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Slush 2015 - Never a better time to be a European entrepreneur

On the strength of this year’s Slush conference, one of Europe’s biggest tech investment events, it’s clearly an exciting time for European entrepreneurs to be raising money.

Welcome the dark. Embrace the cold. So implored the organisers of Slush. 15,000 people heeded the call, descending on the crisply beautiful city of Helsinki for one of Europe’s biggest tech investment conferences.

Helsinki
Helsinki: Crisply beautiful

Amongst the crowds of participants this year, 250 Venture Capital funds were present, by some estimates representing almost every sizable fund in Europe. An opening keynote from Finland’s PM, Juha Sipilä, addressed this select audience directly when he implored the participants not to “hesitate to spend a lot”. And he is well positioned to make this call, as the scale of Slush’s extravagance represents the investment that Finland in particular has put into creating arguably one of the brightest, most energetic and vibrant startup scenes in the whole of Europe.

 

slush
Slush: Production quality to match the scale of ambition

Such confidence in the opening perhaps also represented the major theme of this year’s Slush. It has never been a better time to be a European entrepreneur, according to Niklaas Zennstrom, the visionary founder of Skype and Atomico, the London based growth investor. With ten so-called Unicorns ($1bn+ companies) under its belt, Europe has enjoyed a rapid expansion of the VC ecosystem – 5,000+ active angel investors, 1.6m software developers and a healthy band of returning successful entrepreneurs. According to Zennstrom, startups now pass the ‘mum and dad test’, with talent increasingly being enticed away from the investment banks and management consultants.

Underlining this strength is a marked increase in early stage capital. 80% of seed and Series A investments are now being met by local investors in Europe, according to Atomico’s recently report, Achievements unlocked but mission not accomplished. But move to Series B and beyond and 70% of European funding comes from overseas, predominantly the USA. Perhaps this is not such an issue – despite the best efforts of Brussels, Europe will never be an entirely homogenous market and companies at scale will necessarily need to have embraced the global opportunity. So although perhaps this imbalance is helping to create systemic competitive advantage with more resilient companies that are global from the start, the longer term ecosystem will need to find a way of adapting if it is to help produce more game changers.

Another factor is a distinctly lower level of hype. Valuations in Europe are roughly 50% of their US equivalents. Companies have learned to scale on thinner levels of capital, and as a consequence have more patient investors holding their shares at more defensible valuations. Perhaps the impending and oft-cited bursting of the technology bubble will hurt far harder on the western fringes of the Atlantic than it will therefore in Europe.

This sentiment was reflected even more strongly by our European policy makers. Speaking of the EU as a “single digital market of 500m”, the former Digital Commissioner of the EU, Neelie Kroes, suggested that European talent is ahead of the U, telling all young European entrepreneurs that they are the base that will “build out our disruptive economy”. And there are examples of how policy makers are working more harmoniously in parts of the EU to embrace disruptive technologies and create the framework for innovation. The President of Estonia, Toomas Hendrik Ilves, once more taking to the central stage, talked about his government’s initiative to integrate electronic receipts generated by Uber with the tax agencies to circumvent legal challenges cited elsewhere in the Union. This he suggested was an example of how we “need the legal solutions to meet these challenges” – in his words, not just moving linearly but meeting the challenges of exponential changes in technology.

In the investment world, Europe is a very different place to the USA. We are not centralised around a single “Valley” where an entrepreneur has sight of sufficient potential capital to power a small economy. We are a system of distributed hubs each with different strengths – London in fintech, Berlin in media, Nordics (and indeed Dundee) in gaming, Israel for software to name but a few. Overriding the theme of all activities in Slush 2015 was the sense of need to connect these hubs in order to create the necessary conditions for the delivery of best practice, talent and movement of resource.

Slush is more than a conference. It is almost a movement. It’s impossible to attend Slush and not be energised by the passion and creativity behind the booming speakers, flashing lights and grand presentations. It has become a destination for the great and the good in entrepreneurship and of course in European VC. And long may it last.

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