Funny enough, I don't actually think the money is quite the problem that people think it is.
Look at the early days of YC. Single digit millions a year was enough to stimulate the growth of a whole ecosystem of startups! Some startups are inherently capital-intensive but most don't need that much money to get to the point of basic viability. There are plenty of private individuals in Europe who could support a $10M a year incubator by themselves, not to mention the many institutions that could do this. And yet... there is no European YC and there never was.
I think it's cultural. Go talk to the top students at the top universities in the US and Europe and you will notice plenty of talent on both sides of the Atlantic - yet far different levels of ambition. Now run an experiment; pay ten of those students a hundred EUR/USD to tell everyone that they're dropping out and starting a startup. Watch the parents' reaction. Watch the professors' reaction. Watch the reaction from their doctor, their baker, their crush, their garbageman.
You already know the result, of course, it's obvious. That's your problem; and by comparison, the money hardly matters.
Oh yes. Being a failed entrepreneur is a stigma. Being a very successful entrepreneur is a stigma too. Only being a struggling or moderately successful entrepreneur is acceptable.
But if you look to the Hofstede's Six Cultural Dimensions, you can see that European cultures are geared toward Long-Term Orientation (compared to the Short-Term from USA). In long-term thinking, why can you not wait two years before dropping out of university and start a startup afterwards?
Do you believe short-term thinking is essential for successful startups?
> why can you not wait two years before dropping out of university and start a startup afterwards?
because someone else over in the USA dropped out two years earlier than you to do this very same startup, and thus they get a head start.
Unless your novel idea is so completely novel, that nobody else but you could've done it. Most ideas are not this novel, and first mover advantage is real.
Not to mention that to make long term work out, the short term must also work out. It's a stair case - each short term period adds up and turns into long term. It is almost impossible to have a long term plan work out, if the short term is so unsuccessful that you need more funding every year.
YC became valuable because of the ecosystem. YC enables so many varieties of exit options and inherently lowers the risk for the investors across various stages in the lifecycle of the startup company.
If the only options are such that the companies have to become profitable in isolation or go IPO, starved off private capital otherwise then the risk is much higher.
That’s why it may very well be impossible to create another YC that’s successful., unless you can replicate the entire ecosystem along with it.
> The Gulf Arabs are another group with a similar mentality but they don't have the population, freedom or education (yet) to do the same things
Correction, the Gulf Arabs don't. Their autocratic leadership is though. A frequent point of contention between government and public is the private sector - the government wants them all to join the private sector and even provides locals with seed funding for most kinds of businesses. But the locals are rather risk averse and would rather stay in the cushy public sector. The few who are entrepreneurial tend to be extremely entrepreneurial though, and they have a lot of the risk-enabling capital structure in place in Abu Dhabi and Dubai
Yes you're right. The broader population doesn't have that mentality and are, in fact, I would say on average quite lazy. It's a certain group among the elite (especially those foreign educated) who seem to really want to push the needle.
>The "pioneer spirit" is so core to the American identity and hard to replicate in Europe
Consider that the European frontier is either
- west: Americas (already done)
- south: Africa (not gonna happen again)
- north/east: drang nach osten (again, not to be repeated)
- up / down? Perhaps Europe needs to focus on space and mining tech?
Russia has a frontier, and they are pretty strong in engineering, but I doubt that a SV style ecosystem is likely to form, given the… ahem… unique cultural aspects.
All said, I disagree that a frontier experience is necessary: the UK, Germany and Austria-Hungary were massive industrial modernizers while the US was still going through its westward colonization.
Is tech an exceptional field, or just the current SotA in industrial development?
There's different frontiers. Good farmland used to be the big thing. And trade routes, like natural harbors or navigable rivers. So in many parts of the world, most of the best places were already taken and the "frontier" was worse land. But not so in Americas, because there was available land for reasons. You could have "fertile frontier".
Over time when farming technology improved, people could live self-sufficiently in worse places. Transportation technology changed as well. Railways, highways. And now remote working and data centers. So there have been frontiers also in the old world in that sense. The king of Sweden in the 1500s declared some eastern frontier areas as tax free for some time, as he wanted people to settle there to control those areas (in accords, some of it might have been Russia...). Many places have waxed and waned over the centuries. When Estonia gained independence for the second time, some Finnish farmers went there as there was excellent farmland that was very underutilized.
With modern knowledge you could even build up a great place to live almost anywhere. Good policies and cheap energy. Maybe fresh water is the hardest physical requirement.
When it comes to tech startup capital, its not America its Silicon Valley and nobody else. Sure there are deals closing in other regions but the structure isnt the same.
Silicon Beach/Alley/Gulf/Islands within America cannot replicate it either
Without a culture of paying it forward as a reckless angel investor sometimes dressed up as a fund, already within the people that made it, none of these ecosystems get off the ground
Notably, Silicon Valley’s earliest winners were from a government funded initiative
Look at the early days of YC. Single digit millions a year was enough to stimulate the growth of a whole ecosystem of startups! Some startups are inherently capital-intensive but most don't need that much money to get to the point of basic viability. There are plenty of private individuals in Europe who could support a $10M a year incubator by themselves, not to mention the many institutions that could do this. And yet... there is no European YC and there never was.
I think it's cultural. Go talk to the top students at the top universities in the US and Europe and you will notice plenty of talent on both sides of the Atlantic - yet far different levels of ambition. Now run an experiment; pay ten of those students a hundred EUR/USD to tell everyone that they're dropping out and starting a startup. Watch the parents' reaction. Watch the professors' reaction. Watch the reaction from their doctor, their baker, their crush, their garbageman.
You already know the result, of course, it's obvious. That's your problem; and by comparison, the money hardly matters.