Venture capitalism in Europe.

"The downturn is unlikely to lay waste to the old continent's tech unicorns.

"NONE OF MY friends stayed in tech." Fred Plais, the boss of Platform.sh, a cloud-computing company based in Paris, still remembers vividly what happened in Europe in 2001. The firm he ran back then, an online-search engine, closed down after the dotcom bubble burst--along with most of the other startups he knew.

The story was much the same in 2008 as a result of the global financial crisis. European technology firms again suffered more than their American counterparts. Fears that the looming downturn and plummeting tech valuations will once more hit harder in Europe than across the Atlantic were stoked on July 1st, when the Wall Street Journal reported that Klarna, a Swedish buy-now-pay-later darling, was trying to raise fresh capital at less than a fifth of its peak valuation of $46bn.

Such stories notwithstanding, both Europe's startups and its venture capitalists look much sturdier than they have in the past, and much less reliant on foreign know-how and capital. They may even weather the storm better than American counterparts this time around.

To understand why, start by considering the boom. Last year was a smasher in Europe even by frenetic global standards. For the first time, venture-capital (VC) investments on the old continent exceeded [euro]100bn ($118bn) in a single year, reports PitchBook, a data provider. Startup valuations rocketed accordingly, pushing the number of European "unicorns", private firms worth more than $1bn, to nearly 150 today, about 13% of the world's total. Although Europe's tech ecosystem is still only about a third as big as America's in terms of VC investments, it has more than doubled in size since 2020.

Some of this growth is a mechanical consequence of excess capital flooding into Europe, where startup valuations had lagged behind those in America and Asia. In 2021 American VC firms invested in European deals worth $83bn, a threefold increase on the previous year, according to PitchBook. Non-traditional investors, both American and from elsewhere, such as hedge funds and big companies' VC arms, discovered Europe, too, participating in nearly $100bn-worth of deals, an increase of 150% from 2020.

As Klarna's attempt to raise funds implies, this surfeit of capital is poised to end this year in Europe as elsewhere. Happily for European tech, that isn't the whole story. "The European flywheel has taken off," says Sarah Guemouri of Atomico, a VC firm in London, referring to the idea that success in tech breeds further success. Flywheels spin at the level of the individual firm, when more users translate into better services, which draws in more users, and so on. They can also help to rev up the whole industry.

Nothing ventured, nothing gained

European venture capitalism indeed looks capable of powering itself. A critical resource is talent. Last year Dealroom, another data provider, analysed the careers of 38,000 startup executives. Almost two-fifths had already worked for both small startups and established firms, signalling a growing collective experience. Similarly, when Mosaic Ventures, another European VC firm, recently looked at nearly 200 founders of unicorns, it discovered that two in three were repeat entrepreneurs. "It is the second or third time that produces a unicorn," says Simon Levene, one of the firm's partners.

As they become more experienced, European entrepreneurs are not only becoming more ambitious, but better at telling a convincing story about what they want to achieve. Nadine Hachach-Haram, founder of Proximie, a health-care startup which uses augmented reality to allow doctors to remotely watch a surgery, is on a mission to create the "borderless operating room". Avi Meir, who runs TravelPerk, a site to manage business travel based in Barcelona, wants it to become the place to facilitate "human connections between remote workers", for instance by offering tools to organise real-life team meetings. Nicolas Brusson, the boss of BlaBlaCar, which started as a Parisian service to arrange shared car rides between cities, aims to turn it into a "multimodal platform" that also aggregates demand for buses and perhaps even trains globally. To some this may sound like marketing guff but it is precisely the sort of thing investors and prospective staff still want to hear.

Capital is being accumulated and fed back into the industry, too. According to PitchBook, nearly [euro]100bn in VC was raised by European funds over the past five years. Almost half of that has yet to be deployed, leaving Europe's venture capitalists with plenty of "dry powder" to tide over startups even if the crisis drags on. European investors also tend to plough a lot of cash into early-stage startups. In 2021 European startups attracted a third of all investments in financing rounds of up to $5m globally, estimates Dealroom--almost as much as their American counterparts.

The number of "angels", successful entrepreneurs who funnel some of their tech wealth back into other startups, is also growing. Some create their own VC firms. On June 28th Taavet Hinrikus, co-founder of Wise, an international-payments service, and three other European entrepreneurs, launched Plural, a [euro]250m fund. Executives lower down the food chain have also started to invest, in part because more and more European tech workers are compensated in part with their employer's stock. A few years ago only about 10% of shares were allocated to employees, says Dominic Jacquesson of Index Ventures, a transatlantic VC stalwart. Thanks to legal changes, and a growing cultural acceptance of stock options in Europe, the figure is about 17%, not far off the 20% or so common in America.

The structure of the tech ecosystem is also more robust now whereas once it was a disparate collection of unlikely success stories, such as Skype, a video-conferencing service now owned by Microsoft, or Spotify, a Swedish music-streaming app. In a recent report on European unicorns Richard Kersley of Credit Suisse, an investment bank, and his colleagues split the firms into "enablers", for example payment services like Klarna and Checkout.com, and "disrupters" (such as Getir, a Turkish delivery app) which thrive by piggybacking on such infrastructure.

On top of more home-grown experience and capital, as well as a hardier structure, European firms boast certain comparative advantages that will come in handy in a leaner, post-pandemic era. One is their relative thriftiness. Although private companies are not required to disclose such numbers, indications are that their "burn rate", the speed at which they spend money they have raised, is lower, at least at younger startups. It helps that hiring software developers in Barcelona or Berlin costs on average only half what it does in San Francisco or Seattle.

Burning ambition

As they become unicorns, however, such differences seem to disappear. On average, American and European startups have raised about the same amount of capital before reaching that status: $378m compared with $392m for firms that have achieved a valuation of more than $1bn since the beginning of 2021.

Mature startups in Europe, meanwhile, are less geographically concentrated than their counterparts in America, both in terms of their markets and their VC support. Because Europe's domestic markets and talent pools are limited, firms quickly expand abroad. Veriff, an Estonian online-identification service, recently opened a site in Barcelona because it could not hire enough engineers in Tallinn.

As a result, about 80% of European tech companies have an international presence, compared with 61% of firms based in Silicon Valley, according to Atomico. Only one in five European firms has an office in its home territory alone and just over half are present in three or more countries. In Silicon Valley the ratio is reversed. In a crisis, such diversification is a boon.

Europe's thematic unicorn mix may also help. According to the classification used by Credit Suisse, recession-prone businesses such as consumer services are less prevalent than in America. A third of European unicorns operate in fintech, often providing payment services to other firms, thanks to the EU's more open financial regulations. Nearly a quarter of unicorns, the bank estimates, could be put in the bucket labelled "sustainability"--a type of business that is likely to benefit as the world gets more serious about fighting climate change.

All this helps explain why the number of unicorns has risen in Europe this year. PitchBook counted another 42 in the first six months, compared with 37 created in the same period in 2021. The coming quarters are certain to be tougher. But so are Europe's tech companies. Platform.sh recently managed to raise $140m (the valuation was not disclosed, but is approaching unicorn territory). And that means Mr Plais, its boss, is unlikely to have to go job-hunting again soon." [1]

1. "A species reborn; Venture capitalism in Europe." The Economist, 9 July 2022, p. 67(US).

Kelionių chaoso vasara Europoje yra žvilgsnis į ateitį, kai laisvų darbuotojų nedaug

"KUR dingo visi darbuotojai? Šis klausimas yra visur paplitęs Europoje. Nuo prancūziškų kavinių iki Airijos statybininkų brigadų, Čekijos automobilių gamyklų ir Italijos fermų darbdaviai kažkada manė, kad pigūs darbuotojai gali būti išsikviesti savo nuožiūra. Dabar atrodo, kad darbininkai tiesiog išnyko. Įmonės niurzga, nors retai taip garsiai, kaip paryžiečiai, laukiantys, kol atskrenda užmirštas garjonas su jų gėrimais. Jokiame sektoriuje personalo trūkumas nėra toks ryškus, kaip kelionėse lėktuvu. Kelias savaites turistai kai kuriuose didžiausiuose Europos oro uostuose susidurdavo su didžiulėmis eilėmis sugauti savo skrydžius, darant prielaidą, kad tie skrydžiai nebuvo atšaukti dėl rankų trūkumo. Atostogauti dar niekada nebuvo taip įtempta. Tokioje ekonomikoje kiekvienas gali susirasti darbą Europoje, todėl Europa nedirba.

 

    Po dvejų metų pandemijos neapibrėžtumo turizmas sugrįžo (atėmus kelis Azijos lankytojus). Europai, kuri pritraukia pusę pasaulio tarptautinių keliautojų, tai turėtų būti palaima. Ir vis dėlto antraštės niūrios. Darbuotojų trūkumas oro uostuose ir oro linijose paskatino atšaukti skrydžius. Konsultacinės bendrovės „Cirium“ duomenimis, birželį, kai kurortai ir miestų centrai turėjo užsipildyti, Didžiosios Britanijos, Prancūzijos, Vokietijos, Italijos ir Ispanijos vežėjai atšaukė beveik 8 000 skrydžių, maždaug tris kartus daugiau, nei 2019 m. Kiekviena išbraukta kelionė sukelia daugybę verksmingų istorijų: Alikantėje atidėti bernvakariai, paliktos Toskanos šeimos išvykos. Amerikos oro kelionės taip pat turi problemų, bet nieko panašaus į kai kurias Europos dalis užgriuvusį bedlamą.

 

    Tie, kurių skrydžiai nebuvo atšaukti, galbūt norėtų, kad būtų buvę. Kai kuriomis gegužės mėnesio dienomis laukimo laikas Amsterdamo Schipholio oro uoste siekė šešias valandas, todėl Nyderlandų vėliavos vežėjas KLM keturioms dienoms sustabdė užsakymus iš pagrindinio oro uosto. Atsižvelgiant į chaosą užkulisiuose, bagažo registracija tapo tikėjimo aktu. Pagrindiniame Paryžiaus oro uoste beveik pusė visų krepšių, kurie turėjo sekti savininkus į paskirties vietą liepos 2 d., paklydo. Profesinės sąjungos įspėjo keleivius, kad jie niekada nebus sujungti su savo maudymosi kelnėmis. Kipro parlamento narys, dvi dienas įstrigęs Frankfurto oro uoste, pasmerkė „trečiojo pasaulio sąlygas“ ten panašiai, kaip kai kurie vokiečiai keliauja į Viduržemio jūrą.

 

    Dalį sumaišties lėmė netikėtai greitai atsigaunantis turizmas. Ilgus metus netekę atostogų, poilsiautojai „keršydami keliauja“, išeikvodami pandemijos eros stimulų čekius. Tikėtasi, kad karas žemyno pakraščiuose sumažins paklausą. Vietoj to jis nusiuntė eurą (beveik paritetą su Amerikos doleriu), todėl Graikijos tavernos ir Baltijos paplūdimiai tapo neįveikiamai traukiantys.

 

    Oro uostai turėjo būti pasirengę. Numatyti keliautojų skaičių konkrečią dieną nėra beprotiškai sudėtinga, turint omenyje, kad bilietus jie nusipirko gerokai anksčiau. Tačiau aviacijos viršininkai kelis mėnesius skundėsi, kad sunku samdyti darbuotojus. Operacijų paspartinimas užtrunka: turi būti patikrintas oro uosto saugumas ir apmokyta keleivių salono įgula (nors kai kuriose oro linijose to nežinotumėte). Tada atėjo streikai. Pastarosiomis savaitėmis iš darbo išvykusių kelionių darbuotojų buvo skandinavų pilotai, vokiečių apsaugos darbuotojai, Prancūzijos oro uostų ugniagesiai, olandų valytojai, Belgijos keleivių salono įgula ir italų oro eismo kontrolieriai.

 

    Iš dalies streikai atspindi darbuotojus, reikalaujančius, kad atlyginimai neatsiliktų nuo didelio turistų srauto ir sparčiai didėjančios infliacijos. Tačiau oro uostų sunkumai nėra vien tik vietinių darbo problemų pasekmė. Toli už asfalto Europos darbuotojai šiuo metu turi pranašumą. Nedarbas euro zonoje – 6,6 proc. – yra žemiausias nuo bendros valiutos įvedimo prieš du dešimtmečius. Kai kuriose vietose darbuotojų pritrūko: Vokietijoje bedarbių lygis siekia tik 2,8 proc. Kadaise ji būtų pašalinusi rankų trūkumą, importuodama norinčius lenkų ar bulgarų būrius. Tai nebeveikia: lenkai ir bulgarai dabar randa daug gerų darbų namuose. Vokietija išduoda leidimus dirbti turkams, kad jie galėtų tvarkyti jos bagažą. Kad ir koks nenoras būtų buvęs įsileisti daugiau ne ES migrantų, buvo pašalintas.

 

    Europoje dabar dirba beveik visi norintys ir galintys dirbti.

 

    Kai kas gali įtarti, kad dosnios gerovės valstybės daugeliui europiečių leidžia išsisukinėti. Praėjusiais metais buvo kalbama apie „didįjį anksčiau dirbusių žmonių atsistatydinimą“. Tačiau neatrodo, kad taip būtų. Didesnis procentas 15–64 metų amžiaus žmonių euro zonoje turi darbą, nei prieš uždarant. ES darbo jėga, skirtingai nei Didžiosios Britanijos ar Amerikos, dabar yra didesnė, nei prieš pandemiją, pažymi Jessica Hinds iš Capital Economics. Daugelis turi geresnių pasirinkimų, nei kadaise jiems rezervuoti darbai.

 

    – Visi klausia, kur jie visi dingo? – svarstė Timas Clarkas, „Emirates“ oro linijų vadovas, rašo „Bloomberg“. "Ir atsakymas visada yra: “Amazon"."

Paaiškėjo, kad elektroninės prekybos paketų tvarkymas už padorų atlygį, klausantis podcast'ų muša būtinybę 5 val. ryto atvykstančių keleivių paklausti, ar jie nesusikrovė skysčių į rankinį bagažą. Arba nekantriesiems paryžiečiams patiekti jų kokteilius.

 

    Europa gydosi

 

    Atsižvelgiant į griežtas darbo taisykles ir pastaraisiais dešimtmečiais sparčiai augantį augimą, Europai ne dažnai tekdavo susidurti su per daug darbo vietų problema. Vis dėlto tai yra problema. Oro uostuose matomos dramos rutuliojasi ir globos namuose, viešbučiuose bei kitose vietose, kur reikia daug nekvalifikuoto personalo. Jie tiesiog sulaukia mažiau dėmesio. Kai kurių darbuotojų atlyginimai gali padidėti, tačiau daugelis įmonių, kurios remiasi pigia darbo jėga, teigia, kad negali sau leisti mokėti daugiau. Tuo tarpu profesinės sąjungos, kurios paprastai derasi dėl nuolatinių atlyginimų šuolio, gali nerimauti, kad, tai darydami dabar, gali paskatinti infliaciją.

 

    Galbūt sulėtėjus Europos ekonomikai darbo rinka šiek tiek atsigaus. Pastarosiomis savaitėmis nuotaiką pablogino sparčiai didėjančios energijos kainos, taip pat atsinaujinęs koronavirusas. Vargu ar tai būtų gera žinia, nebent sunkiai dirbantiems darbdaviams – ir tiems, kurie nori šiek tiek laisvalaikio tolimame paplūdimyje. [1]

 

Gražios mažos istorijos. Yra pamirštas pagrindinis faktas, kad kūdikių bumo kartos žmonės išeina į pensiją. Tai yra daug žmonių. Dar viena bėda, kad kai kurie iš jų neišgyveno Covido.

 

1. "No-fly zone; Charlemagne." The Economist, 9 July 2022, p. 53(US).

 

A summer of travel chaos in Europe is a glimpse of a future with few spare workers

"WHERE DID all the workers go? The question feels ubiquitous in Europe. From French cafés to Irish construction crews, Czech car factories and Italian farms, employers once assumed cheap staff could be summoned at will. Now the toilers seem to have simply vanished. Companies are grumbling, though rarely as loudly as Parisians waiting for an oblivious garçon to arrive with their drinks. In no sector is the lack of staff so glaring as in air travel. For weeks tourists at some of Europe's biggest airports have faced serpentine queues to catch their flights, assuming those flights have not been cancelled due to the shortage of hands. Going on a relaxing holiday has never seemed so stressful. In this economy, everybody in Europe can find work; as a result, Europe isn't working.

After two years of pandemic uncertainty, tourism is back (minus a few Asian visitors). For Europe, which attracts half the world's international travellers, that ought to be a boon. And yet the headlines are grim. Staff shortages at airports and airlines have prompted a surge in flight cancellations. In June, just as resorts and city centres ought to have been filling up, carriers in Britain, France, Germany, Italy and Spain cancelled nearly 8,000 flights, roughly three times the figure in 2019, according to Cirium, a consultancy. Each scrapped journey gives rise to a planeload of sob stories: Alicante stag parties postponed, Tuscan family getaways forsaken. American air travel has problems too, but nothing like the bedlam that has engulfed parts of Europe.

Those whose flights were not cancelled might wish they had been. Waiting times at Amsterdam's Schiphol airport ran to six hours on some days in late May, prompting KLM, the Dutch flag-carrier, to suspend bookings from its main hub for four days. Given the chaos behind the scenes, checking in luggage has become an act of faith. At Paris's main airport, nearly half of all bags that were meant to follow their owners to their destinations on July 2nd went astray. Passengers have been warned by unions they may never be reunited with their swimming trunks. A member of the Cypriot parliament stuck at Frankfurt airport for two days decried the "third-world conditions" there in much the same tone some Germans use when they travel to the Mediterranean.

Some of the havoc is down to tourism rebounding unexpectedly fast. Deprived of holidays for years, vacationers are "revenge travelling", depleting what remains of their pandemic-era stimulus cheques. War on the fringes of the continent might have been expected to crimp demand. Instead it sent the euro tanking (to near parity with the American dollar), making Greek tavernas and Baltic beaches irresistible.

Airports should have been prepared. Forecasting the number of travellers on a given day is not unreasonably complicated, given that they have bought tickets well beforehand. But aviation bosses have complained for months of the difficulty of hiring staff. Ramping up operations takes time: airport security must be vetted and cabin crew trained (though you wouldn't know it at some airlines). Then came the strikes. Travel workers walking off the job in recent weeks included Scandinavian pilots, German security staff, French airport firemen, Dutch cleaners, Belgian cabin crew and Italian air-traffic controllers.

In part the strikes reflect workers demanding that pay keep up with high tourist loads and soaring inflation. But airports' difficulties are not merely the result of local labour troubles. Far beyond the tarmac, European workers currently have the upper hand. Unemployment in the euro area, at 6.6%, is at its lowest since the single currency was launched two decades ago. Some places have all but run out of workers: Germany's jobless rate is just 2.8%. It would once have fixed a shortage of hands by importing willing throngs of Poles or Bulgarians. That no longer works: Poles and Bulgarians now find plenty of good jobs at home. Germany is issuing work permits to Turks to handle its luggage instead. Whatever reluctance it might have felt to let in more non- EU migrants has been set aside.

Europe is now employing nearly everyone within its borders who is willing and able to work.

Some might suspect that generous welfare states are letting a lot of Europeans shirk. The talk last year was of a "Great Resignation" of the previously employed. Yet this does not seem to be the case. A higher percentage of 15- to 64-year-olds in the euro area have jobs than before lockdowns. The EU's labour force, unlike Britain's or America's, is now bigger than before the pandemic, notes Jessica Hinds of Capital Economics. Many have better options than the jobs once reserved for them.

"Everyone's asking, where have they all gone?" pondered Tim Clark, the boss of Emirates airline, according to Bloomberg. "And the answer is always: Amazon." It turns out that handling e-commerce packages for decent pay while listening to podcasts beats arriving at 5am to ask passengers whether they have packed any liquids in their carry-on. Or serving impatient Parisians their cocktails, for that matter.

Europe is healing

Given its rigid labour rules and ho-hum growth in recent decades, Europe has not often had to face the problem of having too many jobs. It is a problem nonetheless. The dramas visible at airports are also unfolding in care homes, hotels and other places that need a lot of unskilled staff. They simply get less attention. Some workers may see salaries rise, though many firms that rely on cheap labour say they cannot afford to pay more. Meanwhile, the unions who typically bargain for permanent wage bumps may worry that doing so now might feed inflation.

Perhaps the labour market will regain some slack as Europe's economy slows down. Soaring energy prices have soured the mood in recent weeks, as has a resurgence of covid. That would hardly be good news, except for hard-up employers--and those looking to catch a bit of downtime on a far-flung beach.” [1]

Nice tiny stories. There is a forgotten basic fact that baby boomers are retiring. This is a lot of people. To add insult to injury some of them did not survive Covid.

 

1. "No-fly zone; Charlemagne." The Economist, 9 July 2022, p. 53(US).