Image the scene. It’s 2003 in Tallinn, Estonia. Taavet Hinrikus, a 20-year-old pc whiz, has simply accepted a suggestion to change into the primary worker of a little-known video-call startup, Skype. Little did he know then, but it surely was the beginning of a multi-decade evolution that might make him one in every of Estonia’s first billionaires, spawn dozens of startups, and generate billions of {dollars} in enterprise funding throughout Europe. “The concept that you could 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. Nevertheless it 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 cost platform Clever and accomplice of founder-led enterprise capital fund Plural Platform to his résumé, having steered a number of firms by means of numerous funding rounds. Hinrikus’s story—distinctive on the flip of the century—would make him a pioneer in a captivating enterprise development: In Europe, a surprisingly excessive variety of staff 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 concept that you could 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 staff of 215 unicorns since 2008, in accordance with information offered by enterprise capital group Accel and Dealroom.co. The pair offered Fortune with information on European spin-outs of startups within the area, having individually analyzed Europe and Israel starup exercise over the21st century.
Sure nations have punched above their weight. Sweden, for instance, is a standout performer, breeding the multibillion-dollar companies Spotify and Klarna. Workers from that pair have based an extra 123 startups. King.com, the Swedish gaming group behind Sweet Crush Saga, has seen 43 staff go away to create their very own firms.
Skype staff would go on to launch 31 startups in whole, together with Hinrikus’s Clever and the ride-hailing group Bolt. Up to now, 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, just 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 at all times asks the identical query: “What’s the riskiest factor that you just’ve ever executed in your life?”
Nelis’s personal reply? Getting married (he says he’s been fortunately married for 30 years now). However a detailed second may be Spotify. Nelis was a part of the group that gave Spotify early monetary backing, regardless of business consultants warning {that a} streaming music enterprise would by no means work.
“The momentum was virtually plain,” Nelis remembers when requested why he backed it anyway. “The product was so good and really easy to make use of, and the early shopper response so overwhelming, the corporate truly had an opportunity to make it.”
Consider any multibillion-dollar European tech firm immediately, and it’s doubtless Accel was concerned in its inception. After the group raised Collection A funding for U.S. firms like Fb, Nelis’s solely actual mandate in Europe was to search out entrepreneurs with “huge concepts.” That daunting temporary might be why he nonetheless asks job candidates about threat immediately.
“The largest mistake in enterprise isn’t 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 angle 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 largest mistake in enterprise isn’t 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 yr accused the U.Okay. of affected by a “know your house” angle 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’ angle towards entrepreneurship when he began GoCardless in 2011.
“Beginning an organization was probably not an accepted factor to do. You realize, 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 angle overhaul, Europe simply wanted just a few profitable founders to point out everybody else what was doable.
Ilkka Paananen, CEO and co-founder of Finnish cellular gaming unicorn Supercell, was a type of entrepreneurs working and not using a roadmap to comply with.
“There have been only a few European tech entrepreneurs who I may name for recommendation, for the straightforward purpose that we simply didn’t have many tech startups at scale at the moment,” Paananen recalled.
Nelis says Europe’s startup founders have been position fashions who made success simpler to examine for his or her successors. A kind of could be Plural’s Hinrikus, who watched Skype change into one in every of Europe’s first unicorns.
“Folks know the drill higher,” Nelis says, noting that new startups come to Accel immediately with plans to resolve huge 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 more likely to be a profitable founder: “He was a mean particular person, identical to me. If he can do it, then I can equally do it.”
Robinson says the most important 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 absolutely inevitable. Robinson spoke to at least one firm that talked ambitiously about turning into the first-ever kilocorn, a $1 trillion personal startup.
“I can not 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 staff will sooner or later go away to start out 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 shaped out of Monzo, it’s not only one particular person departing.
“Folks begin their very own companies, however typically their founding group or their first handful of staff are additionally Monzonauts,” she says.
This has been one thing embraced, somewhat than suppressed. At Monzo, Ryan says, an inside firm web site celebrates former staff who went on to change into founders.
“Folks begin their very own companies, however typically their founding group or their first handful of staff are additionally Monzonauts.”
Tara Ryan, Monzo’s VP
“I don’t assume it’s wholesome for workers or employers to attempt 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 finally go away and kind their very own startups.
The European dream
It’s value a wager that Hinrikus, wearing a hoodie and branded tee, and talking from Plural’s London workplace, seems to be as invigorated as he did when he stumbled by means 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 guardian, Microsoft, not wants Skype now that Microsoft’s Groups video-chat operate has been broadly adopted. Equally, DeepMind, the pioneering synthetic intelligence analysis laboratory based in London, is immediately a Google subsidiary.
More and more, although, European firms, pushed by rising entry to each capital and expertise, are managing to face on their very own two ft.
Spotify, Accel’s dangerous early wager in Europe, had a market worth of practically $125 billion initially of March. Its Scandinavian management group has maintained its grasp on the corporate’s operations as Spotify battles with Apple and Amazon.
Different youthful firms 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 at all times been about having huge 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, various tradition, and a singular lifestyle that all of us love — this can be a excellent spot to reside and develop a household. This could assist us each retain and appeal to one of the best expertise,” stated Paananen.
Hinrikus spoke of constructing the American Dream come true for his staff, solely in Europe.
“I feel the scar tissue we’ve from proudly owning our firms and constructing them makes us higher companions for the subsequent era,” Hinrikus says. “There’s in all probability 100 early staff in numerous positions, even in buyer help, who earned one million {dollars} from inventory choices.
“Now we’re displaying time and time once more that it’s not an American Dream,” he notes. “Now we have the identical factor in Europe.”
This text seems within the April/Might 2025 situation of Fortune with the headline “The European dream.”
This story was initially featured on Fortune.com
