To challenge big tech, European startups need their own Nasdaq
Why can’t be European technology companies compete with Silicon Valley giants? It’s a perpetual conundrum for the continent’s IT leaders – and one that Phill Robinson is trying to solve.
After a world-traveling career as a technical director, Robinson returned home to the UK and set up Boardwavea network platform that aims to make Europe a software superpower.
The concept grew out of Robinson’s diverse background in the industry. The entrepreneur traveled through Europe and Silicon Valley for decades, in roles ranging from CMO or Salesforce.com during its IPO to CEO of Dutch software giant Exact.
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These experiences have revealed several benefits for technology companies in the US. Robinson focused on one: the breeding ground for success created by Silicon Valley’s tight-knit community. The small piece of land connects a large number of techies, entrepreneurs, investors and advisors. In the meantime, the business environment in Europe is highly fragmented.
To replicate the valley’s network effects, Robinson founded Boardwave. On March 30, he promises to share more insights about building tech giants at TNW Valencia.
Before the call, Robinson unveiled one of his most ambitious proposals: creating a pan-European version of Nasdaq.
Nasdaq is the world’s leading marketplace for tech stocks. Google, Amazon, Apple, Facebook and Microsoft all went public. There is no comparable trading platform in Europe, which limits the growth of startups.
“There is not a single technical market here in Europe,” Robinson told TNW. “Nor is there the knowledge, experience and understanding of software from investors in public markets. They don’t know how to value software companies, they don’t understand how they operate, and they don’t understand their intrinsic value.”
These circumstances contribute to a huge “exit gap” between European and US companies. In Europe, tech founders often sell their companies while still private – missing the opportunity to maximize their valuations in the public market.
Those pursuing an IPO usually list in the US.
“Either they go to the NYSE or to the NASDAQ,” says Robinson. “At that point you are no longer a European software company – you suddenly become an American software company.”
Hammer blow to the arm
Arm’s flotation plans are a painful example of the consequences. The British chip giant is planning repulsive pleas from the British government to list in London and float in New York instead. Even offers bend the rules of the stork market have not been able to convince the company to go public in their own country.
Analysts attribute the decision to the larger equity markets of the US investment landscape, its focus on growth and its history of generating higher valuations. European investors, on the other hand, have a reputation for being risk averse and short-term.
A listing on the Nasdaq also increases confidence that a company will be there for the long haul.
“It’s a step towards a world leader, which we don’t have in Europe,” says Robinson.
It is a market for technology companies to go public in Europe.
Proposals have been made for a localized equivalent of Nasdaq in Paris or London. But Robinson insists only a pan-European exchange would have the necessary scale.
Setting up such a market will be extremely challenging. It requires the will of politicians, new legislation and deeper market expertise. Once they are there, European technology companies will have to be persuaded to enter the market.
It won’t be an easy process, but Robinson believes it will be worth it.
“If you have a European version of Nasdaq… it’s a market for technology companies to go public and list their companies in Europe – and not sell out to become a US software company because they have nowhere else to go be able to.”
Phill Robinson will speak at TNW València, which will take place at the end of March. If you want to join the event, we have something special for our loyal readers. Use the promotional code TNWVAL30 and receive a 30% discount on your business conference pass for Applied Sciences Valencia.
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