"We f**cked it up": Lack of media companies buying startups is Europe's achilles heel says Hommels

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[UK] There were some interesting panel discussion today at the NOAH conference – a new event in London aimed at presenting tech companies to the private equity and banking sector – but the plethora of suited and booted attendees were shocked out of their chairs a little when Klaus Hommels, (one of the first angel investors in Skype, QXL and XING and recently a venture partner with Balderton (formerly Benchmark Capital Europe) spoke his mind.

The panel he was on had been beating about the bush on investing in tech startups, until he broke into the discussion to make some salient points:

“Whenever we want to grow we are too reliant on US companies and too reliant again when we want to sell.”

In other words, European companies have to use US platforms and ad networks like Google to ‘get out there’ and US companies to sell to.

In fact, he said:

“Structurally we fucked it up. European tech companies would normally have been picked up by media companies in Europe but they are in such a bad state this is not possible. So before anyone puts money into new companies, we need to ask: who is going to buy all the shit in our existing portfolios?!” (I think he might have meant to say ‘stuff’, however…)

He went on: “With B2B companies you run into a wall trying to convince Europe companies to adopt early models. It’s much easier to tack onto a US advertising play than onto a European play – so what keeps me awake is the structural disadvantage we have here. Angel investment is altruism here compared to the US.”

These are pretty heavy words. One of the most respected, experienced Angel investors in Europe is calling it right: the European media industry – even as it now wakes up to how to operate in a digital world – should have thought a lot more like Rupert Murdoch a lot earlier. ITV buying Friends Reunited barely counts. Of course, media companies should not be expected to bail out Angels, or buy their “shit”. But the lack of this kind of eco-system in Europe has created a big structural disadvantage for European startups and does tend to lead to talent and companies moving to the US.

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