As a long-time observer of the venture capital scene, I've often wondered why a handful of firms on Sand Hill Road in Silicon Valley dominate globally. Is it the investment acumen of the partners? Or does it have to do with quality of the start-ups they back? Paul Jozefak, managing partner of the German venture capital firm Neuhaus Partners has some interesting thoughts about this on his blog:
you don't, you tend to leave quickly. Those who've stayed and continued
to start new businesses or finance them have the loftiest of goals.
They're probably also not about the money. Sure, they enjoy the perks
of an exit but my experience is that lots of people there want to
change the world. If not change it, at least try. You hear it in their
pitch and you see it in their eyes. Ask me the one thing I see lacking
most often when it comes to start-ups in Europe and I'll answer
"hunger, drive and lofty goals." The few that have it you recognize
immediately. They usually end up succeeding quickly and you chase them
to invest in their companies. Those that don't have it probably never
will. It's also not about being "American", which also often comes up.
The Valley is made up of people from every corner of the earth. Each
and every start-up I've visited there was a pot pourri of backgrounds,
often Europeans.
I think Jozefak makes a good point. Too many of the start-ups in Europe are merely imitations of American start-ups. These "copy-cats" ramp up quickly to grab a slice of the local market. But the exit strategy is to be taken out by the US company – more often than not backed by a "Valley" VC. Good way to make a quick profit, but hardly a "world-changing" business model. I'd love to be proven wrong and learn about start-ups in Europe that have the "hunger,drive and lofty goals" that Jozefak mentions.
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Just from my small corner of the world: My husband consults for a French high tech startup, and the people are very dedicated. Being French, however, they do not spend 24 hours a day on their work. He also works for startups in the U.S., in Silcon Valley and elsewhere, and most of them fail even though the CEOs and employees work on them all the time. Most startups fail, period.
Yes, most start-ups fail. But in “the Valley” failure is a badge of honor. In Germany, at least, it’s something shameful.