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While the European startup ecosystem is improving on all fronts, we’re still missing one major thing: Aircraft Carriers.

We call them Aircraft Carriers because they are one of the foundations in the ecosystem: they are grown up startups or incumbents, often platforms,  big enough to “chop through the seas”, lead the direction that their industry is going, and have the resources and cash to invest in and acquire smaller startups to land “in the ship”. Aircraft Carriers are also source of new startups as talent “take off” from the ship and start new ventures.

It’s not just continental pride we need more of these Aircraft Carriers in Europe – they are crucial in the ecosystem. Companies acquire in order to get access to new technology, a new business line, more customers and acquire talent. Therefore Aircraft Carriers are vastly important for the role they play in the exit market, which is to a large extent still lacking in Europe.

Aircraft Carriers in the US
Perhaps one of the other reasons we call them Aircraft Carriers is that most of them are made in the US. And this is one of the reasons we at Creandum have a presence there. It is not only the size of the market and capital available. The exit and corporate M&A activity stateside so much larger and in fact, over 80% of tech M&A is made by US companies and over 90% of tech companies go public in the U.S. We as investors need to be proactive in understanding what the larger U.S.-based corporates are interested in so that we can expose and position our investments for exit.

The startup ecosystem in Silicon Valley has been built over the past 50 years so the tech companies and larger companies have learned more naturally than their European counterparts that is impossible to invent and grow organically with today’s speed of innovation. Instead, acquisitions and venture investments are needed to complement internal innovation and R&D.

Companies like Google, Facebook, Twitter, Paypal and Apple are of course very active in this space and invest and acquire new companies nearly every week. But looking at the U.S. as a whole they’re not the only ones playing a role in the exit market, “older” companies in media, retailing, finance, industry and energy have learned to also be very active in acquiring and investing in startups.

What about the incumbents?
In addition to tech startups becoming new Aircraft Carriers, Europe needs the incumbents – the older corporations to play a more active role. There’s a few role models: looking at Nordics, Schibsted has for several years been the most active, by acquiring startups in one or two steps, cross promoting them, and launching them internationally through existing properties. Bonnier and Telia have started investing, and Kinnevik has also been active through Rocket and recent acquisitions. In Europe we have Bertelsmann, ProSieben and alike. But these are all media companies, outside that field the activity is pretty small. Ericsson has on the one hand acquired lots of companies globally but I can’t think of one in the Nordics. H&M only recently started some venture investing.

So on the one side we need incumbents and larger companies to become more active, but we also need new tech companies to stay in Europe and eventually become new Aircraft carriers. I believe European entrepreneurs have historically sold companies too early. Stressed to get exits, satisfied with a limited upside or pushed by (insecure) investors, entrepreneurs have often sold to their first solid bid rather than building for the long term.

Some good signs in Europe
Lately we are however starting to see some new Aircraft Carriers in Europe – Spotify, Klarna, King, Just Eat, Rocket Internet, Criteo to name a few. These are now large public or private companies, some already platforms, being active in the ecosystem and at a scale that they might start aggressively acquiring. Hopefully the ones that are still private will not sell out and instead will IPO when they are ready.

King’s successful IPO quickly showed they could have become a true European Aircraft Carrier. Several new gaming startups have recently sprung out of ex-King talent. And we recently sold Creandum’s portfolio company, Nonstop Games to them. The exit to Activision is of course fantastic for the company and ecosystem – an opportunity for all founders and employees to cash out, and becoming active angels in the Nordics. But with the acquisition King loses its autonomy. Although the founders will continue to be active, I believe that the decision power will slowly move to Activision’s headquarters in LA, away from Europe and the Nordics.

So here are two challenges to Europe. First, let’s get the incumbents to start behaving more like Aircraft Carriers by being an active part of the tech ecosystem. And second, let’s continue to push more startups towards IPO and becoming large independent European companies, rather than selling out early.