Money: Dave Deruytter has been catching up with European progress on its silicon (valley) revolution.
There is great respect around the globe for the success of Silicon Valley in California on the West Coast of the US. For a decade the whole world been has looking for the keys to its success in order to copy it in their home country. Innovation or starters’ hubs are all around Europe too. Taken on their own, they are very small compared to Silicon Valley. Combined, they could be powerful, if they would coope- rate efficiently and have the required support from investors or governments.
Silicon Valley leads the pack, particularly in large, breakthrough innovation, but China and other countries are improving their game. Even in the US there is competition for California from the East Coast, New York and Boston too. In China, Shanghai is high on the radar, but also Shenzhen and Guangdong province in the south of the country. In Asia there is more than just China alone – Tokyo, Seoul and Singapore are forging ahead too. I was pretty impressed by Tokyo on my recent trip there. Japan may be ready for a new awakening and the upcoming Tokyo Olympics in 2020 may lead the way to their renewed visibility on the international scene. Further in Asia, also Mumbai in India is steaming ahead. In the EU, London is still the paramount number one. Still, it remains to be seen what Brexit will bring, and Berlin, Paris, Amsterdam and Barcelona are getting stronger.
Studies point to five key differences between the US and Europe on the starters/innovation scene:
1. Europe lacks a pure capitalistic approach, so there is not enough risk-taking and too much protectionism. European investors are too focused on revenue and not enough on pure growth.
2. The speed of action is slower in Europe. Money from investors is less quickly disbursed and in smaller amounts. Failing, and starting all over again, is not as welcome or as fast as it should be.
3. Entrepreneurship and innovation are not stimulated enough by education and governments.
4. There are fewer European universities (and their research centres) in the top ten of the best universities around the world – the list is dominated by the US. Talent is key to innovation, starting a business or even expanding it later on.
5. The European market is more fragmented than the US one. Business models and plans have to take care of different languages and cultural biases. In today’s 24/7 connected world, fragmented hubs like in Europe may function more efficiently than before.
If diversity really adds to performance then Europe should do well. Still, for large breakthrough innovations worldwide it is better to grow fast in a large uniform market and squeeze out the competition there, before using your profits or momentum to conquer the smaller or fragmented markets. China is developing US-style and has the market size and uniformity, giving it an advantage over Europe. So has India, but with less uniformity. Both China and India still lack top universities and related research facilities. But they see more and more compatriots studying overseas at top universities returning home to launch or join local success stories.