Jason Goldberg I am of the same opinion. Dream big. Make shit happen. I am perhaps the example of this. I was raised in Italy dreaming of building world changing stuff. Moved to Cali to learn the 'mindset' then returned to Europe. Worked at Yahoo mainly because it was 'the internet' back then. Built a b2c marketplace to change the future of work on the basis that people will need to move to a p2p support economy (in which I still believe). Many lessons learned thru failing but one of the lessons was the appetite of European investors towards the BIG/risky assumptions. I ultimately raised my 1 M$ in NY/SFO and only later I brought in tiny capital from Europe. Having now operated in early stage for the large part of the last 8 years I see this apply to 90% of the VC mentality. Most SaaS, ecommerce and B2B. So I'll always be looking to support the Dream Big thinking but my main message is also let's not sell pipe dreams to founders. If it is the BIG b2c company they are building at some point they might have to go get capital somewhere else.
I took some time to think about this before writing back.
At one level what you are saying makes a lot of sense. The structural nuances of the European vs us venture market definitely skews Euro vc's more towards saas and e-commerce and sectors where startups can show revenue traction early rather than just consumer usage traction.
On the other hand, I hate the notion of squashing any entrepreneur 's dream to build a consumer startup. No one could have predicted Snapchat or Instagram or whatsapp -- it was the ingenuity of the team and not their investors that made each a success.
I rather encourage founders to dream whatever dream they want to go for. So long as they acknowledge the risks ahead.
Access to capital disappears as a risk with traction.
In Europe there is 3X less available capital than the US. Early stage is worse with 5-8X less capital available. -> this shifts the pendulum of power even more so towards VC. Europe has also much less opportunities for Exists especially in lower-bound scenarios. Equally the ecosystem and echo chamber of ecosystems such as sfo / NY makes it so that there is more support and more willingness to accept failure. Case in point -> the same company 'failing' equally in SFO will way more likely be acquihired than one in Berlin. But the most significant difference lies in the expectations VCs have when getting into a deal. Because there is less protection on the downside and lower chances of breakthru success a european VC would operate more cautiously when assessing investment and equally when deciding whether to doable down or not.
This has created a funny arbitrage opportunity for California based VCs (500startups) who shop around in Europe for cheaper deals than in the US.
Entrepreneurs in Europe work as hard or more but the infrastructure and risk propensity of the ecosystem is lower influencing - in my view - the types of startups that can more easily be built in Europe. Preference towards revenue making / B2B incremental innovations vs 'disruption' / creating a market businesses.
European founders time to mature and change expectations towards building startups. We have been following the bible from Silicon Valley but we have missed the memo. VCs and European Angels dont follow the same bible but their own interpretation. Expecting that LPs — and consequently VCs — in Europe will change their expectations is going against all odds. But we my friend. The entrepreneur. The master of neuroplasticity. We Can. Change our expectations. And build startups from a different playbook.
Do you have the Pepo app?
Get the free Pepo app and get personalized insider tips on the topics that matter most to you!