Europe does not lack capital – it lacks scale

[PARIS] The conventional wisdom in Europe is that we lack home-grown technology giants because we lack the capital to generate them. Every debate on competitiveness thus ends with a recommendation to put billions more dollars on the table and focus on scaling up technology companies.

This view misses the point. It conveniently allows governments to announce grand plans without pursuing serious reforms. While it enables investment funds and startups to access more financing, it does not question the rules of the game. Worst of all, it sidesteps the fundamental question: European economies boast some of the world’s highest savings rates, so why does private capital invest so little there?

A perfect illustration of the problem is the new Scaleup Europe Fund, a vehicle launched by the European Commission, the European Investment Bank and large private investors to provide late-stage growth capital to innovative firms in so-called strategic technologies (artificial Intelligence, quantum, semiconductors, and so forth). Once again, billions will be deployed to address a problem that is not financial, but structural.