8 things American VC’s find weird about European entrepreneurs



Irena Goldenberg is a principal at Highland Capital Partners Europe in Geneva. She is interviewed in ‘Mastering the VC Game’ by Jeffrey Bussgang, a very readable and accessible introduction to the world of VC’s.

Goldenbergs perspective is interesting, because she’s an American VC working in Europe (she was born in Ukraine but educated at MIT). I thought some of her insights in the European VC and entrepreneurial scene were well worth sharing here.

Note: the book was published in 2010, so some of the things she talks about have already changed or are visibly shifting, but it’s interesting to get the perspective nonetheless.

Here are 8 quotes about what American VC’s think about European entrepreneurs:

1. Europeans don’t think in a Single Market, but hop from country to country

Says Goldenberg: “In the US, VC’s don’t think “hey, I’m going to dominate Texas, and then maybe I’ll enter California”. This is very much the case in Europe.”

Although we’ve had a single market at least since 1992, European business networks and the media still stay focused almost exclusively on their home markets. Power is still national in Europe, so media and business gravitate towards the national capital.

While it’s a serious disadvantage, Goldenberg says that it’s just a reality that VC’s and startups have to live with: “Europe is certainly not a single geography, and can’t really be treated as such. Cross-country nuances emerge in types of teams, deals, technologies, expectations of entrepreneurs, and expectations of core investors—these vary quite a bit by geography.”

2. European VC is less competitive

The good thing about Europe is that there are fewer big VC funds – “just a handful” really, she says. “One positive aspect of the industry, at least from a venture perspective, is that there’s not as much competition for hot deals as there would be in Boston or in the Valley.”

I wonder if this is still true. And on the other hand, I guess the real competition between European VC’s at this time is: who can still raise money for new VC funds…

3. Entrepreneurs from smaller markets think bigger

Entrepreneurs in smaller European countries, like Sweden, Finland, Denmark and the Baltics, often think bigger, Goldenberg says. “A Swedish entrepreneur sees the world as his target market. He does not build to the Swedish market; he is building to the world.”

On the other hand, entrepreneurs from the bigger countries like Germany and France sometimes get trapped in their home markets, because  ”in their mind, they are the largest markets in Europe. But to us [as a VC], it is often not a global enough vision.”

4. Europe misses a single, Silicon Valley style hub

A bit of an open door, this, but: entrepreneur hunting in Europe is a nomadic undertaking, that requires VC’s to travel a lot. “We look for top-quality management with global ambition,” says Goldenberg, “which involves getting on a plane every week in search of the best entrepreneurs in Barcelona, Berlin, Stockholm, or elsewhere. There is no Silicon Valley equivalent in Europe.”

This increasingly goes for US VC’s too, is what I took away from a short chat with Paul Singh of 500 startups in Berlin last week (“can’t be afraid to fly in this business”).

This city tripping is also why the European startup scene sometimes resembles a travelling circus. A lot of tweets in my timeline are entrepreneurs and bloggers pinging each other about their travelling schedule: who’s in Barcelona this week? Will you be in Munich next week? No, I’m at that thing in Helsinki!

Despite claims made by the “hubs” that they’re the relevant hub-du-jour, it’s not likely to get better anytime soon. The emergence of Central and Eastern Europe will make this even more pronounced.

5. There is a budding class of post-exit European entrepreneurs, but not enough of them

Gradually, role models of serial entrepreneurs turned angels or mentors emerge in the European entrepreneurial scene. To name just a few that were mentioned on Whiteboard recently: the Skype “twins” Janus Friis and Niklas Zennström were maybe the first – young, fast, ambitious and loaded with cash to invest. Zennström founded Atomico.

In France, Xavier Niel and Jeremie Berrebi are trying to invest in anything with a pulse with Kima Ventures. There’s also Marc Simoncini, Jean-Antoine Granjon and Jean-David Chamborédon. Germany has Lars Hinrichs (HackFwd) and the Samwers.

Martin Varsavsky is based in Madrid, but obviously works his charm, making friends with entrepreneurs like Daniel Ek across the entire continent (and the US too). In Finland, Kaj Hed (majority shareholder and chairman of Rovio) made his first investment outside of Rovio in Kiosked.

But, says Goldenberg: there’s not enough of them yet.

“There’s an emerging class of entrepreneurs that everyone in the venture community wants to be best friends with. Very experienced entrepreneurial managers—meaning second- and third-time entrepreneurs, who have built companies, exited them, and are doing it again. But there just aren’t enough of those investments to go around. And that, too, is a big difference from the U.S.”

6. Europeans have a weird compulsion to “confess” (seriously, stop that!)

Europeans startle Goldenberg with their tendency to confess the “darkest, deepest secrets and risks” of their company. Europeans still have difficulty ‘selling’, says Goldenberg. They’re just less polished than their Silicon Valley counterparts. And they are sometimes too realistic, afraid of failing big.

“They are hesitant about putting together a plan that they think may be unachievable. So you have to push them on accelerating their vision. Or they might have a big vision but the timeline is too long. I think the American perspective is more optimistic, often over-optimistic, about compressing timelines and moving faster.”

7. Europeans like the opera

Goldenberg also says she was somewhat surprised by some of the more old world habits of her business partners. In the US, small talk is mostly about football, she says.

“But when we did our deep diligence process with a German company, for example, they invited us to fly in the day before, go to the opera in the evening with them, and then spend the following day together drilling down on business fundamentals. This is something that would never happen in the U.S.”

Maybe we have less of a  ”brogrammer” culture in Europe.

8. Europeans (well, Spaniards) ask weird questions!

Finally, Goldenberg says, the weirdest question ever came from a team she wanted to invest in in Spain.

“At the end of the meeting, we asked if they had any remaining questions about us, about our process, about the way we work, or if we could provide references. The only question that came back was, and I quote, ‘Irena, are you married?’”

Photo: the European GitHub community (colors represent languages), Flickr, Franck Cuny

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About the author

Raf Weverbergh

Editor of whiteboard. Raf Weverbergh was a magazine journalist whose work appeared in magazines like Rolling Stone, Playboy, Mail on Sunday, Publico and South China Morning Post. He is the co-founder of FINN, a corporate communications agency where he advises startups and multinationals on their PR and Mustr, the easiest media database for PR professionals. You can contact him on Twitter, Linkedin or Skype (rafweverbergh).

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