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This year's report is another strong indication of the upward trend in European tech. There is much to celebrate, but the report also highlights some obvious challenges we need to address if we are to continue the progress of the past decade.

Prioritise diversity and inclusion

Europe’s diversity and inclusion challenges are stark. Just 7% of VC funds go to female or mixed gender teams in Europe. The level of funding to other underrepresented groups is even lower. Those numbers have not budged in any meaningful way in recent years. The result: Europe has lost untold talent and value due to these issues. This is not somebody else’s problem. It is our problem. Why are we not taking more positive action?

Mobilise hidden talent pools

There are at least 15 cities across Europe that have more than 50,000 professional developers but have seen less than $1 billion in total capital investment since 2013 and less than $500 million in most cases. By contrast, Stockholm, which has around 80,000 professional developers, has attracted almost $5 billion over that period. How can we get all of those cities to punch at that level?

10x pension fund commitments to European VC

Pension funds have committed just $2.4 billion to European VCs in aggregate since 2013, equating to less than $500 million per year. This equates to just 0.01% of total European pension fund assets under management of around $4 trillion. All of that despite the fact that European VC is now competitive with US VC and European private equity. How can we educate and create the right incentives and allocation models to entice more pension funds to support a European VC ecosystem?

Build density through interconnectivity

Europe’s ecosystem is unique in its geographic diversity. In response to this, the region’s interconnected hubs are achieving density in a uniquely European way. More than a third of all investments by European VC already flows across borders and 28% of Europe’s founders and employees have also moved across hubs. How can we strengthen this interconnectivity even further?

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Lose the inferiority complex

There is no better proof that European tech companies can compete on the global stage than Spotify. It is hard to think of a company anywhere that has had to fight fiercer competition from the world’s largest tech companies and never deviated from its long-term vision despite untold distractions. And they still ended up as the global category leader and a trusted consumer brand the world over. What can we learn from Daniel and his team?

Build an investor base to target underrepresented communities

The transformation of the European investor base into a deep and increasingly sophisticated network of interconnected sources of funding has elevated European tech to another level. But the job is not close to being finished. Europe’s challenge is to identify and support emerging fund managers and angels that can target the communities that do not have access to the same capital and advice as those in London, Paris or Berlin. This means a new generation of sophisticated investors in new geographies and explicitly seeking to invest in diverse groups of founders. What can we do to help incentivise and support this next generation of investors?

Bridge the tech and policy divide to harness tech for good

European tech leaders and policymakers want to work more closely together, but they are still speaking across each other today. If aligned more closely we could create better products and services for consumers and help strengthen the European tech ecosystem. How can we build a bridge to create a European tech ecosystem that is working in concert with its policymakers to unlock the potential of using tech for good?

Stop living in the past and drop the cliches

People still talk about Europe like it can’t do tech. And for sure, Europe has historically not created as much enterprise value from tech as the US and China. That isn’t surprising. The US tech ecosystem has a 30-year headstart on the European ecosystem. China is a closed market with heavy government support that cannot be replicated in a region of multiple democratic countries and languages. We need to throw away disparaging clichés about European tech. Europe’s tech ecosystem is flourishing and rapidly gaining ‘market share’ on the global stage. If we can’t stop talking about the past, how can we focus on the future?

Compensate talent and bring it to Europe

Europe’s biggest challenge, arguably, remains a shallow pool of executive level talent with experience scaling tech companies to thousands of employees, millions of users and billions of revenue. The ecosystem is, therefore, reliant on attracting global talent to Europe or to luring home European talent back from overseas. Europe now offers compelling opportunities to join amazing companies, but needs to align compensation to compete with benchmarks elsewhere. What can Europe do to help incentivise talent more effectively?

Prioritise diversity and inclusion

This challenge is so great, it should be Europe’s first and most urgent priority. If Europe fails to make meaningful progress on this, it will still be unable to reach its full potential in terms of creating value for consumers, business and stakeholders even if it solves all the other challenges. Some people have started to make a difference. Diversity VC has created a toolkit for founders to address diversity and inclusion. So, what are you doing?