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Here’s what Europe needs to do to catch up with the US – Techstars’ Eamonn Carey on the state of the European tech sector

May 8, 2019

Written by Lucy Fuggle

More capital. More role models. More talent. The European tech ecosystem is booming, says Techstars’ Eamonn Carey. But we’re still lagging behind the US in some key areas…

Eamonn Carey is a longtime presence in the European tech scene — as a founder, mentor, advisor and angel investor. Among many other ventures, early on in his entrepreneurial career he co-founded FarmVillain, a dark parody of FarmVille and similar social games that garnered over a million players — along with a legal threat from Chuck Norris.

Now, as managing director of Techstars London, he’s also a key player in a global community of entrepreneurs that includes more than 10,000 mentors and over 300,000 alumni. Techstars’ accelerator programmes have included companies like SendGrid (acquired for $3bn by Twilio earlier this year), PillPack (acquired by Amazon for $1bn last year), and popular cloud platform DigitalOcean.

Eamonn will be joining us on the Lead stage at Turing Fest 2019 this August — ahead of his TF debut, we caught up with him to get his take on the health of the European tech scene, Brexit, diversity in tech and more…

Hi Eamonn, thanks for talking to us. We’re excited to get your take on today’s startup landscape, especially in Europe. So to set the scene, how strong do you think the European tech sector is right now?

Europe feels to me like it’s booming at the moment. We did some research with tech.eu and Stripe last year, Seed the Future, and saw a 5x increase in the amount of capital going into early-stage companies in Europe at sub-2 to 3 million euro rounds over the last three years. It’s gone from a couple of hundred million a year to almost 2 billion per quarter going into companies in a very short amount of time. There are huge numbers of new seed and series A funds coming to the market, and we’re seeing capital coming in from US and Asian investors.

The amount of capital going into companies is through the roof. The quality of entrepreneurs that we’re seeing coming through is extremely high.

Europe has role models now, too. You can point to companies like TransferWise or Spotify or Monzo… or lots of other successful so-called unicorns scaling rapidly and becoming big dominant players in global markets.

From a talent perspective, we’re producing lots of incredible graduates out of universities across Europe and a wide range of fields. And from a company perspective, we see tens of thousands of applications every year for Techstars programmes. The calibre of companies from all parts of Europe has been incredible – both in Central and Eastern Europe… Ukraine, Bulgaria, Romania. The quality has been going through the roof over the last few years.

So I’m really bullish on the European tech sector. There are some things that could be better and work more coherently, but I think it’s only going to get better.

What about the UK and Brexit? How you see things unfolding from here – and how are founders, angels and VCs feeling right now?

I think the uncertainty is extremely frustrating for everyone — founders, investors and all of the stakeholders in the startup world. I think there are a lot of question marks about how easy (or otherwise) it will be to hire people post-Brexit. However, we see an increasing number of companies keeping their dev/R&D teams overseas, but moving some of the founding team and sales ops to London.

From an investment perspective, we haven’t really noticed a slow down in the amount of available capital. If anything, there are more new funds spinning up, and more capital coming in from the US and Asia. It’s maybe taking a little longer for decisions to be made, but from my perspective, the great companies are still easily able to raise.

Techstars has a huge network. You’re operating in 150 countries which is a huge pool of talent. You already mentioned European talent is really strong at the moment, but how does it compare to the US? And where can (and should) Europe catch up?

One of the big challenges you have in Europe is mobility of talent, even though it’s about a 3-4 hour flight from here in London to almost anywhere else in Europe. People are still a bit nervous about outsourced or offshore teams. I’m not – a lot of the companies that we backed in the last year or two have their head offices, CEOs, or some of their founders or sales team in London, but all of the R&D, tech and build in Ukraine, Bulgaria, Estonia or other markets.

Another challenge we have in Europe versus the US is you can look back over 50 or 60 years of culture in Silicon Valley and point to some people who have been extremely successful in the technology field. The reason why Silicon Valley is so successful is because a bunch of people made money in Xerox and HP and others in the 50s and 60s, re-invested in the Microsofts and Apples of this world in the 70s and 80s, put those piles of money into Netscapes and others in the 80s and 90s, and then that went into Google.

There’s been a virtuous cycle in the US market for a long time that we haven’t really had in Europe. But that is changing. If you look at the founders of Skype, or some of the most active angel investors in Estonia who funded TransferWise, they’re now reinvesting into the next generation of startups. We’re starting to see the green shoots of it happening in Europe.

Another thing we’ve heard from US VCs in particular is that there’s not as much M&A activity in Europe as there is in the US. So just seeing more of an exit profile of companies going public, being acquired, that activity…

That’s really interesting. You mentioned role models, which often comes up when talking about diversity. I’m curious how you’re approaching that at Techstars. I know you’ve had some really cool companies come through with female CEOs, like ClassPass.

So two sides to this question: what are you trying to do at Techstars to level the playing field? And what do you think the rest of the industry should be doing to level things out?

There are a couple of things we’re doing internally and externally. When we’re recruiting companies at Techstars, we make as much effort as we can to reach out to underrepresented groups and get involved with organisations supporting founders from diverse backgrounds. We want to spend time mentoring and supporting them and learning about their businesses.

Speaking from a Techstars London perspective, if you look at the last two or three batches we’ve had, if you average it out probably 40-50% of the companies are led by female CEOs. If I look at those companies, they’re doing extraordinary well. We’ve done an awful lot with Startup Weekend and Startup Week and others to try and engage with diverse communities around the world and help them have a touchpoint with Techstars.

We do a lot of training around unconscious bias so we’re more aware of the decisions we make and the way that we think and how we can reframe both, frankly. That means we’re making better decisions and can get a more diverse team of applications.

We’re supporters of what Check and the team at Diversity VC are doing. One of the big challenges at the moment is that pretty much every board that I sit on is a bunch of other white guys with English or Irish accents in their late 30s or early 40s… and maybe for a bit of diversity we have a bald person in their 50s. It’s something we’ve realised is a big challenge and a big issue.

You need diversity of opinion regardless of if you’re a B2C or B2B company. It’s unlikely that all of your customers are going to be white and male. Companies need to be more cognisant of it. People can roll their eyes when they hear people talk about diversity, and there is still a long way to go in terms of the education of founders, educators, and other stakeholders.

The smart people are realising the difference it makes to have diverse founding teams, to have diverse boards, to have diverse opinions in your pool of advisors and mentors. And they’re taking action on that. I would hope we are in that group.

What advice do you give to companies that have ended up with an all-male team and/or board without even really thinking about it?

We nudge people by sending them the data that shows the difference it makes to have a diverse team. Most of the companies we invest in will be well aware of our thoughts on it… we talk about diversity and inclusion publicly as Techstars a lot, and we talk about it privately in 1 on 1 sessions with companies. Even in conversations I’ve had over the last couple of weeks with companies that are overwhelmingly white and male, I think they recognise it.

What we normally say to people is just go talk, go out and meet as many people as possible, have as many conversations as possible, and start really thinking systematically about hiring biases within your company. We run training and have video training for founders so they’re aware of that unconscious bias in hiring… it’s the same way we approach it when we invest. We try to equip founders with as many tools and as many skills as possible, and then connect them into as many networks as we can to actually go out and find these people.

A lot of companies, and certainly the better ones, recognise the importance of diversity and inclusion. It’s then about how quickly you can act on it.

How have you noticed the tech and entrepreneurship landscape change over the course of your career so far?

Fifteen or so years ago, when I started my own company, starting a business was something that only insane people did. It wasn’t really a thing to the same extent as in the US That’s obviously changing, and I think people are more empowered to start companies, but one of the things I’ve found fascinating not just in Europe but globally is that the playing field is levelling at a pace we’ve never really seen before.

When I go to Ukraine or Vietnam or Korea or any of these markets, people have access to the same Coursera courses, they have access to the same Medium posts, they have access to the same books and materials and podcasts as anyone at Stanford or NYU or UCLA or Cambridge. We’re meeting all of these incredible entrepreneurs from different parts of the world whose talent is the equal of anything we’ve seen coming out of the US, or China, or markets in Asia.

For Europe, I think it’s about: having role models, having access to capital and mentors and guidance — which I hope Techstars and others provide — and having more visibility of success. I think things are only getting better from here on. 

Up next: read part 2 of our interview with Eamonn, with some invaluable practical advice for early-stage founders.

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