Techies Across The Pond
In late 2000 a couple of students at Stanford University's Graduate School of Business, Eric H. Baker and Jeff Fluhr, came up with a nifty idea to create an online ticket exchange. They launched the company in San Francisco, and it quickly took off. By 2003, StubHub Inc. (EBAY) had turned its first profit after selling $60 million worth of tickets to baseball games and other events.
Soon, with StubHub thriving, Baker was ready for a second act, far from Silicon Valley. In 2005 he moved to London to launch viagogo, an online ticket agency for Europe, bringing five Americans with him. Baker had never lived abroad and moved with some trepidation. But the entrepreneurial energy in supposedly hidebound Europe surprised him. "If you are plugged into the right networks, it's very reminiscent of what's going on in Silicon Valley," he says. "More and more people are going to wake up to the opportunity."
Baker is among a growing cadre of Americans jumping across the pond to join a newly dynamic startup culture. True, it's still harder to launch a company in Europe than in the U.S. But executives and venture capitalists say the number of Americans creating or running companies in Europe is on the rise. Says Neil Rimer, general partner of Index Ventures, a European venture capital firm: "We get more U.S. résumés than European résumés in some cases."
Dan Cohen, who headed the My Yahoo! business unit, now shuttles between Europe and the U.S. as CEO of Pageflakes Ltd., a German startup that two Germans and a Bangladeshi founded in 2006. European managers are hiring Americans, too. Last July, Brian Murphy, who helped build photo-sharing site Ofoto, was persuaded by Moo.com founder Richard Moross to move to London and help launch an online photo-printing service as its vice-president of operations.
Techies cite a number of reasons why Western Europe seems so hospitable: top technical talent and more financing mechanisms such as angel investors, less competition than in America, and the single European market. Venture funding of European tech companies rose 16% last year, to about $2.8 billion. U.S. funding for tech startups rose at a far slower rate, 2%, albeit to a much larger $13.8 billion total.
LEVELED FIELDRecently, leading U.S. venture firms Benchmark Capital and Accel Partners, with offices in London, raised money for two large European funds. "We're seeing the highest levels of entrepreneurial activity since we set up shop" in 2000, says Kevin E. Comolli, managing general partner of Accel Partners London, which last year raised a $450 million fund. Accel is pouring money into open-source software, Web services, e-commerce, and makers of communications gear in Britain, Germany, France, and Scandinavia.
Europe has generated its share of innovative tech outfits through the years, of course, ranging from SAP (SAP) in software to Nokia Corp. (NOK) in phones. But for a new generation of startups, the Net has leveled the playing field between Europe and the Valley. A few years ago, tech entrepreneurs had to set up shop in the U.S.: The market was too big to ignore, and it was difficult to be taken seriously as a European startup. Today, if an idea is innovative, the world beats a path to your door, says Mark Tluszcz of Luxembourg venture firm Mangrove Capital Partners. He should know: In 2003 Mangrove invested $130,000 in Skype (EBAY), the fast-growing Net phone company based in Luxembourg.
Skype, bought by eBay Inc. (EBAY) in 2005 for $2.6 billion, is the polestar for new Euro startups. But it's not alone. Sweden-based MySQL is a leader in open-source database software; Britain's Last.fm is breaking ground with a social networking site for music; and Madrid-based FON, launched by serial entrepreneur Martin Varsavsky, is building a global wireless-communications network. "Thanks to Skype, you've got proof that you can build a company in Europe that can be big," says Baker. "That is a huge inspiration."