TNW Valencia is just around the corner and Boardwave Founder, Phill Robinson, will be taking to the stage in the opening morning keynote address entitled: Leading the future: creating the next generation of European tech companies and he will focus on the four key conditions contributing to the success of the European software market:
Government support
The willingness of investors with capital and domain expertise to invest from the early stages of businesses and follow through
A thriving, collaborative ‘local’ community
Mission-driven Founders who are focused on the business, not themselves
Phill will be discussing how these conditions are needed for Europe to lead the world in the next ten years as a global software powerhouse.
As a Boardwave Member, we wanted to give you this preview of what Phill, our Founder, will be discussing in his keynote address in Valencia, whether you’ll be there or not. But don’t forget - if you still don’t have your ticket, we have a limited number of free passes for Boardwave Members, which are up for grabs and you can register for one here or, if all of these have been allocated already, you can get a 20% discount with code BOARDWAVE20.
So, what will Phill be covering on the day?
The perennial conundrum
Phill created Boardwave to help make Europe a software superpower, to solve the ‘perennial conundrum’ of why European tech companies typically struggle to compete on a global scale.
Having lived and worked in Silicon Valley twice, most recently as CMO of Salesforce.com Phill identified several advantages enjoyed by US-based tech firms over their European counterparts. In particular, Silicon Valley’s tight-knit community creates a breeding ground for success, connecting tech whizzes, entrepreneurs, investors and advisors. In other words… it’s not what you know, it’s who you know.
In stark contrast, Europe’s software market is highly fragmented, meaning entrepreneurs have to work much harder to make the right connections. That’s exactly why Phill founded Boardwave - to help build a European community that will nurture and develop the tech giants of tomorrow.
Phill identifies the four conditions for success in Europe in the next 10 years. The first of these is Government support, in terms of greater focus on educating our children in STEM subjects, creating an attractive labour market, encouraging research and innovation through incentives (e.g. tax breaks), reduction in red tape and a liberal regulatory environment ; all designed to encourage software entrepreneurs to build their businesses here in Europe.
Over the last ten years, some progress has been made in this area in encouraging software start-ups in tech hubs in Europe. The four most successful are London, Berlin, Paris and Amsterdam. In fact, the value of the tech ecosystem, which is dominated by software, in London in 2022 was worth €900 billion, with Berlin at €475 billion, and Paris and Amsterdam at approx €250 billion.
The fact is, we have managed to create the very beginnings of a self sustaining ecosystem in these places for start-ups.
The second condition for success is access to capital. In days gone by, this was a major hurdle as many investors favoured Silicon Valley start-ups, with the promise of greater returns. However, in the last 5-10 years, there is a much greater availability of capital to deploy in Europe.
According to data from dealroom.co in early funding rounds, of less than $5m, Europe attracts just as much investment as the US. However as the rounds get larger and businesses move out of early stage start-up phases into scale-ups, the picture is very different, as can be seen from the graph above. Unfortunately, whilst we have done a decent job helping start-ups, once they get a little success they are on their own, with very little support at all.
This is the critical moment when Founders in Europe need more help to give them the confidence to continue to deliver on their mission, rather than suffer Founder Fatigue, and give-up or sell-up to a US competitor.
According to research by Venture Capitalists Bessamer, a good high growth US software company will take 12 years to have scaled up to $100m ARR. The very best might get there in 6-7 years (the last European software company to grow that quickly in its early years was Skype). Based on our own analysis of Boardwave Members, it takes a European Founder, on average, 13 years to scale to $50m. Thats longer than it takes our US cousins to become twice the size.
This is critical. Unless we surround our scale-up founders with the right know-how, knowledge and expertise, and offer them benchmark examples of others who have stood in their shoes and succeeded, there is every likelihood that they will suffer "Founders Fatigue" - it just takes too long to scale-up.
Silicon Valley has the ultimate ecosystem of support for scale-up founders. If you're driving down Highway 101 in Silicon Valley, and you see billboards for Facebook, Google, Twitter, Apple, Oracle, Salesforce.com, and some of the executives of these companies are even helping you, you're hardly likely to face a crisis of confidence. Sit yourself in The Hague, or Brussels, or Rome and its a different story - there's no significant track record of success in these places, and no one to get help and support from.
As you know thats one reason we created Boardwave to ensure the excellent Software Leaders, that we do have, are more connected, more available and proactively helping each other to succeed - to build an ecosystem of support for scale-up founders. Boardwave is a community, and communities work.
In Silicon Valley they talk about the Paypal Mafia. Of the top 19 execs that started at Paypal, they have jointly gone on to found, invest or advise a whole generation of new companies together. They have been involved in Tesla, SpaceX, Facebook, Xero, Stripe, OpenAI, Pinterest, Uber, Linkedin, YouTube, Evernote and others. This just shows the power of the community, and it's replicated a hundred times over, as the same thing happens at every other successful software company in California.
Boardwave is designed to help in the same way so that we can all work together as founders, investors and advisors in Europe to create the same conditions for success.
Nevertheless Geography also plays a large part. If you build a new killer product in San Jose, you can sell the same product in Dallas, and if it sells in Dallas, it will sell in New York. If it sells in New York it will sell in Boston. American software companies have a single huge contiguous market to sell into. They can get big fast, and without the complexity of having to go International too early in their journey.
We just don't have that in Europe. We have a series of relatively small national markets, separately regulated and governed, with differing cultures and languages. This is why it might take 13 years to get to $50m ARR when the Americans are at $100m. So what advice should we give the European Founder embarking on the Scale-up phase of his journey?
First of all, design your business from day one with an International focus baked in. With the right approach you can traverse national boundaries. The Israelis have built an amazing tech scene, but have the tiniest of home markets, each business has to be designed to work Internationally from the very beginning - and we should do the same. Alternatively pick a space that operates the same globally, so you are not too affected by the nuances of national markets. Spotify and Skype are both examples of companies that have done the latter.
A third alternative is to pick a market for your product that is so large locally, that it will be a long time before you need to consider the complexities of other international markets, and you can scale locally.
Or philosophically accept that it just takes longer in Europe and have patience and resilience to continue the journey. We need founders that are prepared to focus on the needs of the business rather than themselves.
Many founders don't. With Founders Fatigue, and a generous acquisition offer from a larger competitor (generally American) they don't complete their mission. They sell up. Maybe the money pays off the mortgage, the school and university fees. Nothing wrong with that but that's fundamentally why we don't have global leading software brands in Europe.
We, as Europeans, need to nurture innovation in our software sector. It's what will help our economy re-ignite growth. We must build a strong ecosystem not just for start-ups - as we have done in the last ten years (though it proves we can do it) - but also for scale-up and larger companies who need just as much help. In the form of our four key conditions for success :
Government support
Access to Capital
A supportive ecosystem and connected community
Patience & Resilience
If we do that, who knows, in 10 years time the next Facebook or Google might have come from Berlin, Paris or Amsterdam!!!
Know of another CEO or Founder attending TNW Valencia who should be a Boardwave Member? Nominate them here!
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