Europe has the potential to create more value in tech than any other region in the world. Our tech industry has long been overshadowed by the USA and China, and speculation about Europe's ability to catch up with its predecessors still dominates debate. This seems unfair to us, not only because the European ecosystem is relatively young, but also because there are clear signs that Europe is on the cusp of becoming a global tech superpower.
The key figures are well known: European tech is a $3 trillion industry, with an annual growth rate of 27 % since 2015. More than 300 companies valued at over $1 billion have been founded in Europe, from a diverse base of 29 countries. But Europe's potential is revealed on closer analysis. Growth results from a mix of innovation, talent and capital, which every "superpower" needs. Despite the economic downturn, there is ample evidence of the industry's fundamental strength.
The flow of emerging high-tech companies is almost equal to that in the United States. Both regions now create the same amount of new start-ups each year. Thirty per cent of all global funding for early-stage companies went to European start-ups, compared with 36% for the US. This gap has halved in five years. What's more, Europe is showing greater dynamism, with a compound annual growth rate of 24% over the last 10 years, compared with 4% in the US. At this rate, Europe will overtake the US in five years' time.
'Raw talent is not enough'
The conversion rate of emerging companies to unicorns is the same; 1.9% of start-ups financed from seed become unicorns in both Europe and the US. When it comes to impact technologies, Europe has the advantage, with more than 50% of seed investments going to companies contributing to the UN's Sustainable Development Goals (SDGs). This level of investment remains constant despite the recession, while in North America and Asia it has fallen sharply.
Historically, the lack of experience within teams has been a problem. Yet Europe has twice as many software developers as the US, and boasts four of the world's top 10 technical universities (compared with three in the US). This provides a solid base for Europe to become a leader in artificial intelligence (AI) and other cutting-edge technologies – 18% of the world's AI research talent is in Europe, compared with 20% in the US.
We know that raw talent is not enough. Europe now has leaders who have gone through several career cycles; that wasn't the case before. Starting with Skype, and thanks to the networks of BlaBlaCar, Klarna and Adyen alumni, an unprecedented level of talent is emerging. More than 1,400 companies were launched by European unicorn alumni during the 2010s – 160 times more than during the 1990s.
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