Forget Silicon Valley. Europe Will Soon be Home to the Best Startups
While there's no denying the U.S. continues to play a huge role in developing the tools of the future, Europe is starting to pull ahead in key startup sectors.
Despite the advances in European tech over recent decades, we continue to associate transformative technology with America. The Silicon Valley tech boom gave the world behemoth tech brands such as Apple and Intel and, for many years, it was the home address for almost every startup turned heavyweight. As such, the West Coast acquired a legendary status as an Eden of engineering, a place where geniuses flock to make our lives better (and their bank accounts bigger), with the globe’s leading venture funds clustered around these companies accordingly.
That’s not to say that innovation hasn’t occurred outside American borders during this era. Spotify, Skype, Adyen Graphcore, Monzo and Deliveroo all sprung up and scaled in Europe. However, these global success stories have done little to change the consensus that America is the birthplace of the best tech. It’s state-side companies who still hog the limelight, set the PR agenda and dominate our consciousness. For many, it’s hard to see beyond the stars with U.S. stripes.
Yet we should be very wary of letting the Silicon Valley mythology continue to cloud our perspective, as it’s a world view which is becoming rapidly outdated. While there’s no denying America continues to play a huge role in developing the tools of the future, other geographies are giving our American cousins a run for their money when it comes to building radical new technologies. In Europe, where VC money is increasingly flowing and both unicorns and IPOs are becoming less mythical, the continent is on track to take the crown across a range of market segments.
Alongside a booming market for continental FinTech and FashionTech ventures, GovTech is another prime example of where Europe is set to reign supreme. From contactless donation devices for homelessness initiatives, messaging apps for doctors, or data protection bots, GovTech focuses on helping public services work better. And it’s one of the most rapidly growing sectors in technology. Currently valued at $400 billion dollars globally and set to be worth £20 billion in 2025 in the UK alone, it’s already 25 times the size of the LawTech sector.
The boom in this area is logical. Europe has both the apparatus and the understanding needed to foster growth in this space; established civil systems and channels in need of modernisation exist alongside ingrained public service cultures. Large swathes of Europe have an established history of public service provision, giving the continent a unique advantage when it comes to creating the societal innovation of tomorrow. This is something the Bay Area cannot emulate.
Europe has other characteristics, too, which make it an ideal site for GovTech innovation. Its political history means it has managed to strike a more even balance of power between Big Tech and national government, compared to the tech superpowers of America and China. The United States’ deference to Big Tech and China’s tight governmental controls present a number of issues around developing GovTech. On the one hand, we’re already witnessing the Big Problems which arise from uncontrolled Big Tech (particularly around privacy rights), yet a solely government-dictated approach won’t work either. Governments lack the agility, capacity and resources to echo the innovation of private firms and their uptake of new products and initiatives - however desperately needed - is always slow. In contrast, Europe has avoided sliding to either end of the spectrum and as such, has created an environment where citizens aren’t sidelined whilst technological frontiers are able to be explored.
All this talk isn’t theoretical, however: European start-ups are already proving these points and showing the world how GovTech is done. For example, Berlin-based health app Clue has captured international attention, using cutting-edge science and data analytics to help women discover patterns in their menstruation cycles and take control of their health. In the UK, GovTech start-ups are securing significant contracts with government bodies - such as Adzuna, which has won a £5.8 million contract with the UK Department for Work and Pensions to work on its job search service. These are by far isolated examples. From staffing platforms on track to save the NHS millions to French citizen engagement apps taken up by the European Union itself, it’s becoming clear that Europe is the place to grow GovTech.
However, no garden can truly flourish without careful cultivation and despite these successes there remains a great deal to be done. Europe still lacks a framework of support for its tech start-ups and until this is addressed it will struggle to emulate GovTech or FinTech’s success across other market segments. This is something governments are starting to address, with France leading the way - just this month President Macron announced a new €5 billion VC fund to help foster French tech start-up growth. And according to Atomico’s 2018 report, only “two European companies founded in the 2000s had reached $B+ by 2008”, whereas, in the 2010s “31 reached that milestone by 2018 - an increase of 15.5x.” Encouraging investment at every funding stage, responsible regulation and assistance for emerging companies are just some of the ways we can continue to cultivate this growth within Europe. Direction action is crucial if we want Europe’s society and economy to reap the benefits of developing technology.
As the last few months of 2019 approach and fresh decade appears on the horizon, we have many questions to ask ourselves about the future of our world, our society and the way in which it’s run. Technology will play an increasingly pivotal role in providing the answers but it's crucial we remember that true pioneers don't need to live in a certain postcode to qualify. Silicon Valley has power but it's not tech's promised land. For GovTech and other areas of the next-generation economy, that title is on track to be Europe's.