Europe’s Innovation Ecosystem Can Make It the New Palo Alto

For implicit a decade, the tech manufacture has been chasing unicorns—those elusive startups valued astatine implicit $1 billion. The obsession began successful 2013, erstwhile Aileen Lee—a Palo Alto–based VC—coined the word that captured the imaginations archetypal of founders and investors, and past premier ministers and presidents. But these mythical beasts are besides rare: lone 1 percent of VC-backed startups ever scope this status.

As nine enters the property of AI, and fiscal markets enactment renewed worth connected concern fundamentals, our knowing of what makes a palmy tech institution is evolving. Promise unsocial doesn't marque a national, determination oregon planetary champion. Champions are those companies that harvester some the committedness of untapped maturation and the cardinal metrics that show beardown and sustainable lawsuit demand.

Until recently, Silicon Valley has been seen arsenic the world's undisputed unicorn factory. But Europe's innovation ecosystem has matured to a constituent wherever it is consistently producing companies with some the imaginativeness to alteration the satellite and the fundamentals to prolong that change. Leading the battalion is simply a cohort of much than 507 “thoroughbreds”—startups with yearly revenues of astatine slightest $100 million.

More than a 3rd of these high-potential companies are headquartered successful what we telephone New Palo Alto: not a singular location, but a web of interconnected ecosystems wrong a five-hour bid thrust of London. After the Bay Area, this is the world's 2nd astir productive innovation clump and includes cities with concern practice similar Glasgow, Eindhoven, and Manchester, arsenic good arsenic world-renowned capitals of culture, policy, and academia similar Amsterdam, Cambridge, Edinburgh, London, Oxford, and Paris.

They’re location to companies specified arsenic low-cost machine shaper Raspberry Pi, whose exertion was invented and developed successful Cambridge, manufactured successful Pencoed, South Wales, and sold worldwide. Raspberry Pi precocious crowned implicit a decennary of maturation with a listing connected the London Stock Exchange. At the clip of listing, it had gross of $265 cardinal and $66 cardinal successful gross operating profits.

Other New Palo Alto thoroughbreds see fintechs Monzo, Revolut, and Tide, which provides mobile-first banking to SMEs, arsenic good arsenic fast-growing companies specified arsenic iPhone challenger Nothing and London-founded Cleo, the conversational AI pioneer that helps young US consumers negociate their finances.

Seven of Europe's 10 astir invaluable tech companies founded aft 1990 person emerged from New Palo Alto: Booking.com and Adyen from Amsterdam; Wise, Revolut, and Monzo from London; ASML from Eindhoven; and Arm from Cambridge. All are products of this interconnected ecosystem.

Yet, for each its promise, New Palo Alto remains an underinvested region. While early-stage backing is present higher than the Bay Area, thoroughbreds look a staggering $30 cardinal spread successful backing astatine the important scale-up signifier compared to their Bay Area counterparts.

Governments of the starring economies successful New Palo Alto—Britain and France—have delivered progressive argumentation frameworks to enactment innovation and tech companies, including concern successful R&D, talent, and visa programs. They are besides putting successful spot policies including the UK’s Mansion House Compact and France’s Tibi, to enactment much scale-up capital.

But nary innovation clump ever became large due to the fact that of argumentation alone. Success occurs erstwhile investors afloat recognize the concern opportunity. Now that we person astir 1,000 venture-backed companies successful EMEA with revenues of much than $25m, helping this ecosystem to execute its afloat imaginable is nary longer astir solving a argumentation challenge. It’s astir recognizing a immense concern opportunity.

This is wherefore successful the past decade, the magnitude of task superior coming into the portion has accrued 9 times, and wherefore successful the adjacent decade, ample organization investors successful the UK and successful France volition bring billions of dollars of concern to backmost backstage companies.

The caller British Prime Minister's location constituency includes Somers Town, an country adjacent to St Pancras presumption and wrong show of Google and Meta’s immense European headquarters. Yet for each the gleaming towers, excessively galore neighborhoods successful New Palo Alto person been near down by technology. In Somers Town, 50 percent of children person escaped schoolhouse meals, 70 percent of residents person societal care, and adults unrecorded 20 years less than successful leafy Highgate, lone 20 minutes up the road.

As the tech manufacture faces accrued scrutiny, we person an accidental to connection an alternate exemplary of innovation. By gathering thoroughbreds to beryllium sustainable, transparent companies we tin statesman the enactment of sharing the benefits of innovation much equally.

Just arsenic immoderate of the astir iconic US cities instrumentality their names from the past cities of Europe—New York and New Orleans—New Palo Alto pays respect to its namesake portion besides signaling a deliberate prime for the future.

This nonfiction archetypal appeared successful the November/December 2024 variation of WIRED UK.