THINK ACT

THINK 

ACT 

BEYOND MAINSTREAM 

October 2015 

Can European start-ups 

crack the code? 

How to realize the old continent's digital vision

2 THINK ACT 

Digital start-ups 

THE BIG 

3 

ROLAND BERGER'S 

VISION OF A 

DIGITAL EUROPE 

P. 16 

PLUS 

USD 110 bn 

is the cumulative value of Europe's unicorns – 

start-ups with a value of more than USD 1 billion 

each at the start of 2015. 

Page 8 

USD 6.9 bn 

has been raised in the first 6 months of 2015 – an 

increase of 86% compared to the same period in 2014. 

Page 4 

400% 

more accelerators and incubators populate the European 

start-up ecosystem today than did so in 2007. 

Page 12

THINK ACT 3 


It's time to break free 

from the US role model. 

Europe's start-ups can 

crack the code, provided 

they make good use of 

their own strengths. 

It has become rather fashionable to be part of the European 

digital start-up scene in recent years. A remarkable 

turn of events, given that cyberspace is largely 

dominated by American giants on the one hand and 

fast-growing Chinese players on the other. Over the 

past four decades, Silicon Valley has carved out an imposing 

position for itself as the only digital hub model 

worth talking about. What Silicon Valley excels in is 

convincing the world's entrepreneurs that, if they are 

serious about success, they have no alternative but to 

come here. Yet genuine avant-garde start-ups are well 

advised not to worry too much about the success patterns 

of the past. No one is talking about "silicon" anymore 

anyway: The new building material is data. 

MORE THAN JUST A RACE TO CATCH UP 

Europe can do a lot better than simply try to catch up 

with the US. The important thing is for it to find its own 

digital path. New conditions are changing the game 

and spawning new models. The framework is already 

in place: The digital revolution is entering a new phase 

thanks to a new wave of technological disruption 

brought about by big data and cloud computing, 3D 

printing, advanced robotics and the internet of things. 

Embedded sensors, the practice of implanting processors, 

software and connectivity (read: computers) in 

products, the existence of a cloud in which product 

data is stored and analyzed and certain applications 

are run… All these developments are driving dramatic 

improvements in product functionality and performance. 

And this new phase is reshuffling the pack 

across the world's various digital hotspots. Now is 

therefore the ideal opportunity for Europe to claim its 

fair share of the world's digital economy. A B 

Rather than copy American recipes for success, Europe 

can now play its own trump cards, building on what 

has always made it successful: industrial expertise, diversity 

and internationalization. 

This is happening already, and European digital 

ecosystems have visibly been maturing. The first sign



A NEW SPECIES OF EUROPEAN 

ENTREPRENEUR IS BORN 

New aspects have lately been added to the general understanding 

of what constitutes entrepreneurial success 

in Europe. Traditionally, "true entrepreneurs" were expected 

to build a company, earn their living from the 

returns and spend the rest of their life caring for it. The 

second wave of entrepreneurs that followed – founding 

companies, realizing fast growth and selling up after a 

few years – has now also become an accepted model. In 

addition, many young graduates have acquired new 

tastes. For them, building a career no longer means joining 

investment banks or consultancies, as many prefer 

instead to become entrepreneurs. Those who do so several 

times over are treated like stars and are eager to 

share their experience. In France, for instance, individuals 

such as Pierre Kosciusko-Morizet, founder of 

Price-Minister, Marc Simoncini (Meetic), Xavier Niel 

(Free), Jacques-Antoine Granjon (vente-privée) and others 

are busily investing in start-ups and infrastructures. 

Xavier Niel is currently converting the Halle Freyssinet 

in Paris with the aim of making it the world's largest incubator 

– populated by 1,000 start-ups – in 2016. In Germany, 

the Samwer brothers established Rocket Internet 

in 2007. This Berlin-based start-up incubator has already 

helped launch around 80 companies, including 

leading regional online retailers such as Zalando (Europe), 

Lamoda (CIS), Lazada (Southeast Asia), Dafiti 

(Latin America) and Jumia (Africa). 

It is small wonder that successful initial public offerings, 

mergers and acquisitions are swelling liquidity 

in Europe. Zalando's EUR 5.3 billion IPO in Sepof 

this change is, of course, the vitality of the start-up 

scene. For some months now, not a day has gone by 

without news of yet more significant funds being raised 

for European start-ups. In the first half of 2015 European 

start-ups raised USD 6.9 bn – 86% more than in 

the same period in 2014. C Most successful were 

OneWeb (UK), which raised USD 500 million, Spotify 

(Sweden, USD 526 million) and Delivery Hero (Germany, 

USD 730 million). In France, internet of things specialist 

Sigfox raised USD 115 million and automotive 

player BlaBlaCar USD 100 million. 

"Nobody can build 

another Silicon Valley. 

Europe's chance is to 

score with diversity." 

Stefan Glänzer, a German serial entrepreneur 

and one of the founders of Passion Capital 

Other players are also beginning to enter the European 

digital fray. Realizing the importance of digitization, 

corporate players are pouring money into venture 

capital funds – or creating venture capital funds 

of their own. In Germany, Tengelmann Ventures invests 

in young companies in the e-commerce, social 

commerce and internet-enabling technology sectors. 

Telecoms incumbent Deutsche Telekom has created 

Deutsche Telekom Capital Partners, which is endowed 

with EUR 500 million, while Siemens launched 

a new USD 100 million venture capital fund – the Industry 

of the Future Fund – at the beginning of 2014. 

The latter fund is dedicated to early-stage industrial 

start-ups. In France, SNCF, Orange and Total have set 

up Ecomobility Ventures as an investment fund to 

support innovative mobility development by enhancing 

cooperation between start-ups and larger groups. 

Air Liquide and Michelin also signed up in 2015. 

French telecom provider Orange together with communications 

and consulting firm Publicis Groupe 

also created a venture fund in 2012. 

These and a series of further significant investments 

proves that big digital corporates are actively 

seeking to stake their claim in terms of European digital 

start-up competency. Take Google, for example: 

The Mountain View-based giant has opened half a 

dozen research centers in Europe. Amazon is likewise 

getting in on the act, having launched a brand new 

development center in Berlin in 2015. 

Strong digital ecosystems do not consist only of 

self-organizing business communities, however. They 

are also heavily dependent on the regulatory framework, 

and intensive discussions on the European digital 

market show that this issue is being addressed. Regulators 

in Europe are increasingly aware of the 

challenge, and the recent debate triggered by Uber and 

Airbnb in many European countries has both highlighted 

the difficulties and enhanced awareness.



A 

THE EUROPEAN START-UP 

LANDSCAPE REVISITED 

Rankings, exit growth and financing 

FOUR OF THE TOP TWENTY START-UP 

ECOSYSTEMS 

Berlin, London and Amsterdam climb higher, 

Paris holds its ground [ranking] 

THE WINNER TAKES… ALMOST 50%! 

Berlin sheds its non-exit stigma 

[share of exit volume in the top twenty, 2013 & 2014] 

Silicon Valley 

RANKING 

1 

Silicon Valley 

47.3% 

New York City 

2 

3 

London 

10.2% 

Los Angeles 

3 

Los Angeles 

6.6% 

Boston 

4 

2 

Tel Aviv 

6.5% 

Tel Aviv 

5 

3 

Berlin 

6.1% 

London 

6 

1 

Boston 

5.7% 

Chicago 

7 

3 

Chicago 

4.5% 

Seattle 

8 

4 

New York City 

3.6% 

Berlin 

9 

6 

Amsterdam 

2.5% 

Singapore 

10 

7 

Seattle 

2.1% 

Paris 

11 

Paris 

1.2% 

São Paulo 

12 

1 

Austin 

1.2% 

Moscow 

13 

1 

Singapore 

0.8% 

Austin 

14 

NEW 

Vancouver 

0.5% 

Bangalore 

15 

4 

Montreal 

0.3% 

Sydney 

16 

4 

São Paulo 

0.3% 

Toronto 

17 

9 

Toronto 

0.2% 

Vancouver 

18 

9 

Bangalore 

0.2% 

Amsterdam 

19 

NEW 

Moscow 

0.1% 

Montreal 

20 

NEW 

Sydney 

0.1% 

Source: Compass



B 

HYPER-GROWTH MADE IN EUROPE 

Berlin – fueled by Rocket and Zalando IPO – leads the field 

How hubs relate to average growth: Berlin startups lead the field – 

fueled by Rocket and Zalando IPO – 20 times faster than their peers. 

TEL AVIV 

2X 

AMSTERDAM 

4X 

BERLIN 

20X 

Hyper-growth = at least two times average growth 

Source: Compass 

LONDON 

3X 

BANGALORE 

5X 

C 

A QUESTION OF MONEY 

European start-ups open the pockets of venture capitalists 

A year-over-year comparison. While the number of French start-ups who opened the pockets of venture capitalists increased 

significantly, in Germany, Austria and Switzerland's entrepreneurs managed to harvest the largest volume increase. 

154 

159 

2.5 

129 

103 

1.8 

81 

44 

47 

56 

0.6 

1.0 

1.0 1.0 

0.8 

0.6 

Scandinavia 

Germany, 

Austria, 

Switzerland 

UK France Scandinavia Germany, 

Austria, 

Switzerland 

UK 

France 

Number: 

First half of 2014 

First half of 2015 Value [USD bn] : First half of 2014 First half of 2015 

Source: Les Echos/whogotfunded/clipperton analysis



tember 2014 and Rocket Internet's EUR 6.5 billion 

flotation the following month both went extremely 

well. At the same time, the number of very successful 

non-public exits that go under the radar is likewise 

increasing. One example was the USD 219 million acquisition 

of Berlin-based restaurant reservation service 

Quandoo by Japan’s Recruit. Another was Microsoft's 

USD 100-200 million purchase of German 

start-up 6Wunderkinder. Both transactions went 

through in 2015. Meanwhile, German sports equipment 

brand Adidas has bought Runastic for EUR 240 

million, while Berlin-based data specialist Sociomantic 

was snapped up by Tesco subsidiary Dunnhumby 

(UK) in 2014 for EUR 150 million. These examples 

show how large corporate incumbents are increasingly 

gaining a foothold in the digital business. One welcome 

side-effect is that these mergers have boosted 

the prestige of the European start-up scene. 

"Legislation will always 

create a context for 

growth […] but the real 

value comes from 

connections between 

people and a focus and 

real desire on solving real 

human problems." 

Duncan Lamb, design director 

at Transferwise.com 

NEW BUBBLE? OR NEW GAME? 

Some observers fear that history – specifically, the 

bursting of the internet bubble in the 2000s – could 

repeat itself. And indeed, some signals are pointing in 

this direction. Low interest rates, for example, are forcing 

investors to seek new sources of return. Yet the 

business models of today's European start-ups have 

much firmer foundations than their counterparts from 

the start of the millennium. This time, there is a real 

market: The number of internet users has multiplied 

by a factor of ten, spiraling from 300 million in 2000 to 

more than three billion in 2015. And this time, the 

companies' success is built on returns and not only on 

rising stock prices. 

The first wave of IT, when computers took the stage 

in the 1960s and 1970s, can be referred to as the "hardware 

era". The internet triggered the second wave – the 

"software and network" era – with its inexpensive and 

ubiquitous connectivity in the 1980s and 1990s. Today, 

we find ourselves in the middle of the third wave, in 

which IT has become an integral part of the product 

itself. Digital is now everywhere. It is no longer an end 

in itself but has become an enabling technology. Companies 

need digital "solutions", i.e. technology that can 

be leveraged for this industry or that application. Computing 

power keeps accelerating, and producing software 

has become comparatively straightforward. The 

power of the software is no longer what sets innovations 

apart: Putting together intelligence (matching 

supply and demand, fostering understanding) and 

data is what makes winners, because it drives transactions 

and efficiency. 

The opportunity is thus there for Europeans to 

break free of the American "software monopoly". Companies 

like BlaBlaCar and Criteo have already shown 

that success is all about data. At first glance, Europe's 

digital start-up activities in the B2C environment still 

appear to be poles apart from its traditional champions 

in the B2B environment. But a closer look reveals 

that the gap may be smaller than we think. Forging 

smart links between the two worlds can be the making 

of Europe's future. In the future, B2B and B2C will be 

much more closely aligned than they are today. Added 

value will be found in big data algorithms, product design, 

marketing, manufacturing and after-sales service 

of any kind, where non-digital traditional European 

businesses and players possess a wealth of knowledge, 

strong brands, very large customer bases, sectoral expertise 

and robust supplier networks. 

In November 2013, Aileen Lee – founder of Cowboy 

Ventures – first used the term "unicorn" to denote 

start-ups that have reached a market value of over USD 

1 billion. The Bay Area, and especially San Francisco, is 

still giving birth to most of them. That said, we note 

that unicorns now appear able to flourish and grow in 

other ecosystems besides. You may even see some of 

this nascent breed on your travels in Europe!



Can unicorns flourish in 

Europe? We revisit four 

myths about European 

digital start-ups and 

reveal insights into an 

exciting new species. 

The European system of start-up hubs is unique. It is 

very different from Silicon Valley and is plotting its 

own development trajectory. One of the most obvious 

characteristics is its vast geographical spread, with the 

UK, Germany, France, the Netherlands and Scandinavia 

standing out as the top European regions. Of particular 

note are the start-up hubs in Berlin, Paris, London, 

Amsterdam and Stockholm. E In today's glocalized 

world, the decentralized nature of the European startup 

system is a definite advantage. 

Admittedly, Europe is still a dwarf in terms of size 

and the number of exits. While the cumulative value of 

US unicorns is estimated at about USD 700 billion, the 

European species is worth only around USD 110 billion 

in total. Moreover, not even half of Europe's unicorns 

have reached the IPO stage, compared to about two 

thirds in the United States. Even so, there are good reasons 

to be optimistic about the future of European 

start-up development. Most of the recent news emanating 

from the unicorn club has been nothing short of 

spectacular: In 2014, seven companies completed successful 

IPOs, and their ranks are growing fast. In 2015 

alone, the number of members increased by 30 percent. 

D Size is not everything, however, and there are 

positive signs in other areas besides. The future game 

could, for example, make qualities such as diversity 

and smart collaboration skills more important than 

ever. Maybe these qualities will even outweigh some of 

the disadvantages in terms of the total value added. In 

the future, we expect to see many mid-sized hidden 

champion start-ups, just as we saw similar success stories 

in Germany's fabled "Mittelstand" in the days before 

the digital economy. Think of German start-ups 

such as Sociomantics and Rhode-Codes: There may be 

more sexy companies out there, but their business 

models plug important gaps in the market.



D 

WELCOME TO THE CLUB 

The 30 European digital unicorns 1 

(independent players or IPOs/acquisitions in 2014 or later) 

COMPANY CURRENT HQ INDUSTRY STATUS 

Adyen 

Netherlands 

Financial services 

AO World 

UK 

E-commerce 

IPO in 2014 

BlaBlaCar 

France 

Travel 

Delivery Hero 

Germany 

Food delivery 

Farfetch 

UK 

E-commerce 

Funding Circle 

UK 


Home24 

Germany 

E-commerce 

Just Eat 

UK 

Food delivery 

IPO in 2014 

King.com 

Sweden/Ireland 

Gaming 

IPO in 2014 

Klarna 

Sweden 


Kobalt 

Sweden 

Music 

Markit 

UK 

Data services 

IPO in 2014 

Mojang 

Sweden 

Gaming 

Acquired by Microsoft in 2014 

Powa Technologies 

UK 

Software 

Rocket Internet 

Germany 

Incubator 

IPO in 2014 

Rovio Entertainment 

Finland 

Gaming 

Shazam 

UK 

Music 

Skrill 

UK 


Sold to CVC in 2015 

Skyscanner 

Scotland 

Travel 

SoundCloud 

Germany 

Music 

Spotify 

Sweden 

Music 

Supercell 

Finland 

Gaming 

Majority-owned by SoftBank 

TransferWise 

Estonia, UK 


Ve Interactive 

UK 

Software 

vente-privee 

France 

E-commerce 

Wonga 

UK 


Wooga 

Germany 

Gaming 

Zalando 2 

Germany 

E-commerce 

IPO in 2014 

Zendesk 

Denmark 

Software 

IPO in 2014 

Zoopla 

UK 

Real estate 

IPO in 2014 

Source: Bullhound, Atomico, Roland Berger 1 Market value over USD 1 bn 2 Incubated by Rocket Internet



E 

AN OLD CONTINENT DOTTED 

WITH YOUNG DIGITAL START-UPS 

The geographic spread is broad and so is the range of innovations: 

Top hubs and runners-up form a unique pattern in Europe 

LONDON 

Old money meets fintech 

Strength: 

Home to most leading European venture capital 

firms (including Balderton Capital, Index Ventures 

and DFJ Esprit), English-speaking environment, 

traditionally international and diverse city 

Weakness: 

Cramped and expensive 

Focus: 

Advertising, finance and healthcare 

Examples: 

Mind Candy, Wonga, 

Funding Circle 

Dublin 

Amsterdam 

Brussels 

PARIS 

From museum to digital 

seeding ground 

Strength: 

Strong government support via the "tech visa" 

and public investment funds, Parisian venture 

capital firms among the top three investors in 

Europe in the first quarter of 2015 

Weakness: 

Struggling to shake off a reputation of having 

lost its innovative spirit 

Focus: 

Software 

Examples: 

Sigfox, BlaBlaCar, 

Criteo 

Madrid 

Barcelona 

Front runners 

Runners-up 

Source: Compass, Wired, Roland Berger



Oslo 

Helsinki 

Tallinn 

STOCKHOLM 

High innovation density 

Strength: 

Strong tradition of innovation, early adopters 

of diverse developments, highest per capita 

start-up activity rate 

Copenhagen 

Weakness: 

Has lost momentum in recent years 

Focus: 

ICT, fintech 

Warsaw 

Examples: 

Unomaly (software), 13th Lab (mapping), 

MAG Interactive (gaming), 

Spotify (music) 

BERLIN 

"Poor but sexy" 

Strength: 

Plenty free space, good value for money, 

an almost Mediterranean lifestyle, a living 

laboratory, an inspiring urban environment 

Milan 

Weakness: 

A lack of industry 

Focus: 

E-commerce and big data 

Rome 

Examples: 

Rocket Internet, Zalando, 

SoundCloud



REVISITING FOUR MYTHS ABOUT THE 

EUROPEAN DIGITAL START-UP SCENE 

MYTH 1: 

Europe is not attractive to start-up entrepreneurs 

Definitely not true 

Large European ecosystems with a respectable tradition 

are already well established. London is a prime 

example, with most European start-ups tending to congregate 

in large, dynamic urban environments. 

Each of these environments has its own specific 

characteristics and growth mechanisms. In the words 

of former Berlin mayor Klaus Wowereit, the German 

capital is "poor but sexy": It boasts neither big industries 

nor DAX-listed corporate HQs. However, it seems 

that precisely this kind of environment has unleashed 

enormous creative forces. At the same time, Berlin has 

become more international than any other German 

city. Its streets are buzzing with foreign languages and 

it attracts entrepreneurs from all over the world. At the 

other extreme, Paris is the economic engine of a whole 

country. No fewer than 12,000 start-ups are based here, 

if you include the suburbs. The French start-up hub 

benefits from an excellent talent base, especially in engineering. 

Yet it is not only the front-running cities that 

deserve a mention. Europe is also home to a group of 

"runners-up" that includes the likes of Amsterdam, 

Barcelona, Brussels, Copenhagen, Dublin, Helsinki, 

Istanbul, Madrid, Milan, Oslo, Rome, Stockholm, Tallinn 

and Warsaw. Due to their geographical and political 

distance to Europe, we included neither Moscow 

nor Tel Aviv nor Istanbul in our analysis, although all 

of them also have vibrant digital start-up scenes. 

MYTH 2: 

Europe lacks capital 

Still true, but changing rapidly 

Access to capital – or lack of it – has always been seen 

as a critical competitive flaw in the European start-up 

scene. And there is no denying that European companies 

still raise less funding at each stage than their 

US peers. Most significant is the gap in the initial 

phase. Only two years ago, European start-ups trying 

to secure their second round of investment netted an 

average of USD 8 million from US backers. By comparison, 

start-ups that attracted only European investors 

at the same time raised a median amount of only 

USD 3 million. 

However, Europe is gradually gaining traction. The 

number of European companies successfully raising 

seed-stage funding has increased by 600 percent since 

2009. The median size of first-stage rounds is also 

steadily increasing. According to a study conducted between 

April 2014 and April 2015, European digital 

groups completed 46 "large" fund-raising rounds (realizing 

USD 30 million or more) worth a combined total 

of USD 5.7 billion in this period. This compares with 30 

large fund-raising rounds worth a total of USD 2.9 billion 

in the preceding year. 

Aside from the numbers, a whole range of structural 

changes are taking place in the financing environment. 

First, setting up a company has become astonishingly 

cheap. Many of the traditional upfront costs 

for technical infrastructure have decreased dramatically 

as new developments such as the cloud, open source 

software and open source development hubs like 

GitHub have become available. 

Furthermore, start-up financing in Europe is maturing 

and gaining visibility. The European capitals are 

the home base for VC players such as German Startups 

Group (Berlin), Octopus Ventures (London), Balderton 

Capital (London), Northzone (Oslo, Stockholm) and 

Creandum (Stockholm). 

Financing is currently benefiting from a wave of liquidity 

caused by numerous exits. This is important, 

because it is fueling the appetite of VCs within the ecosystem. 

It is also serving as a catalyst for other kinds of 

network effects, as more and more successful entrepreneurs 

team up with members of older firms to create 

new funds. 

One peculiarity of the European scene is the vast 

amount of accelerators and incubators in the market. 

Between 2007 and 2013, their numbers rose by nearly 

400 percent. Apart from facilitating the sharing of experience 

and contacts with lawyers and financing partners, 

these organizations have lowered the barriers to 

launching a company, especially in the digital arena. 

On a per capita basis, Europe has roughly as many accelerators 

as the US – or perhaps even more. 

What is also important, in terms of structural 

changes, is that European start-ups are well on the way 

to successfully tapping sources of offshore funding 

too: in the US, but also in China. Between 2010 and 

2014, non-EU private equity managers invested a total 

of EUR 6 billion in European businesses. By diversifying 

their portfolios in this way, they are making a pow-



F 

GOOD VALUE FOR START-UP MONEY 

Cost comparison of Silicon Valley and European hubs 

YEARLY SALARY OF A SENIOR 

SOFTWARE ENGINEER 

[USD '000] 

OFFICE RENTAL 2014 

[EUR per sqm per month] 

170 

Average 

compensation for tech 

workers in Silicon Valley 

is USD 195,000 p.a., 

with San Mateo County 

the highest at 

USD 291,000. 

95.0 

77.0 

127.5 

65.0 

42.5 

22.5 

Silicon 

Valley 

Europe 

maximum 

Europe 

minimum 

San Francisco, 

prime 

location 

Mountain 

View 

Paris, 

prime 

location 

Berlin, 

prime 

location 

Source: BNP Paribas, Cushman Wakefield, Roland Berger



erful and positive contribution to the European startup 

scene. Since 2012, inflows into Europe from both 

private equity and venture capital firms based outside 

Europe have increased significantly. 

MYTH 3: 

The most talented people shun 

the European start-up scene 

On the contrary! 

It is true that Europe's start-up environment used to be a 

workplace that was often difficult to access from the outside. 

Labor mobility works quite well within the EU, but 

highly qualified people from India or Eastern Europe 

have to overcome language barriers at the very least. Public 

sector documents, for instance, are not always provided 

in English. Prohibitive work permit rules – in Germany, 

for example – still represent a stumbling block for 

digital talents who would like to be active in Europe. 

"To attract the best, 

most talented, most capable 

and most committed people, 

a creative ecosystem 

needs to command the 

local center stage." 

Matt Cohler of Benchmark, a leading Silicon 

Valley venture capital firm that has 

invested in ResearchGate and other firms in 

Germany's capital 

It is an ill wind that blows nobody any good, however. 

And the crisis that has swept Europe in recent years has 

achieved something no policy could have done: It has 

created an urgent need for change in the economic 

model and revealed to the working population that being 

employed by a big firm does not mean your job is 

secure. As the ecosystem matures, it is thus now offering 

excellent opportunities for young talents. It is also 

clearly sufficiently inspiring to bring entrepreneurial 

thinkers back from abroad. Numerous Germans educated 

at Oxbridge or in the Ivy League universities are 

returning to Berlin, Munich or Paris to found start-ups. 

Cloud technologies and telecommuting contracts 

make it possible for them to contribute on a regular 

basis from the kitchen table at home. On the continent, 

business partners are seldom more than a twohour 

flight away, and everyone works in almost the 

same time zone. Going forward, it will be crucial to 

further strengthen the skills base in terms of digital 

and entrepreneurial talent and, ultimately, to intelligently 

unite both aspects. 

1. DIGITAL TALENT 

The UK government – to take just one example – has 

implemented a series of measures to promote education 

to develop digital talent. Some of these measures 

include a computing curriculum introduced in September 

2014; the Digital Business Academy introduced 

by Tech City UK; apprenticeships for digital skills; 

short courses in digital skills (available since April 

2015); a National College for Digital Skills; an independent 

review of computer science degree accreditations; 

the Tier 1 Exceptional Talent Visa for technology; and 

the Entrepreneur Visa, which helps companies attract 

overseas talent from outside the EU. 

Sometimes, the more pressing challenge is to distribute 

digital talent more evenly. Berlin is experiencing 

strong demand for programmers, for example, 

while Spain has a plentiful and highly qualified supply. 

Europe is currently seeking to facilitate mobility for 

students and programmers working in digital disciplines 

across Europe in order to attenuate this geographical 

skill mismatch. 

2. ENTREPRENEURIAL TALENT 

The good news is that Europe has extraordinary business 

schools all over the continent. Examples include 

the WHU in Germany, the HEC in France, the London 

Business School, the IESE and the ESCP, which has 

campuses throughout Europe. Each of these schools 

has its own venture lab and "playground" for would-be 

entrepreneurs. While all of them used to operate more 

or less in isolation from each other, we are at last seeing 

initiatives to break free from traditional structures. 

The new initiative Ecole 42 in Paris, set up by Xavier 

Niels in 2013, takes a counterintuitive approach. Ecole 

42 departs from traditional (and especially ingrained 

French) ideas about how to educate a business elite. No 

special graduation is required to study here. There is 

no academic faculty and there are no lectures, no 

books and no grades. Learning by doing is the guiding

RANK 2014 

14 



Belgium 

principle. Entrepreneurial case studies are made available 

on the intranet. Candidates can decide for themselves 

when they feel creative and fresh enough to tackle 

them. Demand for access to the school is overwhelming, 

with 70,000 applicants reportedly fighting 

for 900 places. 

MYTH 4: 

Europe's business environment 

is not start-up friendly 

Has changed a lot in recent years 

Although the single European digital market is still not 

reality, Europe can nevertheless count on a decent digital 

infrastructure in the individual markets. Broadband 

penetration in the hubs is good and Europe has a 

high standard of data security. 

Conditions in the offline world create several further 

advantages. First and foremost, Europe boasts an impressive 

breadth of market leaders in a variety of technically 

complex fields of business – witness its strong automotive 

and mechanical engineering sectors, for 

instance. The digital transformation is permeating every 

link in the industrial value chain, from logistics 

through production to service provision. An understanding 

of how to integrate B2B and B2C competencies 

will therefore be a key advantage in the future. European 

digital start-ups can be enablers that set traditional 

companies on the way to making money in the digital 

world. This is indeed one of the main reasons why Europeans 

would do well to adopt what have been termed 

"blue ocean strategies", creating their own opportunities 

away from the beaten track of the US role model. 

Although conventional wisdom has it that red 

tape is one of Europe's downsides, it is surprising to 

find that starting a business in many European countries 

is actually easier than in the US. Having said 

that, especially in Germany there is still room for improvement. 

G 

European cost structures too play into the hands 

of young entrepreneurs. Overall average annual compensation 

for digital workers in Silicon Valley totals 

USD 195,000, rising as high as USD 291,000 in San 

Mateo County. In Europe, the top line levels off at the 

equivalent of USD 127,000. Another positive factor is 

the net rent per square meter of office space, which is 

comparatively cheap at around EUR 13.00. Thanks to 

these lower overall costs, European start-ups can get 

by with less early-stage money. F 

G 

Ireland 

Norway 

France 

Source: World Bank 

Latvia 

US 

Spain 

Czech Republic 

19 

21 

22 

27 

28 

32 

36 

45 

46 

52 

74 

101 

110 

114 

Netherlands 

Finland 

Sweden 

United Kingdom 

Greece 

OUTLIER GERMANY 

Ease of starting a business in the majority of European 

countries better than conventional wisdom 

Austria 

Germany



The digital European 

start-up ecosystem 

needs a shared vision. 

We stake out some 

common ground – and 

outline how this vision 

can be realized. 

A potent European digital start-up landscape creates 

important new businesses for consumers, satisfying 

their needs more quickly, more cost efficiently and 

with superior quality. Even more important, however, 

is the impact these start-ups have on the European 

business sector. Their very existence helps traditional 

enterprises enter the digital race – and vice versa – 

creating a healthy symbiosis that is essential if European 

companies are to win the global competitive 

battle. Regarding the role of European start-ups in 

the digital world of tomorrow, our vision rests on 

three pillars. We also show how the vision can become 

reality. 

1. BREEDING GAME CHANGERS 

Innovative digital start-ups working hand in hand 

with traditional industry 

Outstanding innovation, and not just company size, 

will be crucial to Europe's future. European digital 

firms have the potential to market products that add a 

great deal of value, as this sort of innovative strength is 

already at the core of Europe's digital landscape. At the 

moment, this phenomenon can only be observed indirectly: 

in the appreciation that US giants show for European 

innovators. Skype, for example, was bought by 

Microsoft. Google purchased British artificial intelligence 

start-up DeepMind, and London-based 3D print-



er maker botObjects was snapped up by US-based 3D 

printing giant 3D Systems. The next stage, however, 

must be for European companies to apply themselves 

to building the digital future of their own continent. 

Drawing strength from their historic roots, they will 

develop a distinctive trait: becoming world leaders in 

collaborating with industry to take the latter's business 

forward to the digital level (Industry 4.0). The key lever 

will be their B2B competency. By developing and applying 

this skill, they will be able to drive the advance of 

digital and industrial companies alike. Moreover, since 

their digital expertise is deeply rooted in collaboration, 

it will be difficult for others to copy – giving European 

digital companies a genuine competitive advantage. 

HOW CAN WE GET THERE? 

→ Enlist the backing of the EU, governments and industry 

associations for innovative ecosystems (e.g. 

by supporting digital clusters and enhancing technology 

transfer from universities to companies) 

→ Solicit the support of the EU, governments and industry 

associations for digital innovation in the form 

of direct financial assistance or easier access to venture 

capital for innovative start-ups – not only at the 

seed stage, but also in the start-up phase 

→ In particular, be "innovative from the core", leveraging 

European digital companies' inherent innovation 

advantage in fields such as embedded software 

for industry and supporting related areas of application 

such as embedded software in wearables 

→ Build bridges. Talk to traditional companies. Help 

them become more open to ideas from the start-up 

scene. Help them embrace new ways of "thinking 

digital" (with the support of agile and flexible digital 

start-ups). Above all, keep your ears open for the 

latest ideas of young entrepreneurs, and help them 

dovetail their ideas with the challenges faced by traditional 

businesses 

→ Enhance the digital infrastructure (bandwidth) to facilitate 

collaboration between digital companies and 

traditional industry 

2. MAKING THE RULES 

The capability to orchestrate the digital game 

Creating and disseminating the norms that lend 

structure to industrial innovation on the market has 

always been one of Europe's strengths. Also, European 

entrepreneurs have a keenly international mindset 

TURNING TERRA INCOGNITA 

INTO TERRA NUMERATA 

To address the challenges of digitization as 

fully as possible, we created the concept of 

Terra Numerata, an initiative and platform 

to foster a European digital ecosystem. 

→ Digitization can drive significant change in any 

industry. One main goal of Terra Numerata is to 

bring to life new firms with disruptive business 

models. 

→ The initiative leverages the strengths needed to 

drive digital transformation in an innovative and 

efficient way. 

→ In particular, the platform seeks to bring innovators, 

venture capital and talent together as the three key 

ingredients of successful digital platforms. 

→ The idea is to open up new opportunities for all 

players in the digital economy in the shape of 

alliances, joint ventures, partnerships and events 

to facilitate reciprocal learning and dialog. 

→ Given the importance of networked thinking, 

Terra Numerata could also become a virtual 

"marketplace for digital resources and experts". 

from the day they open for business. It is time for Europe 

to play this hand again and define the rules of 

tomorrow's digital game. Europe should develop the 

best ideas for internationally accepted norms in the 

relevant areas – areas such as data security, data governance 

and payment models, but also frameworks 

for consumer rights in the digital marketplace, for 

example. Doing so defines the conditions for gaining 

a market of significant size and can make us world 

leaders in internationalization. We have already proven 

that we have the creativity and the capability to do 

so. One need only think of GSM, a technical standard 

for mobile communication services, which was created 

in Europe and exported worldwide.




→ Define the most urgent normative questions of the 

digital era, set up task forces to find answers and 

campaign for consensus in politics and industry 

→ Endorse industry-driven rules and standards for data 

security and data governance in order to nurture 

trust and confidence 

→ Raise awareness of cyber-security issues in the corporate 

community 

→ Strengthen the EU's position in international standardization 

→ Support the internationalization of digital start-ups 

by supplying them with information about foreign 

markets and helping them become established and 

do business in those markets 

→ Intelligently connect prospering – but still isolated 

– entrepreneurial hubs 

→ Strike the right balance between centralized and decentralized 

actions, between competition and complementarity, 

and between initiatives driven by the 

public and private sectors 

3. FILLING THE GAP 

Taking the political lead via the digital ecosystem 

Leadership is not merely a question of facilitating the 

business of start-ups and established multinationals. We 

also need to be aware of the relevant political power ramifications. 

Europe must position itself and take a clear 

stand. In the political arena, US companies, for example, 

currently play the digital card far more astutely than Europe 

does. Giants like Facebook and Twitter have positioned 

themselves as the platforms on which democracy 

can be lived out if the political environment fails to allow 

freedom of speech (think of the Arab Spring movement 

and, more recently, developments in Ukraine). 

While this is good news in itself, the lack of democratic 

control over these organizations should make us 

vigilant. The dark side of political influence-mongering 

assumes even greater importance when one considers 

the National Security Agency's data collection 

practices in the US and internet censorship in China. 

Evidently, there is a gap where Europe could position 

itself in a way that is hard to imitate. To do so, it must 

find valid answers to one fundamental question: How 

can we create a digital ecosystem in which customers, 

businesses, entrepreneurs and employees all feel safe 

because they can rely on European values such as freedom, 

equality, democracy and the rule of law? 


→ Encourage debate across think tanks, political organizations 

and industry about how digital technologies, 

organizations and infrastructures can be rooted 

in European values 

→ Foster dialog surrounding this question with European 

leaders in governments, industry, start-ups and 

other organizations 

→ Initiate a comprehensive campaign involving public 

opinion 

→ Rapidly adopt the EU's General Data Protection Regulation 

These are lofty ambitions. We are advocating nothing 

less than establishing Europe as a third center of gravity, 

alongside the US and China. However, recent developments 

in the start-up environment indicate that the 

battle will not be won by companies playing the me-too 

game, flexing their muscles and simply striving to become 

bigger than their rivals. 

"The original writer 

is not he who refrains 

from imitating others, 

but he who can be 

imitated by none." 

François-René, Vicomte de Chateaubriand 

Instead, Europe must draw on its own competencies, 

find the right niches, come up with smarter answers 

and discover blue oceans that no one has ever explored. 

Only if start-up entrepreneurs and the leaders of traditional 

firms, governments and political organizations 

in Europe make a concerted push in this direction and 

share a common belief will Europe's answer to the 

challenges of the digital transformation be unique and 

sustainable. Joining forces is worth the effort, because 

the prize at stake is a new, digital future for our socalled 

Old Continent.

THINK ACT 


19 

ABOUT US 

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THE DIGITAL TRANSFORMATION 

OF INDUSTRY 

Digitization is a key innovation that 

will determine whether European 

industry remains competitive in the 

future. If we succeed in realizing the 

potential of connected, more efficient 

production and new business models, 

Europe could see its manufacturing 

industry add gross value worth 

1.25 trillion euros by 2025. But if 

European industry misses out on the 

digital transformation, the sum of 

605 billion euros could be at risk in 

the years ahead. 

AUTOMOTIVE 4.0 

Disruption and new reality? 

New technologies, new players 

and new consumer needs are 

fundamentally changing the 

automotive industry. With a focus 

on the U.S. market we look at 

numerous trends in this study — 

everything from powertrain 

electrification to retail concepts 

without dealerships. Those require 

the industry to respond — but it's 

the confluence of connectivity, 

shared mobility and automated 

driving that we believe will truly 

put the industry as we know it 

to the test. 

A detailed insight into 

current thinking at 

Roland Berger is available 

via our new microsite at 

new.rolandberger.com

Publisher 

RBI – Roland Berger Institute 

ROLAND BERGER GMBH 

Sederanger 1 

80538 Munich 

Germany 

+49 89 9230-0 

www.rolandberger.com 

WE WELCOME YOUR QUESTIONS, COMMENTS 

AND SUGGESTIONS 

CHARLES-EDOUARD BOUÉE 

CEO 

+33 1 53670-965 

charles-edouard.bouee@rolandberger.com 

NICOLAS TEISSEYRE 

Partner and Head of the Telecommunications, 

Media & Technology Practice 

+33 1 53670-973 

nicolas.teisseyre@rolandberger.com 

Editors 

ANNE DUJIN 

anne.dujin@rolandberger.com 

DR. CORNELIA GEISSLER 

cornelia.geissler@rolandberger.com 

DR. CHRISTIAN KRYS 

christian.krys@rolandberger.com 

PHILIPP LEUTIGER 

Partner, Digital CC 

+49 89 9230-8904 

philipp.leutiger@rolandberger.com 

This publication has been prepared for general guidance only. The reader should not act according to any 

information provided in this publication without receiving specific professional advice. Roland Berger GmbH 

shall not be liable for any damages resulting from any use of the information contained in the publication. 

© 2015 ROLAND BERGER GMBH. ALL RIGHTS RESERVED. 

TA_15_038

THINK ACT

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