Silicon Valley has been a globally recognized leader in tech development and a key trendsetter in the latest years. Meanwhile, European hubs have been trying hard to catch up with the American competitors. And now the international experts talk about a negative valuation trend occurring among the US companies: valuations of several fast-developing tech firms have notably decreased. This can also be seen in a
In fact, Europe is totally unaffected by the unfavorable current situation taking place in the Silicon Valley. The explanation to this lies in the strong foundation of local funds, incubators, mentors and inter-hub connections, built within separate investment cycle in Europe. All of them apply joined forces in order to grow successful projects and bring up innovative tech solutions that will become definite industry leaders.
Series A investments in European tech companies have been considerably ramping since 2014: by now, A rounds have risen by 38% year-over-year, while the same US index has taken plus 19% only. The volume of Series A investments serves a good indicator of ecosystem health. Worth noticing, the Nordics is now at the peak of investment activity in Europe. Still, the local institutional investors could provide a better support to late-stage startups. Also, EU data protection activities hit the brakes on data free-flow, which is in a way a barrier to matchmaking and cooperation activities.
All of the above has nothing to do with the possible conclusion about Silicon Valley’s total tech downturn. American startups continue to raise money, even though some of the valuations are decreasing, which could also be treated positively in terms of developed valuation objectivity. At the same time, the truth is that Europe has been on top in the last 3 years. The question is: will European startup ecosystem at some point take the same trajectory as the Silicon Valley and end up with low development traction? Maybe it’s good that we are always several steps behind and have an opportunity to learn from successes and fails of the Silicon Valley.
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