The real problem with Europe’s startup ecosystem

I don’t think Europe’s startup scene ever really had a chance

For the past 15 years, Europe has invested heavily in building a startup ecosystem: incubators, accelerators, VC funds, conferences, hackathons, universities, coworking spaces. We copied what worked in Silicon Valley and for the most part, we did it well

We trained founders, connected startups with capital, scaled public support and made tech entrepreneurship a priority. We did what we thought was required: more founders, more investors, more talent, more culture. A fixable problem, so we set out to fix it

But looking back, the ecosystem was not the problem. We simply misdiagnosed the problem

An ecosystem creates startups. But it cannot define the market those startups enter. That difference changes everything

There are two layers at play. One is the ecosystem: startups, universities, funds, programs, communities. The other is the rules of the game: how markets scale, how capital concentrates, how platforms compete, how winners emerge. Europe focused on the first, while the second was already being rewritten

To understand this, go back to the mid-90s. Globalization and the internet, reinforced by the WTO framework, turned software into a global market. Suddenly, a company in the US could serve the world from day one. Scale, capital and users began concentrating where growth was fastest

Then came the dot-com boom and crash. Many companies disappeared, but the survivors (Google, Amazon, Microsoft) emerged in a global, winner-takes-most environment

Then came the 2008 financial crisis. Interest rates collapsed, capital flooded into tech and US platforms scaled at unprecedented speed. Their advantage became structural, not just technological

And by the time Europe seriously started building its own champions, the game had already changed. The companies we expected startups to compete with were no longer startups. They had become global infrastructure-level platforms

And the question we never asked was: how does a startup compete with a company that can subsidize products for years, operate at a loss indefinitely or acquire any emerging rival?

This is what I call digital dumping, where dominant platforms enter markets with free or heavily subsidized services until competition disappears

In that world a ride-hailing app isn’t competing with another startup, it’s competing with Uber. A search product isn’t competing with Google. An email tool isn’t competing with Gmail. It was never a fair fight

That’s why I think European startups never really had a chance. We spent 15 years asking the wrong question. Not how to build startups, but how to ensure they are not born into battles they cannot win

We confused ecosystem building with market building. We thought copying Silicon Valley institutions was enough. But what determines outcomes are the rules that shape competition itself

Because an ecosystem creates companies. Market rules decide whether those companies ever have a real chance