For decades now, jealous outsiders have pointed to the vast wealth stemming from Silicon Valley startups and asked, “Why on Earth can’t we do that?”
Many have tried to trace the incredible rise of the Valley and its influence on the equally sharp surge in technology and Internet companies, but the growth of this former fruit-farming area in southern California has complex roots. The proximity of military bases and Stanford University certainly helped, as did local employment laws and the invention of the microprocessor in the late 1960s.
Quite rapidly, the Valley became a magnet for chip makers, hardware and software pioneers and Internet startups, attracting venture-capital funds, legal experts and other players that made it what it is today — ground zero for the world’s smartest technologists who possess a vision, a dream and an idea to change the world.
The obvious lure of the Valley for entrepreneurs might ensure its staying power. However, in recent years it’s become clear that there is plenty of room for other areas to host their own dynamic centres and capitalise on the long boom in technology.
Already it’s not hard to find evidence of technology globalisation. Just look, for example, at the way VC firms are scouting the globe for the next tech giant. Or ponder the rise of other areas with the ‘Silicon’ prefix in their names: Silicon Fen in Cambridge, Silicon Roundabout in east London, Silicon Wadi in Israel, Silicon Taiga in Russia, Silicon Peninsula in China, Silicon Gulf in the Philippines or Dubai Silicon Oasis.
But for Europe to catch up with–and, dare I say, overtake–California we need to make the process of building a company simpler, develop an environment that is supportive and encourage a more positive view of entrepreneurs in Europe. Among the major EU countries, at present sadly only the UK has developed a national plan to give startups the support they need.
In a recent letter to the European Commission, I suggested ways to support Spanish entrepreneurs. Here, I’d like to look at the ‘technology entrepreneur’ culture from a European point of view, highlighting seven ways to give deserving startups a much-needed boost.
First, don’t confuse startups with SMEs. Make the distinction between the needs of startups with those of small and medium enterprises (SMEs). The EC should focus on supporting new ventures with the chance to grow very fast. In Spain, for example, research from the Ewing Marion Kauffman Foundation (2010) found that startups generate most of the net job growth.
Appoint a tech leader. A ‘Chief Scientist’ or ‘Entrepreneur in Residence’ role could rally people and shape government strategy.
Encourage risk-takers. Like the US, the EC should not penalise failed ventures with punitive bankruptcy or banking/administrative laws that hit entrepreneurs in the pocket, but instead create a system that treats these cases as valuable lessons. In line with this, the EC should encourage a culture that sees entrepreneurship as a prized quality and build this into the education system.
Provide tax incentive ‘carrots’. Both investors and entrepreneurs would massively gain from reduced bureaucracy, attractive tax rates and lowered costs of starting a business.
Welcome ‘all-comers’. Set immigration and visa laws that let EU members bring in the brightest from the international talent pool and create global companies based in Europe. Immigrants founded 52 percent of Silicon Valley startups between 1995 and 2005.
Let the state set an example. Make crucial information such as access to public financing, resources and support transparent to entrepreneurs, and allow startups to compete for government bids.
Free your data. Open up valuable government and public sector data so startups have the best possible chance to build valuable businesses.
With these sorts of ‘enablers’ in place to build the right playing field for entrepreneurs, Europe has a fantastic chance of building on the pockets of success we’re already seeing in cities like Berlin and London. If we take note of the California success story, put some crucial mechanisms in place and add our unique local market knowledge, we stand to build new ‘Valleys’, products and services–and bring prosperity to our shores.