Start-up admiration and entrepreneurship are alive and well outside of Silicon Valley. Check out Berlin, London or Amsterdam and you’ll be met with a striking number of founders, start-up hoppers, and entrepreneurs. Silicon Valley does reign supreme, but the tides are continuing to turn outside of the California-bubble. In fact, 6.9 billion USD was raised in the first half of 2015 in Europe—that’s 86% higher than the same period in 2014. There seems to be few signs of slowing down, especially in the FinTech industry. If industry insiders foresee an imminent burst in the Silicon Valley tech bubble, what’s to stop European start-ups from getting ahead?

American and European start-ups operate on very different playing fields. It’s not that Europe simply has less talent or interest; rather, they have a different set of hoops to jump through. The most notable is funding.

Finding Funds in the EU

The problem is not that the EU has proved unprofitable. With funding largely focused in the US, many European start-ups are quite simply strapped for venture capital: “There have been 24 billion dollar plus exits in Europe in the last five years,” explains Venture Capitalist Fred Wilson. “When you take all of that and combine the fact that there is probably a hundredth of the VC dollars at work in Europe vs the US, you get a great market to invest in.”

The American start-up style is often “go big or go home.” They launch with a fury of marketing campaigns, and reach in every direction manageable. They have to penetrate the market if they ever want to gain an advantage and grow. VC’s fund explosive campaigns in hopes of getting a slice of a unicorn pie. When that fails, there are still plenty of other projects. Europe, however, does not excel at late-stage funding. If a start-up wants to succeed, they need revenue, not market penetration. Perhaps that’s another reason so many are flocking to Berlin, whose unofficial motto “poor but sexy” sums up the financial mind set of many inhabitants. This understanding of start-up growth may also be the culprit behind the lack of exits in the EU.

One reason Silicon Valley seems to take the cake over Europe is the number of exits and acquisitions. It seems obvious: if Europe had better start-ups, more corporations would buy them out. European unicorns are completely dwarfed by those in America. Whereas Europe boasts an estimated value of roughly $110 billion, US Unicorns estimate at $700 billion. Despite the growing hubs and interest in Europe, those numbers are tough to accept.

Europe is, however, growing. Seven companies completed successful IPO’s in 2014. They aren’t all explosive companies like Facebook, but they are powerful players, nonetheless. Consulting firm Roland Berger suggests that we “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.”

The Double-Edged Sword of Language and Borders

There’s another interesting set-back for Europe: language. Many start-ups blossom in their home country. They might become big fish in a comparably small pond. While start-ups in the US can expand all across the country with relative ease, even into Canada, the UK, and markets that accept English as the working language, expansion is much more difficult. While some start-ups can operate entirely in English, others have a more local focus. Even for a continent with relatively high English language penetration, the mother tongue aspect is important, especially in privacy-heavy areas like FinTech. Start-ups may start in German, French or Spanish, and translating everything into another language is a huge step. Basic “Google Translate”-styled localization won’t do. Terms, buzzwords, marketing all has to be perfectly translated into multiple other languages. Customer service has to be immediately expanded into several different language divisions. It’s not only a matter of legal borders in Europe, but linguistic ones.

This has been a blessing in disguise for several start-ups. While american start-ups gain traction quickly, they seldom understand the art of expansion. Having made it in Silicon Valley, the assumption is that the product will boom elsewhere, and the intricacies of expansion are over-estimated. European start-ups that have already dealt with the legal, operational, and hidden fees of expanding across borders have necessarily already learned much more about markets and strategies than their American counterparts.

The Powerful Role of FinTech

One field that is really blossoming in Europe is FinTech. London has become a hub, and it continues to grow. However, the style of innovation in Europe differs greatly from across the pond. They haven’t adopted the “fail fast, fail often” attitude of Silicon Valley. Instead of risking failure and stigmatization, companies who do “make it” often prefer to work within the U.S.’s existing start-up machine. They are built to sell and exit to American companies, because that is a safe route. The result is that they exit quickly, preferring security to fully developing their product and company.

Hopefully they are ready to fill some big shoes, because London’s FinTech sector is projected to continue climbing, and even to surpass that of Silicon Valley. Accenture and CB Insights have found that, while the majority of funds still go to the US, London’s five-year trajectory has outpaced the competition. FinTech investment is growing worldwide, but Europe experienced the highest growth rate, with an increase of 215 percent to $1.48 billion in 2014, 42% of which was in the UK and Ireland, alone.

As prices in Silicon Valley soar and many expect its tech bubble to burst, the scene is changing in Europe. With more capital, and the push of the FinTech industry, US and EU start-ups may find themselves on somewhat closer footing. Still, despite plans to build the world’s largest incubator in Pairs, and significant growth in hubs like London and Berlin, Europe will not simply replace Silicon Valley. They must continue to take advantage of Europe’s unique opportunities, and set themselves apart from the American system.

image credit: TechEU

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UK FinTech company Hello Soda has announced its expansion into the United States with the opening of a New York office and recruitment of two new heads of sales.

Hello Soda is expanding its UK business overseas after experiencing huge demand for technology platform PROFILE which helps reduce fraud and improve responsible lending and borrowing.

The cloud-based, unstructured data engine gives organisations insight into a customer by analysing their digital footprint. It takes customer information from social media platforms and blends it with other third-party data sources to create real reputation scores with a human element, helping lenders reduce fraud and make fairer decisions around affordability, pricing and terms. Hello Soda’s new credit scoring methods are helping to transform the credit industry.

Hello Soda has been attracting interest from some of the world’s biggest alternative lenders, banks and insurance companies following its development of the PROFILE platform which helps reduce fraud and improve responsible lending and borrowing using Bayesian Belief Network principles to create 4D data. Plugging a gap in the industry, the technology helps companies understand a person as an individual and aims to take advantage of the fact that traditional credit rating models are based on historical financial performance, and do not take into account a person’s ‘true’ and real-time circumstance.

But it’s not just creditworthiness that Hello Soda’s platform is being used for, propensity to commit fraud, employee vetting, and insurance claimants’ trustworthiness are just some of the issues the technology is being put to use to resolve.

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With the increase in the usage of internet services, request for user information by Governments and courts has been steadily rising. In the wake of last weeks revelations about Yahoo’s secret legal battle with the US NSA, over customer data, latest is Google’s biannual Transparency Report which reveals the number of requests made to Google from various governments in six-month periods with certain limitations.

The tenth installment of the report sees a 150% rise in the number of requests worldwide since Google began publishing this data in 2009; already this year, the internet giant has seen government demand rise by 15% compared to the second half of last year. In the U.S., those increases are 19% and 250%, respectively, reports the Google Public Policy Blog. These do not include demands through Foreign Intelligence Surveillance Act (FISA) and National Security Letters (NSLs).

Richard Salgado notes a slightly alarming trend, “Despite these revelations, we have seen some countries expand their surveillance authorities in an attempt to reach service providers outside their borders. Others are considering similar measures.” He adds, “The efforts of the U.S. Department of Justice and other countries to improve diplomatic cooperation will help reduce the perceived need for these laws, but much more remains to be done.”

The report points out that the US made the maximum number of user data requests at 12539 concerning 21,576 accounts, the percentage of requests that Google has to comply with (in whole or in part) being 84%. Globally, more than 31698 requests were made in the first half of 2014, Google’s compliance percentage being 65%.

Salgado, Legal Director, Law Enforcement and Information Security at Google, wrote, “Governments have a legitimate and important role in fighting crime and investigating national security threats.” He explains further, “To maintain public confidence in both government and technology, we need legislative reform that ensures surveillance powers are transparent, reasonably scoped by law, and subject to independent oversight.”

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IBM announced on Thursday that it would be collaborating with The Flint River Partnership to deploy a data-driven method to increase “agricultural efficiency by up to 20 percent.” The goal of the partnership is to use big data tools to analyse large volumes of meteorological, geographical and historical data, which will in turn allow farmers to model weather patterns with more accuracy and localization. With this information, farmers can make better informed irrigation scheduling decisions to “conserve water, improve crop yields and mitigate the impact of future droughts.”

“Farming operations are highly sensitive to weather. In the US, that sensitivity is about $15 billion per year. For example, the USDA estimates that 90 percent of crop losses are due to weather. In addition, improving efficiency in irrigation will reduce the impact in areas with limited water supplies. By better understanding and then predicting these weather effects, we can help mitigate these impacts,” said Lloyd Treinish, Distinguished Engineer & Chief Scientist, IBM Research.

The project will take place in Lower Flint River. The area is known to be an important part of Georgia’s economy – across its 27 counties the area produces more than $2 billion dollars in farm-based revenue annually.

The agriculture and agriculture related industries contributed $775 billion to the U.S. GDP in 2012, a 4.8 percent share. The recent announcement of IBM’s agreement with The Flint River Partnership, along with the growth of big data in other agriculture companies like Monsanto and CropIn, is a sign of how the agriculture industry is becoming a hotspot for big data analytics.

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