The deeper problem may not be whether Europe can produce another large technology company, but whether it can control the layers through which technological power is converted into strategic power. Capital and regulation explain why firms struggle to scale; they do not fully explain why Europe can possess world-class assets such as ASML while still depending on foreign cloud, AI, payments, platforms and connectivity. A technology sector becomes strategically sovereign when its components reinforce one another as an ecosystem. Otherwise Europe may succeed in building excellent pieces while someone else continues to own the control plane.
Just building on the point regarding Swedish investments; it has a very strong retail investment scene which helps boost the liquidity for start-ups since the general population is much less risk-averse compared to other EU countries (only about 10% of household wealth is held in cash). This is largely due to tax-favorable investment accounts (Investeringssparkonto or ISK) which incentivize folks to take on more risk for higher returns vs. traditionally taxed accounts.
The capital gap is correctly identified but the causality runs deeper than risk appetite. US VCs invest aggressively because the US market provides IPO and acquisition exits at scale. European VCs are conservative because European exit multiples are structurally lower. Smaller public markets, fewer large acquirers, fragmented domestic market. The expected return on European VC is lower not because the companies are worse but because the terminal value is smaller.
So the capital follows the exits, not the other way around. You can't fix the capital gap without fixing the exit gap. You can't fix the exit gap without the deep capital markets that the capital gap prevents you from building. That circularity is what Draghi identified and what EU Inc. is attempting to break. Whether a corporate registration reform can solve a capital markets problem is the real question, and history suggests it can't on its own. Estonia and Sweden succeeded not because they simplified registration but because they created ecosystems where exits actually happened and the proceeds recycled locally.
The deeper problem may not be whether Europe can produce another large technology company, but whether it can control the layers through which technological power is converted into strategic power. Capital and regulation explain why firms struggle to scale; they do not fully explain why Europe can possess world-class assets such as ASML while still depending on foreign cloud, AI, payments, platforms and connectivity. A technology sector becomes strategically sovereign when its components reinforce one another as an ecosystem. Otherwise Europe may succeed in building excellent pieces while someone else continues to own the control plane.
What happens to a pensioner’s life savings when “money” becomes a permission slip instead of a possession?
https://nromanov.substack.com/p/what-will-happen-to-pensioners-over?r=8isc4s&utm_medium=ios
Just building on the point regarding Swedish investments; it has a very strong retail investment scene which helps boost the liquidity for start-ups since the general population is much less risk-averse compared to other EU countries (only about 10% of household wealth is held in cash). This is largely due to tax-favorable investment accounts (Investeringssparkonto or ISK) which incentivize folks to take on more risk for higher returns vs. traditionally taxed accounts.
The capital gap is correctly identified but the causality runs deeper than risk appetite. US VCs invest aggressively because the US market provides IPO and acquisition exits at scale. European VCs are conservative because European exit multiples are structurally lower. Smaller public markets, fewer large acquirers, fragmented domestic market. The expected return on European VC is lower not because the companies are worse but because the terminal value is smaller.
So the capital follows the exits, not the other way around. You can't fix the capital gap without fixing the exit gap. You can't fix the exit gap without the deep capital markets that the capital gap prevents you from building. That circularity is what Draghi identified and what EU Inc. is attempting to break. Whether a corporate registration reform can solve a capital markets problem is the real question, and history suggests it can't on its own. Estonia and Sweden succeeded not because they simplified registration but because they created ecosystems where exits actually happened and the proceeds recycled locally.