People in Silicon Valley often dismiss the startup market in Europe as too small or not ambitious enough. However, this view is the complete opposite of how Europeans see their own potential. This year’s annual Slush conference in Helsinki revealed a venture market that feels ready for transformation and is poised to produce its first trillion-dollar startup.
Founders, investors, and government officials all recognize the historical challenges that have limited Europe’s growth. For a long time, European entrepreneurs felt they had to move to the United States to build their companies or sell their businesses earlier than ideal. This was often due to a local market that lacked both sufficient customers and capital.
Some major investment firms made efforts to establish a presence in Europe by opening offices in London after the pandemic. However, they have since closed those locations. In contrast, other prominent Silicon Valley firms have recently announced they are opening offices in London. While some argue that startups must be in San Francisco to innovate, the situation is more complex.
Many investors at Slush believe the idea of a chronically underfunded European market is exaggerated. One investor specifically noted there is significantly more U.S. capital in Europe now than there was five years ago. European companies are also increasingly successful in resisting the pressure from U.S. investors to relocate to Silicon Valley.
For example, the CEO of the vibe coding platform Lovable credited the company’s rapid growth to its decision to stay in Europe. Instead of moving, the company recruited experienced talent from Silicon Valley to come to Stockholm.
A partner at Plural, who was the first employee at the Estonia-founded Skype, observed that the European market is about a decade behind the U.S. However, startups have now become fully mainstream in a way they were not ten years ago. Another venture capitalist added that decades ago, startups were not a noticeable part of the regional economy, but that has fundamentally changed, and their share will continue to grow.
The growing list of European success stories, such as Spotify and Klarna, has boosted the region’s profile. These successes give new founders the confidence not to sell their companies too early. They also provide employees with the skills and financial security to start their own ventures.
Regulators are also taking action to help startups succeed. The European Union is moving toward regulatory changes that would allow a startup to register in all EU countries at once, rather than just its home country. While such steps present challenges, they are a move in the right direction.
Challenges do remain. European corporations are still less likely than American ones to experiment with and implement new technology from startups. Despite this, the overall feeling at Slush was overwhelmingly optimistic. Europe appears ready to finally come into its own, even if the journey has taken a little longer than expected.
As the welcome banner at Slush put it, the message was clear for any remaining doubters.