Daily Management Review

Are US high-tech investors causing brain drain in Europe?


Last week, a group of British scientists in the field of quantum computing moved to Silicon Valley to establish a startup called PsiQ. The company is invested from Playground venture firm created by Android founder Andy Rubin, who sold the last two projects to Amazon. This is not the first time when high-tech specialists from Europe are lured to the US, and European start-ups are beginning to worry about this.

Over the past few years, American corporations have increased the number of purchases of new technology companies in Europe. In 2014, Google acquired the British company DeepMind, specializing in artificial intelligence. In 2016, the same Google bought the French company Moodstocks, the developer of machine learning for image recognition. In 2017, Facebook acquired Fayteq, the German developer of plug-ins to add and remove objects in videos.

According to Mind the Bridge consulting firm, in the period from 2012 to 2016, American firms bought 562 European start-ups, which accounted for 44% of their total number. In 2017, US companies acquired another 17 European startups. According to research company Valuer, 22 of the 30 most buying companies in the world are in the United States, thirteen of them are located in Silicon Valley. According to Google economist Hal Varian, the main reason for acquisitions is the ability to buy the entire team of developers, and not specialists individually.

The situation has become so serious that in January 2019, 500 European start-ups, the cumulative cost of the 12 largest of which is about $ 35 billion, signed an open letter to European politicians in which they expressed concern about the "brain drain". They demanded a change in European legislation so that tech startups that cannot compete in salaries with American giants could allow employees to buy part of the company, thus compensating for the lack of income.

At the same time, European politicians do not consider the growing US demand for European startups to be a problem. Last week, French digital technology minister announced that American takeovers of French start-ups are “not a problem” if the technologies of new companies are not critical for the country. According to Bloomberg, Europeans are primarily concerned about protection of engineering companies such as Alstom SA and Siemens AG, and not their start-ups and, in particular, the sale of the German robot company Kuka in China in November 2018.

source: financialexpress.com