Boosting Innovation - Regionally

By pjain      Published Nov. 1, 2019, 7:01 p.m. in blog Business-Management   

Factors that boost Startups in Regions

Access to Large Uniform Market

A big advantage for American and Chinese companies is their access to a large single market

  • Companies from the EU also have large markets, but, owing to the differences in local markets, have not found an efficient way to use to their advantage.

Digital Market is Fragmented even more

  • While selling "Cheese" or "Wine" would work with a simple label, digital needs full globalization and translation to be suitable. If you are selling financial tools, then you need to deal with unique taxes, rates, etc for each region. So it is far harder to access the uniform digital market.

A related weakness is the lack of a true European single digital market. In the US or China, tech entrepreneurs gain immediate access to a massive market. In Europe, they still must navigate 28 different consumer markets and regulatory regimes. Europe’s “single digital market .. currently amounts to a jumble of outdated, corporatist, counterproductive industrial policies that favor producers over consumers, big companies over small, traditional incumbents over digital startups, and EU firms over foreign ones.

Regulation - EU is super regulatory - Bureaucrats in Charge!

Instead of liberalizing, the EU wants to regulate. For example, it is working to ban companies from refusing online sales (except for copyright reasons) or setting different prices on the basis of a customer’s home country. Other dangerous possibilities – such as an effort to regulate data ownership, access, and usability – lie on the horizon.

Strong Immigration policies, attract founders from all over region - SFO, London

Years of investment in tech companies and education has attracted some of the best entrepreneurs and engineers to the USA, creating a great environment for innovation and big technological breakthroughs.

Strong Education, "Industrial" Parks

The USA is still far ahead of the EU, with 18 of the 25 top universities for computer science based in the country.

Most of these universities create tech hubs and attract big tech companies, making them a perfect place for young people to prosper in the tech industry.

Virtuous Cycle - VCs breed CXOs which invest in next Generation Startups

eSavvy Intensity - Critical Mass matters

  • BCG some focused countries rank higher than US in “e-intensity,” which covers IT infrastructure, Internet access, as well as businesses, consumer, and government engagement in Internet-related activities.
  • Software eats the world, AI eats Software
  • Digitization is expected to generate more jobs than it eliminates - winners benefit from AI, Automation

  • 8%+ Benelux, Baltic, and Nordic countries

  • 5% for Big 5: Germany, France, Italy, Spain, UK

  • BCG data is old 2015 and ignores impact of mPayments, video, chat like WhatsApp/WeChat

  • Per-capita is key factor for e-Index as EC spending depends greatly on that, and smartphones/plans need minimum!
    • 50% aspects of fixed and mobile infrastructure deployment.
    • 25% Engagement how actively businesses, governments, and consumers are embracing the Internet.
    • 25% Expenditure money spent on online retail and advertising - ie digital investments

Available Pension, Hedge Fund and Alternative/Endowment investing in VC, Late-stage

  • It is common for US universities like Yale endowments, etc to invest heavily in Alternative investing including VC early stage, as well as later stage hedge/bridge investing.

  • By law, most pension funds are restricted to Investment Grade which means buying 1.5% 10yrTs in US or -0.5% European 30yr bonds!

  • However, while US firms enjoy 14 times more later-stage capital. That funding gap would disappear, if European pension funds allocated just 0.6% more of their capital under management to venture investments.

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