguably, the region has a great pool of talent and sufficient capacity for innovation and the proof is in the numbers. European tech companies are raising more money than ever before, generating a new generation of tech companies that are truly competing at a global level. Figures show that European start-ups have raised EUR 43.8 billion in the first six months of 2021, surpassing the record EUR 38.5 billion invested in 2020 (Dealroom). In addition, Europe now has 166 tech unicorns, companies valued at more than USD 1 billion, with a combined worth of more than USD 800 billion, according to the recent GP Bullhound report: Titans of Tech. This is a great foundation but our collective ambition is larger and there is more work for all of us to do.
At the conference, we made some specific supporting recommendations:
First of all, we need more investors with scale-up experience and skills to support entrepreneurs as they grow their businesses globally. EQT would welcome the competition, to the benefit of a larger pool of investors, creating appropriate funding mechanisms and a stronger ecosystem altogether.
Secondly, the market would benefit from increased public funding at EU level to fuel those investors, making it easier for institutional investors to support the next generation of growth-stage companies.
Thirdly, it is crucial to create an ecosystem that enables larger funding rounds, to increase the success rate of turning start-ups into late-stage successes. In comparison with companies within the US ecosystem, European start-ups are 30 percent less likely to progress from seed to a successful outcome according to McKinsey’s report Europe’s start-up ecosystem: Heating up but still facing challenges.
But we also need to make it easier, faster, and more attractive to take companies public across Europe, ensuring that tech companies also remain in the region in the long term.
And finally, Europe needs to keep its global head start within ESG and sustainability to capture the opportunity and embrace the responsibility that follows. Challenges remain: Atomico’s 2020 The State of European Tech report revealed that only 0.25 percent of VC funding went to Black-led startups, while in 2019, 92 percent of funding went to all-male teams. Progress over the last decade has been significant – but those in the European ecosystem must find ways to ensure that the best ideas and most ambitious founders are able to pursue opportunity, no matter their gender, ethnicity, sexuality, or socioeconomic background.
At EQT, we offer active ownership strategies for companies’ entire life cycles, from early-stage venture to maturity, and are therefore very much part of boosting the ecosystem of growing tech across Europe. We have a solid track record of future-proofing companies in the European market for over 25 years and we want to support in shaping its digital future, making sure Europe is at the forefront of technological innovation.
If Europe is allowed to better harness the vast opportunities within its own tech ecosystem, it will undoubtedly become the tech leader of the world.