"Why betting on Europe is a smarter play than you think"

Putting aside the seismic shocks that could re-shape the world, the core thesis of The Outlier remains the same. We believe that Europe creates resilient startups that are well equipped to navigate turbulent times. We know these startups can succeed on the global stage. Because when you are born into complex trading environments and have managed to grow within the constraints of less than optimal conditions, you tend to have the grit and agility to take on whatever comes next.

In the past, comparisons between the US and European startup ecosystems painted Europe as a poor relation to the US’s shining example of tech dominance. But straight comparison doesn’t work: European startups are built differently. So where others see insurmountable challenges, we see overlooked opportunities.

First, the challenges. Governments across Europe have a teetering pile of urgent issues to face. Germany is struggling with deindustrialization, energy insecurity, and a multi-year recession after decades of reliance on cheap Russian gas, carbon-free nuclear energy and endless exports to China. France is drowning in public debt and political incompetence as the high ambitions of successive governments dissolve into policy paralysis. And while the UK searches for a post-Brexit economic identity, it faces stagnation and a productivity crisis over a decade in the making. In Italy, structural inefficiencies have prevented the country from translating its industrial strength into a dynamic tech ecosystem – and it faces Europe’s most alarming demographic decline. Even the Nordic countries, so often touted as models of innovation, are having a hard time. The aging population and a shrinking labor force pushes their economic model to the limit, despite their best efforts to move beyond legacy industries.

The EU as a whole remains a bureaucratic labyrinth, tangled in its own red tape. Here, grand visions for technological sovereignty are often stifled by sluggish implementation and political fragmentation. That’s to say nothing of Europe’s struggles with embracing realpolitik at a time when it’s increasingly in demand. With the new Trump administration doubling down on its “America First” policy, Europe faces the real prospect of diminished transatlantic cooperation, increased protectionism, and strategic uncertainty in both defense and trade.

Given this backdrop, why do European startups keep winning? Because constraints breed resilience. If you’re a founder in Europe and you manage to break through the barriers – fragmented markets, slow-moving regulations, complex operating environments – you’re not just good, you’re battle-tested. You’ve learned to build world-class companies despite systemic inefficiencies. You’ve mastered scaling across multiple regulatory landscapes, hiring talent from different countries, and securing capital in an ecosystem that doesn’t throw money around as readily as the US or China. You are a more resilient entrepreneur.

Europe has its fair share of success stories. There are established global winners like SAP, Adyen, ASML, Spotify, Dassault Systèmes, and DeepMind. And then you have emerging leaders across a range of sectors: Amboss in medical knowledge, Mistral in AI, Klarna and Revolut in fintech and payments, Ecovadis in ESG, Studocu in EdTech, Fresha in beauty and wellness tech, Brevo in SMB marketing automation, to name but a few. It’s a lineup that shows Europe’s tech ecosystem is not just surviving, it’s thriving.

Which is why, in 2025, reducing Europe to a doomed economic story is not only lazy but also misguided.

Dig deeper into the most promising startups and you find a tranche of resilient founders. Dali Kilani of FlexAI is pioneering AI compute infrastructure from Europe despite the dominance of US players in the market, ensuring that AI companies can access the computing power they need without relying on American hyperscalers. Gianni Cuozzo of Exein is building cutting-edge cybersecurity solutions in a landscape increasingly defined by geopolitical threats. And Phelim Bradley of Prolific, whose platform provides high-quality human data to train AI models, is making it the trusted choice of some of the biggest AI companies in the world (and he does it all from London, not San Francisco). These founders exemplify the strength and adaptability it takes to succeed in the European ecosystem.

There are signs that the startup ecosystem in Europe is reaching maturity too, with growing numbers of repeat entrepreneurs capitalizing on their successes and failures to build even stronger companies a second time round. A first generation of IPOed founders is also returning to the game, bringing with them invaluable experience, capital, and networks to fuel the next wave of European innovation.

The final indicator of a healthy European startup scene is the flow of money into the space. European behemoths such as Pennylane in financial management software, Alan in digital health insurance, N26 in digital banking, Celonis in process mining, and Vinted in (r)e-commerce, have all attracted significant backing by the top global investors, many of them from the US. Case in point: Lead Edge Capital, the US-based $5 billion growth equity firm, has opened a London office with eyes on European expansion. Elsewhere, Project Europe was launched by 150 of Europe’s best founders to support the next generation of technical builders. Chicago-based firm Thoma Bravo has raised its first dedicated European fund to the tune of €1.4bn. “We think Europe is better value,” they said of the move, “and the ability to differentiate is even greater.” The smart money is paying attention.

Where do we go from here? There are three ways to fuel success in European startups. First, the EU needs to solve market fragmentation – in our view, by creating a true single market for startups. As highlighted in the Draghi report on European competitiveness, unlike the US and China, European startups must navigate 27 different regulatory environments, tax structures, and funding ecosystems, creating unnecessary friction in scaling. Despite calls for a true single market for startups, progress has been slow, limiting Europe's ability to foster the next wave of global champions.

Second, the EU should streamline regulations. While Europe's commitment to consumer protection and ethical AI governance is commendable, overregulation stifles innovation, with the unintended consequence that high-growth companies choose to base themselves in regions where compliance is simpler and faster. A more streamlined regulatory approach is needed to ensure Europe remains competitive.

Third, the EU should tackle labor market rigidity by loosening employment laws. Founders in Europe have a distinct advantage in picking from a talent pool of exceptional engineers, researchers, and operators at a much lower cost than the US. But what we gain in talent we lose in flexibility. Compared to the US, where companies can expand or restructure rapidly, European companies face restrictive employment laws and high hiring and firing costs, discouraging the aggressive expansion strategies needed for global success.

We know that Europe is a place where global champions are made. It just needs to be simpler and easier to make more of them. That’s when the true potential of Europe as an economic powerhouse can be unlocked. That’s how we can take the brakes off, and really start to fly.

So yes, The Outlier is a statement of belief in European startups. It’s a celebration of the founders who prove every day that Europe can build global champions. It’s an invitation to investors to back founders through the toughest part of the journey. And it’s a challenge to policymakers who, if they act boldly, could unlock the full potential of an economic powerhouse hiding in plain sight.

¹Mario Draghi, The future of European competitiveness, 2024 https://commission.europa.eu/topics/eu-competitiveness/draghi-report_en

Most of all, it’s a mindset that craves a new era of European success.

Welcome to The Outlier.