Europe’s startups get bootcamp booster

Tue Sep 16, 2014 10:47am EDT
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By Sara Ledwith

AMSTERDAM (Reuters) - In the two years that Rockstart Accelerator - a private bootcamp for tech firms - has been going, it says the 20 startups it has backed have raised 15 million euros ($19 million) and created nearly 150 permanent jobs.

“It’s cool to be in a startup there,” said Cralan Deutsch, a 44-year-old founder whose Rockstart-backed company has been ticking over for a decade but joined the incubator for a revamp and access to new contacts. “It used to be, I go to a party and I tell the girls I’m in a startup and they walk away – that’s changing now.”

It’s an increasingly familiar story in Europe, where hundreds of entrepreneurs have set up incubators that are adapting the Silicon Valley model to fast-track new companies. For Europe’s politicians, the trend represents an economic bright spot, bringing life to disused office space, new jobs, and reflected geek chic. One EU-funded study from March, by database Seed-DB, estimated startups have created 3,500-4,500 jobs in Europe.

Few, if any, of these firms will ever be Google or Facebook. Some will make money replicating successful ideas. Most will go nowhere, neither growing nor failing but limping along. But every year 100-200 in Europe are bought by rivals or much bigger firms.

The value of those deals is often not disclosed, but where it has been, the average purchase prices have jumped, suggesting that the type of ecosystem found in California’s Silicon Valley may finally be taking off in parts of Europe.

The $2.5 billion that Mojang, the Swedish game developer behind Minecraft, collected from Microsoft earlier this week is far from typical. But in the first eight months of 2014, more than 100 European venture-backed firms were sold to others in the industry. The average value of each deal where a price was given - $420 million - is 80 percent higher than the 10-year average of $233 million, according to Thomson Reuters data.

Prices are volatile, and the number of deals is still far short of the United States, but prices have been higher for European firms. In the United States the average value so far this year, at $398 million, is about 70 percent up on the 10-year average.

The data is partial and no clear trends are discernible. Even so, incubators like Rockstart – there are around 100 of them in Europe, according to website – certainly help feed the market. Funded variously by private wealth, government support and multinationals, they consolidate teams of talent and plug young businesses into investment and expertise.   Continued...

Oscar Kneppers, co-owner of private bootcamp for tech startups Rockstart Accelerator, poses for a picture in Amsterdam September 2, 2014.  REUTERS/Toussaint Kluiters/United Photos