I have a feeling that many today’s wannabe Netpreneurs see situation as a quick buck opp scheme. Enrty bar is relatively low, let’s build something and try to sell it to a VC’s. It is much harder to believe into something, to evaluate all points of usability and comercialization, and to endure along path.

But back to the topic, Europe does lack on quality entrepreneurs, VC’s and buyout companies. Whole envrionment is much more underdeveloped than US counterpart. My experience with all three here in EU is pretty disturbing. Add to this many different, yet strong, local cultures which only add to the EU-market-as-a-whole problem. Re. Media companies in EU, they are quite lost – I have alot of contact with some of them and have this strong feeling. There are sleepy and confused and I don’t see signs of improvement.

Indeed things are going better bit by bit, but I think process must be accelerated before it’s too late for old lady EU.

Aside from that fundamental issue. The challenges that I come across trying to sell a company in Europe is to find the right buyer in a reasonable time frame. Within Europe my experience is that not many ‘traditional’ buyers know what’s for sale out there. Simply including them in a foreseen auction doesn’t bring anything since the auction time frame is typically always too short to make up there mind and saying “No thanks” is always the easiest answer.

I always suggest to CEOs who want to sell their company to simply ‘pencil in’ X hours a week to spend on investor(/potential buyer)-relations. Make sure that the ones that you aim to sell to are aware of your existence. At the point that you want to exit relevant buyers know who you are and can make a decision within a reasonable time frame!

US startups can reach scale hitting the 300 million English-speaking, dollar-spending Americans. For a European to reach scale, they have to work out how to operate in France, Germany, the UK and dozens of other countries.

That’s a huge barrier to entry and a meaningful competitive advantage. US acquirers then have a choice of building their product/service out in multiple languages/currencies or to buy someone who has already done it.

I know a number of VCs who see that as the strength of European startups, and a driver of exits, particularly by US businesses.

Which means that the fragmented nature of the European market becomes to celebrate, not bemoan.

Look, I am not saying we are great; I am focusing on the future and saying “yes there is a live ecosystem, success breeds succes, we need to keep developing it”.

If you take the Paypal crew in the US, they started YouTube, LinkedIn, Facebook !

Recycling a comment here I put on Farhan’s blog to save time: “Look at the impact that the Skype boys are having (ok Joost failed, but boy are they trying hard: Atomico, Rdio) and the Skype diaspora (Ek @ Spotify, the Ambient Sound Investments guys). Or Michael Birch and Brent Hoberman. The guys who made big invest in and mentor the guys who will make it even bigger.”

1) you’ve obviously never met him

2) he is one of the most forward thinking and risk taking VCs out there so let’s encourage him rather

3) he truly cares

@william: great points. Companies are bought not sold.

@richard: we made three investments in the US this fall: all are pre-revenue companies BUT they are headed by recognized entrepreneurs AND they’ve made massive headway on no money.

@kathy: Klaus wasn’t the first angel investor in Skype. Morten Lund was. Klaus was one of the first but he did re-invest at a whooping eight figure valuation and that takes massive b@lls…

@Mike: Klaus stands out so starkly given his successes that he reminds us there should be 10,000 Klauses across Europe. We’ll take a thousand

Lastly I think the biggest problem is not European Media companies in general but their management culture. European Management is so cautious they’d rather have a small loss of 2% this year than shoot for a +20%. Thinking goes like this: “let’s blame it on the crisis and I keep my job.” And “if i shoot for the stars I’ll get blamed and possibly lose my job/status/membership at the country club etc.” So we are back to William’s point: build great companies and you’ll take over Europe. Or move to the US.

Regarding what you said… about launching a product and having other competitors, that charge less or nothing, is one of the problems that i wanted to talk about too.

How can you invest on your own (money + effort) to be above their alternatives and still not charge anything on the users end, at least till somebody will see you out there?

Servers costs, maintenance costs, advertising costs, etc…

You

@Engago: Great, you should have heard Oleg Tscheltzoff (founder footolia) on NOAH Conference. He basically advised everyone to bootstrap their business: Do not waste time and do not waste money. And I have to admit: If you do not have any VC money you basically do not care how to spend money. You will care every day how to make money and save money.

So here is my problem: We are just rolling out a new product. Our first plans were to charge everone for a superior set of features our product was offering. Then we realized there are two VC backed companies giving away an inferior product with less functionality – but for free. Most people opt for the free products. Even if they have to cut back on functionality.

So we are forced to gain market share by offering a freemium model. Everyone would pay for this type of product in general if the VC backed companies wouldn´t give it away for free. It´s ruining the market. For them and for us.

It reminds me of 1999 where market share and turnover were higher rated than sustainability and profitabibility.

In our experience, having launched our service in the UK, Spain, France and Ireland so far, the ‘one size fits all’ approach really doesn’t cut it. You have to have a local tailored offering to be truly successful. Which entails a significant investment that a start-up trying to prove their business in many cases will find it too hard to make.

This makes for a very different investment opportunity. The opportunity in the EU to de-risk a super-scalable business is greatly reduced in comparison to the US.

VCs and acquirers are understandably looking for the biggest wins for the lowest risk. The US market is far bigger than any one European country.

As Europeans, I would contend that we shouldn’t be trying to ape the US and dream of the apocryphal gold-paved streets of Silicon Valley.

Instead, we should focus building businesses that are suited to the markets we operate in. That way we generate real and realisable value for our shareholders.

This will not result into a highly scalable platform/app in 90% of the cases.

Now to somehow hit my problem, i am a developer, always had ideas. At the beginning i wasn’t able to craete something, because i did not have any experience. Now that i am able to produce “stuff”, i realize i miss the key ingredient, somebody who can sell my ideas to a VC to an Angel Investor.

How do you find that key ingredient when you know that you are not capable of doing that?!

Thank you.

I have invested my own money, and I have also pitched to VCs in SV, in the EU, and in IL, with the broadest range of results, from spectacularly well to spectacularly bad.

There are good VCs and bad VCs, just as there are good and bad doctors, pianists, and referees. And some of the ugly things about VCs I believe just come with the job: the cockiness, the short attention span, etc – this is all regardless of where they operate.

There are, however, a couple of features that characterise EU VC and that I find particularly irritating:

1. They are overcautious – about everything: about money, about valuations, about ideas, about people, about growth…

2. Their snottiness is, with very few notable exceptions, completely baseless – their hits (if any) really belong to their US HQ while the local staff’s track record is questionable, to say the least. Perhaps Accel Partners provides the best example of this lot.

3. They like inbreeding – a lot. Yes, knowing the people from previous investments helps but this is not the Church of Scientology, you know? For examples, look at Index V.

All in all, I agree with many of your comments: venture capital in Europe *is* a million miles better than 10 yrs ago; you don’t need $5m to start up and online business today; and some TC readers *do* like to rant (about pretty much anything).

EU VC are not to blame for the state of the IPO markets or the media companies in Europe. But they could certainly contribute in turning things around, especially by working more closely with large EU holdings and regulators – after all, they have more at stake than anyone else, don’t they?