What prevents Europe from developing innovative business: expert opinions

    On November 1, Megamind, along with experts, discussed this topic in relation to Russia. But it turns out that in the very Europe where Peter I was still “cutting the window”, the venture business has serious problems. Perhaps the most harmless of them is the lag of Europe from the United States.

    France and Germany were the first to think about how to remedy the situation: in late October, they announced plans to increase investment in European technology startups. The flow of investments is planned to be strengthened both by the state and by private investors.

    State-owned banks of these two countries and the EU invest 75 million euros in the fund of the French venture company Partech Ventures. By the beginning of 2016, the fund should have 400 million euros at its disposal, representatives of Partech Ventures said. The company will distribute these funds between startups that need a leap in development. However, this leap is needed throughout the EU venture capital industry.

    The French telecommunications giant Orange and the advertising group Publicis at the same time announced that they are creating a fund that plans to invest 500 million euros in French and German startups. “In an innovative economy, capital is becoming a decisive factor. More investment is needed to accelerate development, ”said French President Francois Hollande.

    EU officials call this situation the main challenge in the development of the European economy. In Europe, venture capital is fragmented among many not very large funds, which complicates the innovation and expansion of technology companies. Startups complain that they cannot attract enough investment in Europe to develop. Therefore, they are forced to seek funds outside the EU. Of course, the first thing they do is turn to American investors, which France, Germany and EU officials are against.

    “How did it happen that we cannot find money in Europe?”, Home24 Berlin startup CEO Philippe Craib lamented during a panel discussion at the French-German conference in Paris.

    The European venture investment market is growing, there are many investment funds, but they are quite small. In addition, the difference in regulation in EU countries makes it difficult to invest in foreign countries, even if it is a neighbor in the European Union, EU officials say.

    “Venture capital wants a bigger market and laws are better, not a mountain of restrictions and a pile of obligations, ” Vedomosti quotes Andrus Ansip, vice president of the European Commission for the Development of Digital Technologies.

    Despite the growth of venture capital investments in Europe, the EU is inferior to the United States both in terms of growth rates and absolute numbers. European startups raised $ 7.43 billion in venture funding in the first three quarters of 2015, up 17% from the same period a year earlier, according to Dow Jones VentureSource. But in the United States, venture capitalists invested $ 39.54 billion in startups over the same period, which is 39% more than last year.

    During the European Summit, officials said they were going to unify industry standards and establish certification of data protection in the clouds. This will help small companies grow faster, hopes French Secretary of State for Digital Technology Axel Lemer.

    Returning to the conversation about the problems of innovative business in our country, we can compare the key features of the Russian Federation and the EU:

    - In Russia there is little money, but in Europe they are simply spread out in too many “pockets”.

    - There are too many regulators and conflicting laws in the venture capital industry in Europe. In Russia, such laws are not enough.

    - Startup support institutions are actively developing both in Europe and in Russia.

    The head of the Institute for the Development of the Internet ( IRI ) German Klimenko has a different opinion: "Europe is hindered by the same nuance as Russia: there is money, but there are no startups."

    This is how Alexey Lankin, Director of HotelTonight Eastern Europe Service argues :
    If we talk about Berlin, then I rely more on bank loans or FFF, and not on venture funds and angels. It is money that is the first problem. And the second is the lack of good startups. The question is what is primary, a chicken or an egg, the availability of money or quality products - the answer is both.

    And also a problem with ambitiousness. Everyone wants to be the first guys in the village, but they are afraid to become one of the best in the world. The goals are modest, the timing of the implementation of ideas is long. It’s easier to release an application for those who live in New York and New Orleans than a product that immediately suits the people of York in England and Orleans in France.

    Lyubov Simonova, Director of Almaz Capital in Russia:
    What I see is that in Europe there is no shortage of venture capital funds. The next event, which will be right here the other day ( Slush ), from year to year shows both the presence of venture investors and the presence of companies for investment. This is one of the major European events. About 460 investors and 1200 companies have registered this year.

    In addition, we work with several European foundations and also look at companies from various incubators and accelerators, including in Poland and Bulgaria - this is again from a very operational one.

    Victor Osyka, Almaz Capital 'Associate:
    The EU lacks a huge and multi-connected network of IT giants that make many mergers and acquisitions. This is the strength of the United States. Own startups are usually organized by immigrants from large IT companies. In this regard, the EU is 20 years behind.

    Indian or Asian developers strive to get to Hollywood for the “geeks” - in Silicon Valley. And the European Union has not even become Bollywood. Perhaps the UK is more attractive to developers from Eastern Europe, the Middle East or Russia.

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