December 6, 2023

Taylor Daily Press

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The difference between the investment cultures in Europe and America is world

The difference between the investment cultures in Europe and America is world

While the US continues to thrive as a center for venture capital, Europe finds itself in a constant battle for funding for its emerging tech companies. “In the US, capital is already being put behind a start-up very quickly, and the approach is: we’re going to see if it works,” says Robin Hoogstraten, Benelux regional manager of the European joint investment platform. Seatblink.

  • In Europe, investors place more value on what startups have already achieved, while in America the focus is on pursuing dreams and new opportunities.
  • Improving the investment climate in Europe requires a change in mindset.

Chips, advanced AI solutions, data centers: Europe needs tech start-ups more than ever. But despite growing demand for the technology, there still appears to be a huge funding gap between start-ups in Europe and the US. Taking artificial intelligence and machine learning as an example, venture capital firms invested around €38 billion in US startups last year, whereas European companies managed to raise just €10 billion. Pitch book.

A shame, says Hoogstraten. “Technology start-ups in Europe are full of good ideas, but it’s very difficult for them to realize them,” he begins. He’s trying to change that with his investment platform. The platform attracts local investors interested in early-stage European tech startups. Since 2020, Seedblink has invested over €200 million in European tech startups.

A different mood

There are several reasons why the investment climate in Europe is lagging. In America, you often find it easier for a start-up to gain momentum because of the similar rules, culture and ambiguous language, Hoogstraten explains. “Without here, things often happen gradually.” So an American start-up, if the formula or business model is right, can easily move to other states, while European start-ups like the Dutch expand first to Germany, for example, then to France, and many more to the UK.

Additionally, another trend is evident. “In America, capital backs a startup very quickly, with the following attitude: Let’s try and see if it works.” In short: In Europe, risk appetite is largely absent among many investors.

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A view of the European tech startup

Dutch businessman Lemar Pakteer has also noticed the reluctance of European investors. He is the co-founder is real: A platform – linked to Seedbling – that creates NFT markets to launch digital collectibles. “We notice that European investors are generally very cautious. They put a lot of emphasis on the traction that has already been shown, like the number of customers you have already connected. In America, on the other hand, it’s about the dream. Because of what could happen in the future.”

That doesn’t make it any easier to raise funds in Europe. In fact, “we plan to expand our next round of funding to the US. Our growth continues and we now have significant traction in terms of new customers. By raising capital and opening a branch in the US, we can realize our ambitions even faster.

Attic after the funding round. Co-founders Wouter Kloosterman & Lemar Bachtiar

Despite areas for improvement, Europe has not yet completely lost its charm, Bachtiar likes to add. “I also notice, for example, that European investors take more time for personal interaction with start-ups compared to American investors. Appreciating the small scale and making time for each other is essential. I don’t want to lose that.”

Positive changes

There is no clear solution to the problems surrounding the investment climate in Europe. It’s time for a complete change in mindset, Hoogstraten thinks. Fortunately, it seems to be coming slowly. “You see more and more financial initiatives being launched in every country. Consider, for example, funds set up specifically for technology start-ups. I also see European countries increasingly seeking reconciliation. Large cross-border festivals are organized such as VivaTech in Paris or the TNW conference in Amsterdam. The entire ecosystem depends on it. Beyond what can be found online, the most valuable connections are often made on a human level. It encourages and facilitates investment.

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In addition, Seedblink will also help Europe move forward, Hoogstraten is convinced. “I pride myself on making sure investors look beyond borders. When placing a Dutch start-up on our platform, German, Romanian and Greek investors sometimes suddenly come on board. This not only increases capital, but also opens doors to a wider European network.

Paktiar also believes that the situation in Europe will improve further in the coming years. “Continued investment in young companies is crucial if Europe is to create enough jobs and stay at the forefront of the tech world. Let’s work together to ensure that more start-ups don’t move to Silicon Valley.