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Leaden EU start-up scene looks across the Atlantic

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Leaden EU start-up scene looks across the Atlantic

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The biggest success stories to come out of the start-up scene in the last two decades are primarily tech companies; the majority are from the US and mostly centred around Silicon Valley. From Google to Facebook, Twitter to Pinterest, the disproportionate global dominance of these companies has given rise to despondency in Europe, and a lack of confidence in what the continent has to offer in response.

The pervading belief in the EU is not so much that their 28 countries - and counting - do not possess the potential to innovate, but that the system is not in place to support young entrepreneurs making their first steps. Officials in Europe, both from within and outside the EU halls of power, lament the lack of free-flowing capital that appears so readily accessible in the States to start-ups trying to get off the ground.

In addition to this, there is a growing belief that in comparison to their peers across the Atlantic, the bright young things of Europe will commonly opt to study an MA, rather than embrace the risk of setting up their own company.

Billion Dollar Start-up Club

A recent report by the Wall Street Journal entitled the Billion Dollar Startup Club, named the young companies in the world that are valued at $1 billion or more by venture capitalist firms. While US and Chinese companies accounted for 34 of the 37 on the list, there were only three from Europe.

Leading the Europeans was the fashion and lifestyle e-commerce site Zalando. The German company which began only selling shoes was recently valued at $4.9 billion. In second place was Spotify, valued at $4 billion, followed by Mobileye, the Amsterdam based company specialising in collision avoidance technology.

Outside the Billion Dollar Club Europe can lay claim to the telecommunication service Skype, based in Luxembourg and the phenomenally popular smart phone game Angry Birds, created by the Finish company Rovio.

Changing Winds

The EU’s digital chief, Neelie Kroes, recently provoked a flurry of media attention when she invited US start-ups to move to Europe to avoid the heavy taxes they might have to pay for quicker broadband services in the States. In a blow to the Obama administration, a US appeals court rejected the federal ruling that would have compelled broadband providers to treat all internet traffic equally. Without this equality, while rich companies such as Google and Netflix can provide quick internet service, users of young sites that can’t afford the charges may have to suffer a sluggish connection speed.

Whether this will be enough to shift the balance across the Atlantic is still to be seen.

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