Europe’s Tipping Point: Five Key Takeaways From Our Panel

A convergence of world-class talent and technology, free-flowing capital, and shifting geopolitics has set the stage for European software to come of age. Can we seize the moment? Accompanying the launch of our new report with McKinsey & Company, we assembled a panel comprising founders, CEOs and board members to discuss an action plan.

Promise is one thing. Power is another entirely. European tech possesses an abundance of the former in its growing pool of talent, capital, and companies surpassing €100m ARR. In a critical moment moment for the region, what can our ecosystem of founders, CEOs, investors and institutions do to turn all this tech promise into truly global power?

That was the question posed to our panel at the launch of our new report, Europe’s MoonshotMoment: Fuelling Its Tech Ecosystem For Scale, co-authored with McKinsey & Company. Our panel, Europe at Tipping Point: Turning Tech Promise into Power, featured Electron founder/CEO Jo-Jo Hubbard, Typeform ex-CEO Joaquim Lecha, TA Associates Director Stefan Dandl and Communardo Chair Franz-Josef Seidensticker. Five key themes emerged from the wide-ranging discussion. 

1) Develop a more commercial focus.

For all the industry’s product nous, the consensus among the panel was that go-to-market (GTM) is grossly undervalued by most European tech startup leaders. 

TA Associates’ Stefan Dandl suggested that the art of GTM is lost on many European startups. “In the US there is a better understanding of GTM”, he said. “It requires education in Europe. If you feel like you don't have a solid understanding of the go to market funnel end to end, and sophisticated datasets in your CRM, then you need to ask yourself if you have the right leadership.”

Joaquim Lecha agreed, adding that European startups don’t focus enough on growth and revenue. “There’s too much focus on the product. From day one, you need to devote time and personnel to customer research and market positioning.”

Indeed, the research in our report has revealed two systemic roadblocks holding back Europe’s go-to-market capacity. First, while our survey respondents generally identify marketing and sales talent as readily available on the continent, 19 interviews with European tech leaders suggest that experienced GTM talent who can localize and scale strategies across Europe’s fragmented markets is scarce.

As the CEO of a French SaaS company shared in the report, “Europe lacks the same GTM strength as the US. They have the top GTM talent and expertise and are more aggressive in prioritizing GTM.”

2) Embrace risk.

It’s been widely observed over the years that European software leaders and investors are hesitant to take on risk with the same fervour as their Silicon Valley counterparts.

However, the times are changing. Our panel agreed that amid a growing influx of capital, there are signs that Europe’s risk aversion is beginning to lift. “This is the first time we’ve done a round when the mood music is more negative in the US than here in Europe. It feels like a real opportunity,” said Jo-Jo.

To compound this opportunity, Joaquim Lecha called for more willingness to experiment. “From time to time we need a more revolutionary approach to investment. Put money aside to try new things. If it gets burned, so be it. But it’s crucial to think outside the box and innovate.” 

Risk appetite is a mindset that needs to seep into all quarters of the European market. In practical terms for founders and CEOs, it could mean assembling a diverse, growth-oriented management team and board of directors that can embed risk taking into company culture.

Meanwhile, for investors, it could mean favouring bold bets over measured returns. Takepension funds, for example: just 0.02% of assets are invested into venture capital in Europe, compared with 2% in the United States. “European pension funds are risk averse from the moment they get given capital,” the cofounder of a start-up accelerator told us in our report. All of that can change with a greater willingness to take bold bets – such as pension reforms in the UK, which the government estimates could unlock £80 billion of investment in fast-growing companies.

3) Incentivise talent with equity.

We need financial incentives in place to reward global ambition. Our research suggests that founder friendly equity models and long-term capital could be critical in rewarding ambition over short-term gains. Our panel discussed the reasons behind Europe’s conservative outlook on equity, and how this attitude is beginning to evolve.

“The rewards are typically bigger and faster in the US”, said Joaquim, explaining that investors have typically been afraid of offering equity. “In Spain for instance, investors were scared of the risk, because they said, ‘I'll give you a little bit of money and now you're going to play golf and spend more time managing your money than actually working for the company’.”

He added that this attitude has changed, with founders and investors now seeing the benefits of offering employees financial security. “Now it's more like, ‘I'm happy that you have taken some money out because now that you have your home and no mortgage, you can really go big because if it implodes, you still have your home.”

Ultimately, the aim should be to incentivise bold ambition, not just financial gain. In Joaquim’s words: “In the end talent is not only about skills or experience, but also their ambition, their mindset”.

4) Improve knowledge sharing and collaboration.

The fragmentation of the European market is often cited as a friction point for scale ups. Language barriers, a patchwork of compliance requirements, and a mesh of trade borders all present structural challenges for scale ups aiming to expand.

There was no denying this reality among the panel, acknowledging that our geographic makeup has led to an ingrained insularity – and even a lack of collaboration – across markets. As Jo-Jo Hubbard explained: “In the US, clients are great at introducing us to other utility companies we should work with. We can hardly get European clients to introduce us to other people inside the company, let alone with other companies”.

The panellists also pointed to some of the upsides of the region’s multiple markets, agreeing that we can transcend any perceived structural barriers by adopting more of a collaborative mindset. “Fragmentation can be your friend if you execute well”, says Franz-Josef, adding that if you have the right partners on your side, Europe’s multitude of markets can present more opportunities for quick expansion.

Stefan Dandl emphasised the need for more intentional collaboration through events, mentorship platforms, shared best practices, and celebration of local wins. “Best practice sharing and learning from each other is powerful”, he said.

This is the kind of optimism that can drive Europe towards its tipping by point. Rather than viewing fragmentation as merely a point of friction, we can spin the diversity of our market into our superpower.

5) Build strategic partnerships.

Following on from the question of how best to encourage collaboration, the panel agreed that one of the fastest routes to market expansion is through strategic partnerships and targeted M&A – something Europeans have typically been slower to secure than US companies.

An earlier focus on M&A can help build these powerful connections, and help “build muscle”, in Franz-Josef Seidensticker’s words. As always, the key is in finding the right partner and planning the right execution. “You need to have the right dividends, the right financing, the right integration. It comes back to potential: you need the right timing and the right management team to execute the capital.”

Stefan agreed that M&A can help you go to market quickly, combine your product’sstrengths with another, and become more than the sum of your parts.

Ecosystem players can help shape the environment by supporting critical technology sectors and streamlining the foundational enablers of scale – talent mobility, administrative simplicity, and cross border alignment.

As one CEO explained in our report, “European winners will, most of the time, need to be the sum of many parts; the main game of scaling up has to be through consolidation.”

You can find an in-depth dive into each of these topics — and much more — in Europe’s Moonshot Moment: Fuelling its Tech Ecosystem for Scale. Built from deep analysis and over 100 conversations with founders, CEOs, and investors, it offers a practical blueprint to help more European companies grow from €10m to €100m (and beyond).

Read the full report now.