Image the scene. It’s 2003 in Tallinn, Estonia. Taavet Hinrikus, a 20-year-old pc whiz, has simply accepted a suggestion to turn into the primary worker of a little-known video-call startup, Skype. Little did he know then, nevertheless it was the beginning of a multi-decade evolution that will make him one in all Estonia’s first billionaires, spawn dozens of startups, and generate billions of {dollars} in enterprise funding throughout Europe. “The thought which you can begin utilizing this [video-chat technology] to have voice and video conversations was fairly loopy for a boy who was born within the Soviet Union. But it surely was additionally apparent to me that it was going to be an thrilling journey,” Hinrikus tells Fortune.
In the present day, at age 43, Hinrikus can add cofounder of fee platform Clever and accomplice of founder-led enterprise capital fund Plural Platform to his résumé, having steered a number of corporations by way of numerous funding rounds. Hinrikus’s story—distinctive on the flip of the century—would make him a pioneer in an interesting enterprise pattern: In Europe, a surprisingly excessive variety of workers of unicorns like Skype would go on to launch nonetheless extra unicorns.
Europe’s founder factories
It will be an understatement to say that Europe’s tech scene has undergone a revolution since Hinrikus began his first day at Skype.
“The thought which you can begin utilizing this [video-chat technology] to have voice and video conversations was fairly loopy for a boy who was born within the Soviet Union…”
Taavet Hinrikus
Some 1,650 European tech startups have been based throughout Europe by former workers of 215 unicorns since 2008, in line with knowledge offered by enterprise capital group Accel and Dealroom.co. The pair offered Fortune with knowledge on European spin-outs of startups within the area, having individually analyzed Europe and Israel starup exercise over the21st century.
Sure international locations have punched above their weight. Sweden, for instance, is a standout performer, breeding the multibillion-dollar companies Spotify and Klarna. Staff from that pair have based an additional 123 startups. King.com, the Swedish gaming group behind Sweet Crush Saga, has seen 43 workers go away to create their very own corporations.
Skype workers would go on to launch 31 startups in complete, together with Hinrikus’s Clever and the ride-hailing group Bolt. So far, these startups have raised $3.5 billion in funding.
1,650
The variety of European tech startups based throughout Europe since 2008.
Most founders, round 55%, begin their companies in the identical European metropolis the place they have been first employed. This has helped spawn community results throughout Europe which have turned unlikely cities, like Tallinn, into thriving tech hubs.
Repeat founders have additionally blossomed from the early-2000s scene. Spotify cofounder and CEO Daniel Ek, maybe essentially the most high-profile founder to emerge from Europe this century, lately introduced a brand new funding spherical at a $1.7 billion valuation for his health-tech startup, Neko Well being, making him a serial unicorn creator.
The query is, why did it take Europe so lengthy to kick-start its entrepreneurial streak? And what modified to permit the continent’s founder factories to flourish?
Trailblazers
When Netherlander Harry Nelis—a accomplice at American fund Accel—who has operated out of Europe for the previous 21 years, interviews a candidate for his firm, he all the time asks the identical query: “What’s the riskiest factor that you simply’ve ever executed in your life?”
Nelis’s personal reply? Getting married (he says he’s been fortunately married for 30 years now). However an in depth second is likely to be Spotify. Nelis was a part of the workforce that gave Spotify early monetary backing, regardless of trade specialists warning {that a} streaming music enterprise would by no means work.
“The momentum was virtually simple,” Nelis recollects when requested why he backed it anyway. “The product was so good and really easy to make use of, and the early client response so overwhelming, the corporate truly had an opportunity to make it.”
Consider any multibillion-dollar European tech firm at present, and it’s seemingly Accel was concerned in its inception. After the group raised Sequence A funding for U.S. corporations like Fb, Nelis’s solely actual mandate in Europe was to search out entrepreneurs with “massive concepts.” That daunting temporary might be why he nonetheless asks job candidates about threat at present.
“The most important mistake in enterprise shouldn’t be dropping cash on an funding. It’s lacking the outlier,” Nelis tells Fortune from Accel’s London workplace.
When he first got here again to Europe after spending his early profession in Silicon Valley, Nelis was struck by an apparent distinction in perspective between Individuals and Europeans, specifically that it was uncommon for the latter to pursue constructing an organization as an alternative of becoming a member of a longtime one.
“The most important mistake in enterprise shouldn’t be dropping cash on an funding. It’s lacking the outlier.”
Harry Nelis, accomplice at Accel
Europe has lengthy been accused of missing the work ethic typically related to Individuals. Tom Blomfield, cofounder of British unicorns GoCardless and Monzo, final 12 months accused the U.Okay. of affected by a “know your home” perspective that suppressed entrepreneurship.
Matt Robinson, a fellow GoCardless cofounder and now a accomplice at Accel, disagrees with that evaluation. Nevertheless, like his colleague Nelis, Robinson did discover a distinction in Europeans’ perspective towards entrepreneurship when he began GoCardless in 2011.
“Beginning an organization was not likely an accepted factor to do. You understand, while you sit over right here and begin an organization, I feel folks assume you’re unemployed or unemployable,” he says.
Some components essential to rising a startup, like entry to seed funding, have been nascent within the U.Okay. simply 15 years in the past, Robinson notes.
Those that spoke to Fortune for this text, although, have been aligned of their evaluation that somewhat than an perspective overhaul, Europe simply wanted a couple of profitable founders to point out everybody else what was doable.
Ilkka Paananen, CEO and co-founder of Finnish cellular gaming unicorn Supercell, was a kind of entrepreneurs working with out a roadmap to comply with.
“There have been only a few European tech entrepreneurs who I may name for recommendation, for the easy motive that we simply didn’t have many tech startups at scale at the moment,” Paananen recalled.
Nelis says Europe’s startup founders have been function fashions who made success simpler to check for his or her successors. A type of can be Plural’s Hinrikus, who watched Skype turn into one in all Europe’s first unicorns.
“Individuals know the drill higher,” Nelis says, noting that new startups come to Accel at present with plans to resolve massive issues in a method they typically didn’t 20 years in the past.
Plural’s Hinrikus says his crystallizing second got here when he realized Niklas Zennström, cofounder of Skype, didn’t possess any magical powers that made him extra prone to be a profitable founder: “He was a mean individual, similar to me. If he can do it, then I can equally do it.”
Robinson says the key obstacles in constructing a startup grew to become simpler for him the second time round, specifically, attracting one of the best expertise and fundraising.
Since Nelis returned to Europe in 2004, unicorns and decacorns have emerged from Europe’s VC pipeline, with a centacorn certainly inevitable. Robinson spoke to at least one firm that talked ambitiously about turning into the first-ever kilocorn, a $1 trillion non-public startup.
“I can’t think about saying that and even considering that again in 2011,” Robinson says.
Stick or twist?
Working a thriving entrepreneurial startup setting brings the inherent and evidenced threat that workers will someday go away to begin their very own, generally competing, ventures.
Tara Ryan, Monzo’s VP of individuals expertise, doesn’t see it as a tradeoff.
Monzo stands amongst Europe’s most prolific founder factories. The banking unicorn has spawned 23 startups since its creation. Oftentimes, when a brand new firm is fashioned out of Monzo, it’s not only one individual departing.
“Individuals begin their very own companies, however typically their founding workforce or their first handful of workers are additionally Monzonauts,” she says.
This has been one thing embraced, somewhat than suppressed. At Monzo, Ryan says, an inner firm web site celebrates former workers who went on to turn into founders.
“Individuals begin their very own companies, however typically their founding workforce or their first handful of workers are additionally Monzonauts.”
Tara Ryan, Monzo’s VP
“I don’t suppose it’s wholesome for workers or employers to try to retain folks in any respect prices,” she says.
Accel’s Robinson goes one additional. Whereas at GoCardless, he would inform early interviewees his hope for them was that they’d ultimately go away and type their very own startups.
The European dream
It’s price a wager that Hinrikus, wearing a hoodie and branded tee, and talking from Plural’s London workplace, appears to be like as invigorated as he did when he stumbled by way of Skype’s doorways on his first day as an worker.
Skype was acquired by eBay in 2005 for $2.6 billion, a now-familiar case of an thrilling European startup being eaten up by a a lot bigger U.S. tech behemoth. Its subsequent dad or mum, Microsoft, not wants Skype now that Microsoft’s Groups video-chat operate has been extensively adopted. Equally, DeepMind, the pioneering synthetic intelligence analysis laboratory based in London, is at present a Google subsidiary.
More and more, although, European corporations, pushed by rising entry to each capital and expertise, are managing to face on their very own two toes.
Spotify, Accel’s dangerous early guess in Europe, had a market worth of almost $125 billion at first of March. Its Scandinavian management workforce has maintained its grasp on the corporate’s operations as Spotify battles with Apple and Amazon.
Different youthful corporations throughout Europe, like Monzo, now face the problem of rising whereas sustaining what made them distinctive as startups. Alex Norström, Spotify’s copresident and chief enterprise officer, has recommendation for startups on that journey.
“We’ve tried to take care of our entrepreneurial power as we’ve scaled globally,” he says. “At Spotify, it’s all the time been about having massive ambitions and delivering on them.”
Supercell’s Paananen, in the meantime, thinks Europe’s quirks make it simpler for founders to remain true to their roots.
“Europe has a really distinctive, numerous tradition, and a singular lifestyle that all of us love — this can be a good spot to stay and develop a household. This could assist us each retain and entice one of the best expertise,” stated Paananen.
Hinrikus spoke of creating the American Dream come true for his workers, solely in Europe.
“I feel the scar tissue we’ve from proudly owning our corporations and constructing them makes us higher companions for the subsequent era,” Hinrikus says. “There’s in all probability 100 early workers in varied positions, even in buyer assist, who earned one million {dollars} from inventory choices.
“Now we’re exhibiting time and time once more that it’s not an American Dream,” he notes. “We’ve got the identical factor in Europe.”
This text seems within the April/Could 2025 challenge of Fortune with the headline “The European dream.”
This story was initially featured on Fortune.com
