While the outlook is broadly positive, Europe can do more to capitalise on its current leadership position in Europe. UK & EU policy makers can do more to create and foster a favourable listing environment to ensure that European public markets attract the best homegrown businesses to list domestically, rather than on the NASDAQ. Alongside this, open more opportunities for institutional investors in Europe to invest in European innovation. Currently, these investors are missing out on the value-creation that is happening in private markets.
The significant global demand to invest in European companies will only increase as the ecosystem matures and evolves – many of the investors in these businesses are establishing an on-the-ground presence in the region to help with deal-flow.
But the reality is that exits have always been core to what makes Silicon Valley the place it is. They already play a significant role here too to ensure that talent and capital can be recycled to help build new generations of companies. It’s easy to forget that PayPal, YouTube, Instagram and many other iconic Silicon Valley companies all achieved greater than 95% of their value growth after having been acquired. The fact that we are seeing record value being captured today via M&A, IPOs, direct listings, PE buyouts and even SPACs is a great sign that Europe has succeeded in building a deeper and more liquid market for both capital and talent.
Acquisition by a foreign company is no longer the only option for founders looking to exit or scale their business. Not only is funding from VCs and growth-stage-focused PEs higher than ever before, but exits from investments have resulted in high returns for investors, driven by mutually beneficial partnerships which has seen many European startups scale rapidly. I’m confident that this is just the beginning - with European capital markets rocketing into 2022, founders have more reasons to stay in Europe and grow their business.