Supporting your local small business is in. With a ‘buy local’ mentality encouraging consumers to shop close to home (among other factors), a Mastercard survey in 2023 found that 55% of small businesses expected growth in the year ahead.
But when it comes to tech, that mentality is largely lost: companies will often outsource for cheaper labour, or buy supplies from other major ecosystems like the US or Asia for a lower price point.
While price is a major selling point for startups looking for their next resource or partnership, there are benefits to supporting the European ecosystem that could outweigh the extra cash spent.
So, what positives could Europe’s tech ecosystem gain if that ‘buy local’ ethos extended to startups — and what’s stopping it from being adopted already?
Power of partnerships
“We believe that just through partnering and through promoting your local ecosystem, you can have success as a global company,” says Filippo Sanesi, startup program manager at OVHcloud, one of Europe’s biggest cloud computing providers.
“The way big ecosystems [like London or Paris] work is only through collaboration: you work with the local investor, the local accelerators and the local talent. But if you start outsourcing all of this, then the productivity and the values are then dispersed,” he says.
Collaboration still has to happen on a global level, through investors, founders and regulators. But we need a stronger collaboration in Europe and the UK to succeed.
Collaborating and working with companies within Europe is one way to develop the ecosystem across the region, with a ripple effect across other areas that could do with improvement.
“Buying locally can help a lot in economic growth, [creating] jobs and fostering innovation throughout the community,” says Sanesi.
That doesn’t mean cutting off the rest of the world, though — Sanesi adds that global collaboration is still important, but that startups should shift their priorities to focus first on the local economy.
“I’m not saying that we shouldn’t support or contribute to any foreign investment or any foreign technology [but] let’s start focusing a bit more on what we have close by and then collaborate [with other global ecosystems],” he says. “Collaboration still has to happen on a global level, through investors, founders and regulators. But we need a stronger collaboration in Europe and the UK to succeed.”
And by advocating for the startups closer to home across Europe, companies could also boost the ecosystem’s image within other major ecosystems and pose the region as a viable space for companies across the globe to look to for resources and partnerships, says Maya Noel, CEO of startup and investor association France Digitale: “if we, as Europeans, don’t buy European, then nobody will.”
Sticking to regulations
It’s not just new opportunities that buying local will open up: sourcing from Europe could also make some tricky problems easier.
One benefit of harmonisation across the continent is making tax easier, says Noel: “If you want to grow in Europe as a company and you give equity to your salaries, you have to make 27 different plans of equity. It’s very complicated.”
When it comes to data sovereignty, it’s really important from a compliance and business perspective.
Luckily, jurisdictions within Europe are becoming more in touch with each other as startups start to collaborate across borders more.
It’s also a positive for data protection and GDPR: Sanesi explains that for many companies, especially those dealing with highly sensitive data like financials, information should be stored not only in Europe but on a European cloud computing platform to ensure full compliance with GDPR.
That’s a major motivation for Anders Clarin, CEO of AI service chatbot startup Ebbot, when it comes to working with European providers.
“When it comes to data sovereignty, it’s really important from a compliance and business perspective,” he says. “From our perspective, I think that that is the driving force behind it: we want to be compliant, and we want to be a trusted partner. In order to do that, we need to use services that are fully European-owned.”
Sanesi has found that the clients using OVHcloud’s platform are motivated by that same requirement: “A big number of our customers work with us not only because the price is competitive, but for the fact that we can guarantee sovereignty on their data.”
Barriers to harmonisation
The benefits seem like a no-brainer — so what’s stopping the continent from getting it together?
One barrier is the maturity of Europe’s ecosystem compared to the US and Asia, which means companies across the pond are better established with the reputation to attract customers. While there are viable alternatives within the continent, it can be hard to compete with those incumbents.
“Microsoft, Google and AWS are so far ahead [in terms of] the infrastructure overall,” says Clarin. But while mature American companies have the recognised name and marketing budget to assert themselves as the industry standard, organisations like OVHcloud are working to offer an alternative to that monopoly without the same long-standing reputation.
Within the EU and perhaps on an even more local scale, we need to see way more infrastructure emerging so that you have a lot more options.
“Within the EU and perhaps on an even more local scale, we need to see way more infrastructure emerging so that you have a lot more options. It would be good to see even more players emerging to actually level the field a little bit,” says Clarin.
But education is also stopping companies from collaborating with suppliers closer to home: many startups simply don’t know enough about the European alternatives on offer.
France Digitale has worked to bridge that knowledge gap by producing a map of European scaleups that offer sought-after services. “If you’re looking for tech solutions then we’ve got them here,” says Noel.
“The idea was really to map all the technological champions that we already have in Europe. We made it with 16 countries in Europe and found some partners in each country to show all the startups with more than 100m revenues a year deployed in more than three countries in Europe — just to show that we do have some alternatives [here],” she adds.
In the long term, there’s a lot of work that governments, institutions and European companies have to do in promoting themselves.
When presenting the map to other ecosystem experts, the lack of knowledge about some of Europe’s biggest players became clear.
“[I said] “Hey, do you know all these solutions are in Europe?’ and I was talking to people who are supposed to know the ecosystem. But they said ‘actually, I don’t know half of the companies we have in this mapping,’ and those are some of the biggest,” she says.
As such, there is a way to go before the buy-local mentality can meaningfully be actioned. But there are signs of progress.
“In the long term, there’s a lot of work that governments, institutions and European companies have to do in promoting themselves, not only advocating the product and the level of great service that we can provide but even the fact that you can be closer to the customer, you might have a better understanding of the regulation or the business etiquette,” says Sanesi.
“Let’s not forget that the major, biggest companies in the world in terms of tech all started because they were an alternative to obsolete or different services, so I think that will be the same for European companies,” he says.
Read the orginal article: https://sifted.eu/articles/buy-local-tech-brnd/
