Europe's Tech Strategy: Building Global Tech Giants

A Coalition Backs Manifesto for European Tech Giants

A collective of 200 founders of startups, investors, industry associations, and governmental representatives are supporting a manifesto and a series of recommendations designed to cultivate the next generation of large-scale technology companies within Europe. Currently, French President Emmanuel Macron is hosting an event in Paris featuring participants from this group, known as Scale-Up Europe.

Manifesto Signatories

The companies, investors, and associations that have endorsed the manifesto encompass Alan, Axel Springer, Bpifrance, Darktrace, Deutsche Startups, Doctolib, Eurazeo, Flixbus, France Digitale, Glovo, La French Tech, N26, OVHcloud, Shift Technology, Stripe, UiPath, and Wise.

“I will pursue your ambition – the creation of 10 technology firms valued at €100 billion or more by 2030,” Macron stated.

A Roadmap for Growth

Achieving this objective is ambitious, prompting Scale-Up Europe to develop a detailed roadmap and issue a comprehensive report. While supported by both private and public entities, this initiative can be viewed as a form of advocacy directed towards the European Commission and European governments.

Key Recommendations

The recommendations center around several crucial areas, beginning with funding. The group believes Europe currently trails behind in securing late-stage investments. The size of the largest venture capital funds in Europe does not yet match those found in the U.S. or China.

The French government has already been actively working on strategies to encourage late-stage funding and investment in publicly-traded technology companies within France. According to a source familiar with Macron’s initiatives, “We’ve observed the success of the Tibi initiative at the national level in France and believe a similar model should be implemented across Europe.”

This suggests that Europe should explore utilizing public funds to amplify the impact of venture capital investments. The European Investment Fund already allocates substantial capital to VC funds. However, Scale-Up Europe proposes incorporating private funds of funds, sharing risks, and fostering greater collaboration among public investment banks.

Attracting and Retaining Talent

Another key focus is on attracting foreign talent. Several countries have already implemented tech worker visas. The group advocates for a standardized visa system throughout the European Union, coupled with a degree of portability regarding social benefits.

Previous concerns regarding stock option schemes, as highlighted in an earlier open letter titled “Not Optional,” are revisited in the current report. It reiterates the need for certain governments to adopt more advantageous regulations concerning stock options.

Fostering Deep Tech Innovation

The third major theme concerns deep tech startups. The report argues that Europe is not adequately supporting the growth of deep tech startups and the investors who back them. Recommendations include establishing standardized frameworks for patent transfers, which are vital for converting research projects into viable companies. It also suggests an expanded role for the European Innovation Council in defining a strategic roadmap for deep tech.

Improving Collaboration

Scale-Up Europe also proposes measures to enhance the relationships between established corporations and startups, primarily through tax incentives, R&D tax credits, and other fiscal benefits. (However, it is debatable whether incentivizing acquisitions with tax breaks will genuinely lead to the emergence of more European tech giants.)

A European Tech Mission

Finally, the coalition envisions a European tech mission, modeled after La French Tech in France, to streamline regulatory processes, promote startups, and provide broader support.

Easier Startup Creation and Growth

In general, these recommendations aim to simplify the process of establishing and expanding a startup within Europe. Both investors and startup employees holding stock options are likely to welcome the prospect of more rapid wealth creation. It remains to be seen whether the European Commission will adopt any of these suggestions.

The Challenge of Building Tech Giants

These are practical recommendations, but constructing a tech giant is inherently complex. Such companies typically exert significant control over their entire technology infrastructure, including areas like cloud hosting, payment processing, data analytics, advertising, and artificial intelligence.

Currently, many European startups rely on Application Programming Interfaces (APIs), frameworks, and platforms developed in the U.S. or China. Scale-Up Europe overlooks this critical point. The growth of European startups is not a quick windfall; it’s a sustained process requiring ongoing investment starting from the foundational layers of the technology stack and progressing upwards.