Why Europe is behind Silicon Valey? Why aren’t many European start-ups raising enough capital similar to Silicon Valley?

• Lack of access to huge funding capital

One reason European start-ups struggle to catch up with Silicon Valley start-ups is due to the lack of access to huge funding rounds. Silicon Valley has many big risk-taking investors whereas European ecosystems that have strong seed funding opportunities lack high funding investors even after recording great sales.

• Less intellectual resources

The proximity to top talent has always been a major concern for European entrepreneurs. European universities are behind their U.S. counterparts. This has resulted in many bright minds preferring to choose the U.S. over Europe to improve their skills, which have led to a shortage of talent in Europe.

• Focused on revenue rather than growth

Silicon Valley runs on a modern swift mechanism: to progress and fail quickly! It is a haven for adrenaline driven risk-takers, whereas the European ecosystem has adopted a conservative approach. It works on the principle of “preventing failure” rather than “failing and learning.” Silicon Valley startups have the license to adopt this mechanism because of high reserves of talent, large financial capital and risk-loving investors on the contrary to Europe, where opportunities to raise large capital are bleak.

• Smaller fragmented market

European Entrepreneurs have to deal with their fragmented market. The different countries of the European Union speak different languages and have various cultures, laws, history, practices, lifestyle, etc. To target the entire European Union, entrepreneurs have to find out a winning formula that works for most of the countries in the union, unlike the United States that has a more unified market.

All in all, to attract investors, the European Union has agreed on a new plan with an aim to double the amount of venture investment. But the question is whether the European ecosystem can challenge Silicon Valley.

Authors:Surya Prakash Singh & Sparsha Mallipeddi

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Source: Entrepreneur