[loxodrome]

Wow it’s so refreshing to know that other people can see this.

There is simply not enough private capital investment in Europe. The public money is inevitably passed through academic hands or other public sector bureaucrats. And it is simply an ineffective way to allocate capital. The money should be returned to private hands where it belongs and those individuals should be the ones to decide how to invest their own capital.

Why do so few Europeans get this? It’s like they just can’t stand the idea of a wealthy person investing their own money.

[owenversteeg]

Funny enough, I don't actually think the money is quite the problem that people think it is.

Look at the early days of YC. Single digit millions a year was enough to stimulate the growth of a whole ecosystem of startups! Some startups are inherently capital-intensive but most don't need that much money to get to the point of basic viability. There are plenty of private individuals in Europe who could support a $10M a year incubator by themselves, not to mention the many institutions that could do this. And yet... there is no European YC and there never was.

I think it's cultural. Go talk to the top students at the top universities in the US and Europe and you will notice plenty of talent on both sides of the Atlantic - yet far different levels of ambition. Now run an experiment; pay ten of those students a hundred EUR/USD to tell everyone that they're dropping out and starting a startup. Watch the parents' reaction. Watch the professors' reaction. Watch the reaction from their doctor, their baker, their crush, their garbageman.

You already know the result, of course, it's obvious. That's your problem; and by comparison, the money hardly matters.

[Mofpofjis]

> I think it's cultural.

Oh yes. Being a failed entrepreneur is a stigma. Being a very successful entrepreneur is a stigma too. Only being a struggling or moderately successful entrepreneur is acceptable.

[whazor]

But if you look to the Hofstede's Six Cultural Dimensions, you can see that European cultures are geared toward Long-Term Orientation (compared to the Short-Term from USA). In long-term thinking, why can you not wait two years before dropping out of university and start a startup afterwards?

Do you believe short-term thinking is essential for successful startups?

[chii]

> why can you not wait two years before dropping out of university and start a startup afterwards?

because someone else over in the USA dropped out two years earlier than you to do this very same startup, and thus they get a head start.

Unless your novel idea is so completely novel, that nobody else but you could've done it. Most ideas are not this novel, and first mover advantage is real.

Not to mention that to make long term work out, the short term must also work out. It's a stair case - each short term period adds up and turns into long term. It is almost impossible to have a long term plan work out, if the short term is so unsuccessful that you need more funding every year.

[maest]

> two years earlier than you to do this very same startup, and thus they get a head start.

So work on the next idea?

[crznthndr]

YC became valuable because of the ecosystem. YC enables so many varieties of exit options and inherently lowers the risk for the investors across various stages in the lifecycle of the startup company. If the only options are such that the companies have to become profitable in isolation or go IPO, starved off private capital otherwise then the risk is much higher. That’s why it may very well be impossible to create another YC that’s successful., unless you can replicate the entire ecosystem along with it.

[bobxmax]

The "pioneer spirit" is so core to the American identity and hard to replicate in Europe

Americans just have a borderline delusional self-belief that other cultures really have a hard time matching

The Gulf Arabs are another group with a similar mentality but they don't have the population, freedom or education (yet) to do the same things

[fakedang]

> The Gulf Arabs are another group with a similar mentality but they don't have the population, freedom or education (yet) to do the same things

Correction, the Gulf Arabs don't. Their autocratic leadership is though. A frequent point of contention between government and public is the private sector - the government wants them all to join the private sector and even provides locals with seed funding for most kinds of businesses. But the locals are rather risk averse and would rather stay in the cushy public sector. The few who are entrepreneurial tend to be extremely entrepreneurial though, and they have a lot of the risk-enabling capital structure in place in Abu Dhabi and Dubai

[bobxmax]

Yes you're right. The broader population doesn't have that mentality and are, in fact, I would say on average quite lazy. It's a certain group among the elite (especially those foreign educated) who seem to really want to push the needle.

[mikrl]

>The "pioneer spirit" is so core to the American identity and hard to replicate in Europe

Consider that the European frontier is either

- west: Americas (already done)

- south: Africa (not gonna happen again)

- north/east: drang nach osten (again, not to be repeated)

- up / down? Perhaps Europe needs to focus on space and mining tech?

Russia has a frontier, and they are pretty strong in engineering, but I doubt that a SV style ecosystem is likely to form, given the… ahem… unique cultural aspects.

All said, I disagree that a frontier experience is necessary: the UK, Germany and Austria-Hungary were massive industrial modernizers while the US was still going through its westward colonization.

Is tech an exceptional field, or just the current SotA in industrial development?

[Gravityloss]

There's different frontiers. Good farmland used to be the big thing. And trade routes, like natural harbors or navigable rivers. So in many parts of the world, most of the best places were already taken and the "frontier" was worse land. But not so in Americas, because there was available land for reasons. You could have "fertile frontier".

Over time when farming technology improved, people could live self-sufficiently in worse places. Transportation technology changed as well. Railways, highways. And now remote working and data centers. So there have been frontiers also in the old world in that sense. The king of Sweden in the 1500s declared some eastern frontier areas as tax free for some time, as he wanted people to settle there to control those areas (in accords, some of it might have been Russia...). Many places have waxed and waned over the centuries. When Estonia gained independence for the second time, some Finnish farmers went there as there was excellent farmland that was very underutilized.

With modern knowledge you could even build up a great place to live almost anywhere. Good policies and cheap energy. Maybe fresh water is the hardest physical requirement.

[yieldcrv]

When it comes to tech startup capital, its not America its Silicon Valley and nobody else. Sure there are deals closing in other regions but the structure isnt the same.

Silicon Beach/Alley/Gulf/Islands within America cannot replicate it either

Without a culture of paying it forward as a reckless angel investor sometimes dressed up as a fund, already within the people that made it, none of these ecosystems get off the ground

Notably, Silicon Valley’s earliest winners were from a government funded initiative

[Mofpofjis]

> The public money is inevitably passed through [...] public sector bureaucrats

I'd phrase it a bit differently -- local (country) regulations, taxes and fees stifle startups in the crib.

[whatshisface]

Instead of giving it all to a few people to spend buying real estate and mineral rights, you could tell the funding agencies that they're allowed to take risks, or give it to people's retirement accounts and let companies seek public investment.

[ClumsyPilot]

> The money should be returned to private hands where it belongs and those individuals should be the ones to decide how to invest their own capital

This is not a meaningful statement

‘Returning money in private hands’ does not result in more startup investment, it’s not in the culture to do this.

The money will be put into real estate, bonds, or whatever.

Look at London - it has as much wealth as NewYork or LA but all the money just piles up in real estate or Fintech.

But outside those niches? Good luck getting a farm-tech startup funded, no-one will take a punt.

So it falls to the government to try and kickstart something. As flawed as it may be.

Then they put together a competition for funding that basically feels like a school exam

[rowanajmarshall]

> Good luck getting a farm-tech startup funded, no-one will take a punt.

There are so, so many examples of British agtech companies getting funded:

https://www.lettusgrow.com/blog/2020/1/9/press-release-uk-ag...

https://edinburgh-innovations.ed.ac.uk/news/roslin-technolog...

https://fischerfarms.co.uk/fischer-farms-secures-26m-funding...

https://tropic.bio/tropic-biosciences-raises-28-5-million-se...

[ClumsyPilot]

That's what I am saying - look at the size of deals in UK fintech - Revolut, $577 million, Monzo $374 million, checkout.com $333 million

Uber's Series C was $361M, that's the kind of money you need to put a company on the global map.

[rowanajmarshall]

Then you should also look at Wayve (self-driving cars, $1 billion Series C), Lighthouse (travel and rental data, $370 million Series C), Highview Power (novel energy storage, £300 million). Lots more too. I won't deny that the UK specialises in fintech, but there's a lot more going on than that.

[chii]

> So it falls to the government to try and kickstart something.

why should it fall to the gov't? They're one of the worst funders of startups imho.

In these scenarios, the gov't isn't funding the business via equity, but grants - aka free money. This makes all the wrong incentives. Taxpayers don't feel the loss (not truly, like a private investor would), if the startup fails.

[loxodrome]

Bullshit. All the big VC firms in the USA are funded by private investors (rich people). They fund risky tech startups because big, fast gains are possible and the marginal capital gains tax rate is 20%. In the UK it's 39%! But 24% for residential property, hence the focus on real-estate that you mention.

Tax less, and prosperity follows!

[laurencerowe]

I don't think your numbers are correct. In the UK capital gains tax rates on shares are 24% for higher rate tax payers.

https://www.gov.uk/guidance/capital-gains-tax-rates-and-allo...

In California those rates go up to 33.3% (20% federal + 13.3% state).

[alephnerd]

> All the big VC firms in the USA are funded by private investors (rich people)

They are also funded by large public investors like pension funds (American and European) and sovereign wealth funds.

There is just a lot of capital sloshing around in the US, and it's fairly easy to start a firm here. The same isn't true in much of the EU.

[disgruntledphd2]

The funny part about this is that lots of the capital comes from European savers.

[disgruntledphd2]

This is incorrect, except possibly at pre seed levels. Most of the money for VC comes from pension funds and insurance companies.

[michaelteter]

Prosperity for whom?

[alephnerd]

The HDI of European states is on par with that of the United States [0].

The US has issues, but using American issues as an excuse to ignore European issues (which in reality are a result of soverignity tussles) is ridiculous.

[0] - https://hdr.undp.org/data-center/country-insights#/ranks

[bobxmax]

The US is the place to be for ambitious and highly talented people

For average/unambitious or unfortunate/poor people, places like Europe or Canada are much better standard of living

[alephnerd]

I've lived in Canada as a kid and have family in Europe - at a macro level the differences in QoL aren't that significant, as HDI (an aggregate benchmark of developmental indicators) highlights.

I guess the question becomes, which "Europe" and which "America" are you comparing. And even then, developmentally, the US isn't much different than Western or Northern Europe.

> For average/unambitious or unfortunate/poor people

I mean, youth and normal unemployment remains significantly higher in much of the Europe compared to the US [0][1] and median income after tax remains roughly on par [2], even factoring for purchasing power parity [3].

As a whole, it appears that the US is roughly on par with much of it's peers in Western and Northern Europe, and American problems appear to be overreported and European ones underreported

I personally think there is a lot of glamorization of Europe because more Americans visit Western and Northern Europe as tourists than the other way around, and attribute their tourism experience as that of a normal European, which is an unrealistic assumption.

And it's not like ambitious risk takers don't exist in Europe - look at the startup and dev scene in Sweden, Czechia, Romania, and Poland. It's clearly an institutional problem.

[0] - https://www.cia.gov/the-world-factbook/field/youth-unemploym...

[1] - https://www.cia.gov/the-world-factbook/field/unemployment-ra...

[2] - https://ourworldindata.org/grapher/median-income-after-tax-l...

[3] - https://www.imf.org/external/datamapper/PPPEX@WEO/USA

[jampekka]

Looking at what the billionaires are doing in US politics, perhaps there's something to this.

[somethingsome]

Honestly, in academia you have good hands too, just not every lab. As in business, you also have not so good businesses.

Giving it to academia can 10x the result, but yes research is risky, that's why it's important it is founded externally.

Companies that profited from research in academia are very happy.

Overall I agree, the current European strategy is not optimal, for both Industry and academia.