in large corporations, they don’t work for startups,” says Niklas Zennstrom, a
founder of Skype who now runs an (EIF-backed) venture fund. Tax laws in several
EU countries make it hard to pay staff with stock options, a standard carrot for
American startups. Rules about procurement often favour established firms. More
broadly, Europe’s staid business culture is too slow to forgi ve failure, in contrast to
America where setbacks are celebrated as a necessary staging point to success.
Josh Lerner of Harvard Business School compares doling out public-sector cash,
EIF-style, to serving a main dish before the table is set. Governments the world over
have long backed innovation, for example through public funding of universities.
Silicon Valley thrived in part due to bloated defence spending from the 1940s
onwards. But that is altogether different from Europe’s approach of picking the
firms that pick the winners. Better to make entrepreneurialism pay than to
subsidise it.
From the print edition: Finance and economics