How Europe wins when local startups sell to big U.S. tech firms

News emerged today that Apple has acquired London-based startup Semetric, the company behind music analytics tool Musicmetric. The move is a clear sign that Apple is targeting big data with the impending relaunch of its Beats Music service.

But in the wake of Apple acquiring Dutch digital magazine startup Prss back in September, today’s news highlights a bigger trend we’ve seen of late: U.S. firms gobbling up E.U. companies.

[aditude-amp id="flyingcarpet" targeting='{"env":"staging","page_type":"article","post_id":1646363,"post_type":"analysis","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"business,entrepreneur,","session":"C"}']

U.S. dips into Europe

Back in December, Microsoft bought Germany’s HockeyApp, a startup specializing in beta testing apps. This followed its acquisition of Sweden’s Minecraft-maker, Mojang, for $2.5 billion.

Earlier in the year, Microsoft went to France to snap up app notifications developer Capptain before going on to procure fellow French startup SyntaxTree, the creator of a Visual Studio plugin for Unity. And, of course, Microsoft also took on the devices and service division of Finland’s Nokia in a deal that finally closed in April.

Google has also dug deep into Europe recently to bolster its business interests. In October, it bought two U.K. firms — Dark Blue Labs and Vision Factory — to supplement its research in the artificial intelligence (A.I.) realm. That move came nine months after Google bought British A.I. startup Deepmind Technologies for around $600 million.

Throughout 2014, Google also bought Bitspin (Switzerland), maker of Android app Timely; ad-fraud company Spider.io (U.K.); Web security startup SlickLogin (Israel); e-commerce startup Rangespan (U.K.); and graphics testing firm DrawElements (Finland).

2014 saw Facebook look to Europe for expansion too. In April, it emerged that the social networking behemoth had acquired Finland’s ProtoGeo Oy, the company behind popular fitness-tracking app Moves. That move followed Facebook’s $20 million acquisition of Britain’s Ascenta, a designer of solar-powered drones.

Looking elsewhere, online travel giant TripAdvisor last year bought LaFourchette — the “OpenTable of France” — for $140 million. Earlier this month it also acquired Dutch restaurant review site Lens and restaurant reservation portal SeatMe.

Other notable U.S./E.U. acquisitions of late include 3D printing giant 3D Systems, which bought out local London player BotObjects a few weeks ago, while Warner Music took on ShareMyPlaylists, a U.K.-based Spotify playlists specialist, in October.

Stock photo behemoth Shutterstock acquired Rex Features, a British photographic press agency, for $33 million just last week, and looking to the wider Eurasian region, Dropbox procured Israeli productivity startup CloudOn only yesterday.

[aditude-amp id="medium1" targeting='{"env":"staging","page_type":"article","post_id":1646363,"post_type":"analysis","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"business,entrepreneur,","session":"C"}']

The money conundrum

While Europe has often been accused of not producing enough game-changing tech companies, with a few notable exceptions such as Skype and Spotify, it’s clear there’s plenty going on across the continent to attract the attention of big-name U.S. tech brands.

There’s little question that there is enough talent in Europe to produce disruptive tech. But if the most promising emerging companies are simply bought out at the first hint of success, then there’s an argument that says they will be less inclined to realize their full potential. Yes, these startups will have infinitely more capital at their disposal, but under the stifling, watchful eyes of a big company, innovation is often less inclined to flourish.

Of course, this trend may lead to more wealthy European founders, who can go on to create other companies and products.

But perhaps one of the main reasons European companies have hitherto failed to realize their true potential is a lack of funding to scale and grow beyond the early stages. And this is why many startups view an exit to one of the Silicon Valley big guns as the only viable “succesful” outcome.

[aditude-amp id="medium2" targeting='{"env":"staging","page_type":"article","post_id":1646363,"post_type":"analysis","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"business,entrepreneur,","session":"C"}']

With major tech companies buying into the European tech ecosystem, however, we should start seeing more money coming in from venture capitalists, government funds, private angel investors, and more.

Last year, Google Ventures launched a European fund promising $100 million in capital to local startups. Elsewhere, Balderton Capital revealed a new $300 million fund for European firms, Mosaic Ventures announced a $140 million fund, Singapore VC firm Infocomm made $200 million available, Index Ventures unveiled a fresh $460 million fund for early-stage tech startups, and, just last week, 83North confirmed that $200 million is up for grabs.

London tech firms alone secured a record $1 billion of VC investment in the first nine months of 2014, up almost a third on the whole of 2013, and 1,000 percent on 2010’s figure.

Oscar Wilde once opined that there is only one thing in the world worse than being talked about — and that’s not being talked about. This ethos translates to the E.U. tech startup scene: While some may view early exits to U.S. firms as bad for the European tech industry, they do shine a light on all the good things that are going on. And what would be more concerning is if Apple, Google, Facebook, Microsoft, and all the rest weren’t looking to Europe to bolster their business aspirations.

[aditude-amp id="medium3" targeting='{"env":"staging","page_type":"article","post_id":1646363,"post_type":"analysis","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"business,entrepreneur,","session":"C"}']