Why Can’t Europe Create Tech Giants Like the U.S. and China?
In a region with a comparable economy to the U.S. and with some of the best pools of mathematicians, computer scientists, and software developers in the world, one might expect a European tech giant similar to the likes of America’s Facebook, Amazon, or Google or China’s Alibaba. The most significant explanation is likely the lack of scale in funding for tech firms. The largest American and Asian tech companies founded since 2000 averaged around $7.3 billion in funds raised. European equivalents raised only $1.6 billion. This gap is slowly started to decrease as more European companies reach the $200 million per year funding threshold. Two additional explanations, however, contribute in a less measurable way when comparing Europe and Silicon Valley. The latter has been credited with creating a culture of mentorship and support that is lacking in places like London and Paris. Another reason is the interaction with employees; in the U.S. employees are often motivated by stock-option systems that connect them strongly to the success of the company. Lastly, there are major questions concerning tech giants and privacy concerns in an ecosystem with strong data protection laws that have already targeted U.S. tech companies.