Think about global tech giants and they always have one thing in common: they are American. The UK and Europe have not, yet, produced a giant. But in a report launched today, early-stage venture capital investor Antler aren’t just asking why, but is showing why they think that is about to change.
TFN had a look at Antler’s ‘Europe’s New Tech Founders 2024’ report, and asked Antler Partner, Christophe Klink, for his insights into what it all means.
Economic bad news might be good news for the future
Antler’s analysis covered 1,000 unicorn founders and 60,000 applicants to Antler in Europe and found some stark differences. Their conclusion: Europe has not produced enough founders with a technical background.
In Europe, 90% of failed unicorns — or unicorpses — had no technical founders, those with software or engineering expertise. But looking at US successes, the difference that makes is clear. All the founders of the most valuable tech companies, and 70% of US unicorn founders, have that technical background.
The good news for Europe is that things are changing. Antler has seen a 300% increase in applications from founders with a technical background. Much of this is a result of the wave of tech layoffs.
However, Klink points out that it’s not just a result of the economy. Layoffs may have just prompted something that happens naturally in the US. “The scenario where technical founders build tech unicorns from their bedrooms or garages is more of a myth than a reality,” he said. “Bill Gates, Larry Ellison, Marc Benioff were all working for tech companies when they came up with the ideas that made them billionaires.”
He adds that there is a cultural component, too. “In America, technical founders are the superstars of the economy and out of the top 10 tech companies, 95% of the entire founding team have technical backgrounds,” he explained. “In Europe, there is still a sense that software engineers and computer science graduates are a bit nerdy. That only changes with role models whose success changes mindsets.”
Rise of continental Europe
The increase in technical founders might challenge the UK’s dominance of tech outside the US. The report finds that the new European technical founder is more likely to be French (30%) or German (21%) than British, who only account for 10% of unicorn founders.
Klink suggests that AI might be playing a role in this, founders with AI backgrounds have increased by 700%. “There has been lots of Government investment into AI, particularly in France as we see a strong political agenda to close the gap to the world’s leading ecosystems,” says Klink. While in Germany, “there are also very strong hubs for technical talent in German universities like Technical University Munich, which could also be driving this trend.”
Despite that, the UK is still holding on, Klink said, “measured by total funding and founding activity, the UK remains the leading ecosystem in Europe.”
A new wave of technical startups?
Although the lack of technical founders has been a problem, Klink is aware of the risk of overcompensation. “There are lots of examples of companies which only have technical founders, but, of course, you need a blend of skills in a founding team to scale a business,” he said. He gave the example of Apple’s Steve Jobs and Steve Wozniak, “both had technical expertise, but it was the combination of a world-class engineer with a world-class marketeer that made Apple the company that it is today.”
“At Antler, we encourage founding teams that mix technical expertise with more commercial skills,” he said. “However, the more technically sophisticated the product and the target customer group is, we are also backing founding teams where all founders contribute a strong technical background.” Pointing to Netbird, a Berlin-based cybersecurity company, he highlighted the strength that founding teams with a technical background can offer in high technical markets.
But that requirement puts Europe in a strong position, according to Klink. “In Europe, we’ve always had great financial, consultancy and creative talent who have built a large number of successful companies in the past decades,” he says. “What we’ve lacked is technical talent, until now.”
How VC needs to change
Klink reflects that the ecosystem is more than just the founders, and that VC has its part to play. He points out that the VC system has lacked specialist investors. “Most investors come from a commercial or generalist background and relatively few technical founders and experts switch sides to become investors,” he says. “That may lead to excessive investor focus on businesses that are technologically simple but rather require the operational skills to scale them quickly.”
Klink hopes that the rise of the tech founder will, in time, change that dynamic. And if it does, it may only be a matter of time before we see Europe produce a global giant. Klink points to changes that are already taking place, like the move towards hardware solutions in climatetech by companies like Neocarbon or Airmo, changing Europe’s historical preference for software solutions.
And Antler’s report might also have some clues of that that first global giant might look like. Although most people may not need their data to guess that AI might be involved, the data offer some evidence for that guess. Antler saw a 770% increase in applications with AI and data backgrounds. On job titles alone, the fastest growing previous occupation of an applicant was ‘data engineer’ which saw a massive 1,850% increase between 2021 and 2023.
“A new generation of technical founders is emerging in record numbers and with more experience than ever before,” says Klink. “These are the founders that will build Europe’s first tech giant.”
This article is part of a media partnership with Antler. For partnering opportunities, contact [email protected] or [email protected].
