As AI competition ramps up and geopolitical tensions mount, European founders and investors fret about losing sovereignty to tech giants created in Silicon Valley and Beijing. Cue the growing calls to arms intended to rally Europe’s disparate ecosystems, founders and investors around one Europe and a focused mission to counter US and Chinese dominance.
But this mistaken belief in the notion of ‘European tech’ is a distraction and taking us down the wrong path. Europe — and European tech — is not monolithic.
Trying to ‘fix’ European tech is trying to fix something that ultimately doesn’t exist — except perhaps in the minds of a few agenda-driven politicians. The best and most ambitious European founders aren’t held back by where they are from: they’re building for the whole world.
Only by shifting our mindset to recognise that there is more nuance in Europe than we currently hear can we move forward with confidence and build more UiPaths, more Spotifys and more Adyens. And lay the foundations of European prosperity for decades ahead.
Whose productivity gap?
Take Europe’s so-called productivity gap — often blamed for the fact that we don’t have more global tech companies. It’s true some of the continent’s largest economies are struggling, but Poland and Bulgaria have consistently increased their productivity, and CEE’s GDP is on track to grow at 3% this year. The productivity gap is a lazy western European narrative that overlooks the dynamism that is occurring in central and eastern European nations.
Of course, Europe is fragmented — by language, culture, and law. And there are many wonderful benefits arising from this diversity. But we should not be tempted to think that greater unification or centralisation will magically put us on a level footing with the US ecosystem.
Founders from those central and eastern European countries that trump the UK, France and Germany in terms of productivity build great global companies despite this fragmentation, not because of it.
They succeed globally because they come from families and cultures with a strong entrepreneurial work ethic, they’ve been schooled and started work in more meritocratic societies and have worked hard to acquire deep technical knowledge. Romania led EU‑wide female STEM graduates in 2021 at 42.5% of STEM degrees, with Poland at 41.5%, both well above the ~32.8% EU average, according to Eurostat figures from 2021. Also, in central and eastern Europe in particular, founders are not predominantly drawn from an insular pool of individuals, all from the same schools and backgrounds.
These are company builders who would build anywhere, regardless of their ‘European’ passports.
Accessing global markets
When Daniel Dines launched UiPath from Romania in 2014, he wasn’t part of a Silicon Valley club. He didn’t benefit from a personal network of investors. Instead, he had an obsession with product, an exceptional work ethic and fierce ambition to innovate, not imitate. That mindset powered UiPath’s 2021 IPO to one of the largest software debuts in history.
Daniel embodies the kind of dynamic founder Europe needs more of: driven, resourceful and globally minded. The founders of Spotify, Adyen, Klarna and Wise all showed similar traits. Founders like these — whether they’re in Stockholm, Madrid, or Bucharest — are only focused on one question: “How can I access the world’s biggest markets?”
Dynamic, not united
Dynamic founders are plentiful across Europe and increasingly come from places outside the established tech hubs. Dealroom’s top 10 European companies by enterprise value include expected names, like Adyen and Booking.com, alongside rising champions like Denmark’s Novozymes and Belgium’s argenx. Dublin, Zurich and Athens are leading in technical AI talent, while Helsinki and Vilnius are hubs for gaming engineers. Ukraine, Romania, and Poland are home to some of the world’s largest software development companies, including EPAM and Luxoft, while Dealroom’s Ecosystem Index recently named Kyiv, Vilnius and Zagreb as rising stars in Europe.
Many investors believe regulatory reform and more capital can put European tech on a better trajectory. Some mistakenly look to agenda-driven politicians to support startups and scaling companies. But while change could ease operational challenges, these are not the main impediments in European founders’ way.
Prioritising excellence and giants
What we really need is a fundamental shift in mindset.
Firstly, we need a ruthless eye for excellence. That means backing founders who are driven by ambition, technical talent and relentless focus. And supporting them with time, commitment and real attention — not just capital.
Secondly, we must double down on giants. We need to strengthen those companies that have already reached scale, rather than simply counting the number of startups as a barometer of growth. According to Dealroom, the enterprise value of all European Series A startups between 2022-2025 is still smaller than that of UiPath, Adyen and Spotify combined. One global success seeds more founders, talent and capital than hundreds of pre-seed rounds ever could. We also need to stop focusing on ecosystem health metrics or using the number of companies founded as a barometer. One massive, individual outcome can have a far greater impact on the ecosystem than thousands of failed startups.
Finally, we need to stop seeing global market shifts as a challenge, and instead view them as an opportunity. The US is still the world’s largest software market with a 43% share vs Europe’s 23% and the reality is that a European identity can actually hold a startup back there. But as geopolitical tensions rise and protectionism spreads to digital services, that same identity — underpinned by Europe’s rigorous data standards — could easily become a strategic advantage, particularly in public and private procurement within Europe.
Navigating the landscape
Our job as investors shouldn’t be to big up the region we come from. It’s to back the best founders, wherever they are, and help them scale beyond their borders. The most thriving tech ecosystems are not built on political cohesion; they’re the ones that best serve founder ambition.
Europe’s strength lies in its dynamism. Our differences make us formidable, not flawed. It’s time we recognise excellence wherever we find it to support dynamic founders to build companies that transcend borders altogether.
Read the orginal article: https://sifted.eu/articles/european-tech-doesnt-exist/
