Entrepreneur

Outsourcing entrepreneurs: How the EU lets startups slip through its fingers

(Editor’s note: Jon Bradford is CEO of The Difference Engine, a mentor-led acceleration program in the U.K. He submitted this story to VentureBeat.)

The closing “Europe Gang” discussion at LeWeb 2009 last year focused on how Europe could attract more digital businesses back to the continent.  I believe the folks in that seminar may have missed the point completely, however.sam-startups

Rather than “hunting” for talent elsewhere, Europe should be “farming” its own entrepreneurs. If the continent doesn’t provide native early stage start-ups the opportunities they deserve, many will not achieve their potential or will move elsewhere to realize their dream.

Since the inception of YCombinator in 2005, there has been an explosion of comparable accelerator programs across the United States – including TechStars (Boulder, Boston & Seattle), Launchbox Digital (Washington DC) and DreamIT Ventures (Philadelphia).  To date, there have been approximately 216 teams that have received funding and mentoring through these full time programs, by my counting.

Further, those programs will invest in 102 other businesses in 2010.  While some may debate the commercial viability of them, they do provide opportunities for young entrepreneurs – and deal flow for angel investors and VCs.

During the same period, Europe’s similarly themed Seedcamp program received over 1,500 applications and mentored 280 teams – but only invested in 21.  Its current investment run rate is less than 10 businesses per year.

Effectively, for every available place in Europe on an acceleration program there are 10 places available in the US.  To put this into better context, the total current population of Europe and the United States is estimated to be 831m and 308m respectively.

Over the last three years, we’ve seen the rise of the super efficient start-up, with the ability to do much more with much less.  Cloud computing has left the “heavy lifting” to others, allowing highly focused development teams to concentrate on building product.  The rise of social media, similarly, has allowed start-ups to reach a global audience with only a few tweets.

This changes the shape of start-ups; teams are smaller and more mobile.  We live in a global marketplace and entrepreneurs, by their very nature, are likely to relocate elsewhere to realize their goals. The proposed Startup Visa initiative could provide such an opportunity in the US.

Seedcamp has shown us the way, but greater opportunities are needed throughout Europe to meet demand – otherwise we risk the loss of our best and brightest developers.  Micro seed funding is necessary to help these early stage businesses through their first few formative months.

There are a few places that create these opportunities.  Our firm, The Difference Engine, is heavily modeled on the TechStars program and is open to anyone from any country.  Similarly, Greece’s OpenFund has recently opened its second program.

This problem extends well beyond young entrepreneurs. A lack of deal flow could have a substantial impact upon European venture capital.  Better (and more) quality opportunities are required in Europe.  Acceleration programs can address both of these issues.

To realize Europe’s ambition and extend the innovation ecosystem, European regions must invest in early stage acceleration programs, supported by local mentors and entrepreneurs, to create the opportunities that the next generation of digital entrepreneurs crave.  If Europe doesn’t provide its early stage start-ups with opportunities, their dreams – and the profits that go with those aspirations – will go elsewhere.


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