Your analysis points out some real problems, but I think they are more systemic rather than just cultural. (This is not to say that the cultural issues are not real)

1. Startups mostly leave because Europe doesn not have a private capital ecosystem and hence entrepreneurs can not get sufficient funding for growth.

2. There is some truth to this statement in the sense that some people have this mentality but is not true in general. There are profitable companies in Europe and there are jurisdictions (Denmark, Ireland, Estonia, etc) where it is reasonably attractive to have a company. The data does not show that this makes a difference: the biggest startup markets are still in the larger countries that have a larger (capital) market, even though these countries are usually more hostile to business.

3. Yes, that is the case with all government subsidies, however often their founding documents claim to wish to support small and new things.

1. There is no shortage of startup capital in Europe. European VC funding is almost half of US venture funding. Startup funding in Europe just doesn't produce big winners.

2. There are moderately profitable companies in Europe, and most of them were founded 40 years ago. With regard to the data I think you've got cause and effect reversed. The capital market is smaller because EU startups get out-competed badly. Startups are winner-takes-all. No prizes for 4th place.

3. It's simply not true that subsidies necessarily favor incumbents. Governments are free to structure their subsidies however they like.

Those are fair points but I think there are some important details that are missing.

1. There is no European VC market. This is important. When people talk about EU VC funding they are just adding together national numbers. In reality EU countries have seperate capital markets with different rules serving seperate national markets - when it comes to services there is no single market. This means none of the European markets come close to having the scale of the Chinese or American ecosystems.

Even though the amount of VC funding of the EU as a whole may seem to be of similar order of magnitude, being around 1/3rd of US VC (although as I wrote above, this is a virtual number) there are several important differences. About two-thirds of European funding is provided by governments or (risk-averse) banks, whereas about two-thirds of US finding is from private sources that are comfortable with higher risks and long periods of unprofitable money shoveling (see Amazon, Uber, Tesla).

Furthermore, there is a large difference in the size of funding (about 5x bigger in the US per company) and the amount of it being for late stage growth (very little in the EU). These are big barriers to creating 'big winners' in winner-takes-all markets.

You raise a valid question about the direction of causality here. It could be that European companies are just inefficient because they are overburdened by regulation, and investors know this. I think that is probably partly the case, and definitely in some sectors.

However, there is some evidence that regulatory burden and productivity are currently not the limiting factor. First of all there is quite a lot of diversity in regulatory burden and productivity between countries in Europe. But regularitory burden and productivity does not seem to correlate much with the size of the startup markets in Europe. The biggest startup markets are found in the capitals of the countries with the biggest markets (Germany, France and the UK). These countries are not known for being particularly business friendly or efficiënt, but they are the biggest countries. It seems likely that network effects and market scale are dominant forces here.

Indeed, it seems that the higher cost and complexity of having to scale internationally across different regulatory domains are a bigger problem for potential European big winners. A company that wins scaling in the US dominates the biggest market in the world and is likely to be the global winner. National big winners in Europe do not have the size to compete, unlike those in China. And establishing Europe-wide winners is difficult.

(In fact, it is mainly European business that push for moving regulation from the national to the European level, precisely to make Europe-wide activity easier)

One more piece of evidence is that the US VC ecosystem is centred in SF, California, probably the place in the US most burdened by regulation. They even suffer from a GDPR-light.

2. The big correlate for profits is size and Europe has very few very large companies that are of recent vintage. However, those big companies that do exist have similar profits to large US companies. If you think there is some hard limit I'm curious to hear what you think is the mechanism.

3. Maybe, but this kind of funding always comes with the art of writing the right words, doing the right compliance, and sometimes knowing the right people and having a big and well known name. But maybe I was a bit too black-and-white.

1. I broadly agree with your points, especially with your points on the regulatory burden. I also agree that it's much harder to win a fractured EU market than a single market. Here we can point to US startups that struggle to win individual markets in the EU despite having already won in the US. The most striking difference I see is how badly US founders want to win. When a EU founder makes a few million they think they've hit the jackpot. The EU founder will take the early exit almost every time. EU founders are unwilling to do what it takes to scale up. I'm generalizing for clarity here, but I think this broad difference in mentality is key.

2. Apple made 35 billion last quarter. The best EU tech companies make maybe 3 billion. A 10x difference. European tech is nowhere to be seen on this list: https://www.financecharts.com/screener/most-profitable. There are no EU winners of any vintage on the global stage. It's true that Europe's large cap businesses do about as well as their US counterparts, but mega caps don't exist. Is it fair to compare Europe's biggest winners to the runner-ups in the US?

> Europe's most ambitious entrepreneurs leave for silicon valley because audacious ambition is heavily discouraged culturally.

Good. We've all seen Silicon Valley.

We'll keep our Engineers, Scientists, and large inter-union projects and organisations like CERN.

> Europe has many talented engineers and many founders who aim for "reasonable" success, but that's really not sufficient

Not under a US metropolitan HCOL existence, sure. For most in Europe, however, wealth-generation isn't the metric of success or human worth. Work-life balance is of significantly more importance than the higher-compensation/'at-will employment' trade-off.

While I understand this sentiment, we do need to balance the short term and the long term. And in the long term, economic growth is compound growth.

Consider an example. Country 1 grows at 2.5% (like the US) Country 2 grows at 1.5% (like the EU)

What is the difference after 100 years?

The first country will have grown by 1200%. The second country by 440%.

The faster growing country is now almost 3x richer than the second country.

This is comparable to the difference between Romania and Austria currently.

As these growth effects compound, I believe that it will become hard to compete on quality of life long term.