Silicon Valley. The promised land. The only place where Unicorns – as well as legends – are born and made. Well, if you believe the hype, that is. Because there is also a finely-tuned European startup ecosystem that can be just as effective. 

How the European startup ecosystem shapes up to Silicon Valley

But what’s the competitive advantage of the European startup ecosystem, compared to Silicon Valley, through the eyes of a Bay Area VC firm? And why is it wrong to target so-called “hot” markets such as Cryptocurrency, Machine Learning and AI? Or to try and focus on the latest “disruptive technology”. Is focusing instead on less “sexy” markets much wiser?

These were just a few of the questions that we got the opportunity to discuss with two exceptional guests, in one of our recent Friday Q&As at the Starttech HQ: Phil Dur and Sanket Merchant from PeakSpan Capital. US-based PeakSpan, is an investment firm focused on growth-stage B2B software and SaaS companies, and they are already a partner of our own Epignosis.

If you haven’t had the chance to look at the first part of this series, it’s about Defying the conventions of Silicon Valley’s VC firms. We think you’d find it just as interesting!

Without further ado, here’s what Phil and Sanket had to say and how a finely-tuned European startup ecosystem that can be just as effective as one in Silicon Valley.

A Q&A with PeakSpan 

Before getting into the juicy parts of the discussion, our very own CEO and Co-founder, Dimitris Tsingos, had this to say:

Trying to put myself in the shoes of a person that works at a startup where the goal is to become a Unicorn, it’s a tough place to be. I imagine it to be an extremely frustrating experience.

Hmmm, why is that?

“Every quarter, you need to double your headcount. There is a strange CEO coming in, forcing you to focus on goals and targets which are virtually impossible to achieve. And, if you ask any of them: Did you enjoy your learning journey? I guess that you’re not going to get a satisfying answer.”

For Dimitris, being an entrepreneur, it’s all about the value of the experience. As he says:

“Entrepreneurship is a challenging path and, thus, an interesting experience. Very much in the same way that learning is. Asking ourselves ‘why are we here?’ Well, we are here to grow, to develop, to thrive economically, to learn, but also to enjoy the journey.”

Dimitris then fired up the discussion with an opening question about this.

The unicorn. A false Holy Grail?

Q1: What’s your take on that? Is trying to become a unicorn a waste of time?


“It’s true. Your time is finite. And so, investing it in a mission that you find to be compelling, is very important.What’s also important is to have very strong aspirations. However, these aspirations need to be achievable, and above all, you need to be able to realize if and when that’s true.

When you end up under-performing your aspirations, well, it’s because those aspirations were wrong, not because your effort was wrong.That’s why we enjoy our collaboration with Epignosis and Starttech. Because you have a clear sense of mission. I find the way you do things to be very pragmatic and sensible. You strike the right balance in your goals, which is really excellent.”


“It’s not only judging it based on our collaboration. Prior to us discovering Starttech Ventures, Epignosis, Yodeck, Stackmasters, etc, I think that one of the things that we thought was amazing, is that you guys are targeting a spectrum of amazing markets. You will get LMS, you will get Digital Signage and you’ll also get DevOps software. And that’s great.”

“And all of this, is not possible without the talent, the business model and the business execution. You’re pioneers. I believe that this community is empowering true innovation.”

“You give your customers access to products that would not be able to access otherwise, though they should.  You help them develop their businesses and help them as professionals with the learning and development technologies you offer.And for us, this is really important because we crave for successful partnerships.

It all really comes down to our intention to see ourselves as the extension of a successful team. When we’re successful, our teams are successful, the employers are successful and the whole ecosystem is successful.”

Q2: There is a vast majority of companies that failed to become unicorns and some of them may probably shut down. Judging from your experience so far was that because of their aggressive plan to reach that ‘unachievable’ goal? Or is it a result of poor goal-setting and management, or perhaps because there was a misconception of the market size or share? What’s the usual case behind it?


“It’s a great question. And it’s not a simple one to answer.First of all, I think that their goals and targets were unreasonable. They were very hard to achieve and therefore their company was tied-up to failure.Second, it’s because most of the time the Venture Capital industry has a terrible and distorted approach regarding market types. In particular, when a sector gets hot, then tons of Venture Capitals ‘hunt’ in that sector. The same way as when a fish pops up the water and the seagulls plunge upon it.”

“Let’s take for example online food delivery. Around 3-4 years ago it became a hot sector. There’s no need to explain the why’s behind. Who doesn’t like getting hot meals at their door?  But the thing is that of all the companies that targeted that sector,(almost 193 companies got 4.6 billion dollars in 6 quarters); only three of them made an exit.These three companies took 70% of all the value credited to that segment. The other 190 companies are not feeling that good about what’s going to happen to them. And so, a lot of what you see in Silicon Valley is due to this phenomenon.”

“Another example. Cryptocurrency gets hot and all of sudden there are tons of Cryptocurrency platforms. That’s how it goes in Silicon Valley: If there is a fixed market for a hot sector, then there are hundreds of Ventures competing for that market.And that’s how it goes. So,how do marginal players compete? Well, they compete on price. And so, at death’s door, they keep dropping the price to survive.

This ends up torching the rest of the players, to survive themselves.So, in the end, to answer your question, it’s competitive intensity, it’s false goal-setting, it’s managerial challenge, it’s doubling their sales team every year; and the list goes on. All these things are compounding each other.”

It was at this point in the discussion that a member of the audience added this poignant statement:

“One thing that nobody notices, is that when you’re trying to grow your market, it does not happen according to your balance sheet. You may offer society an innovative idea or a product, but society usually needs some time to catch up.”Hear, hear.

Q3: Startups that happen to attract the interest of VC’s are the ones that trade in sectors which get hot, but may be distorted, in terms of the actual size of the market and demand. As mentioned, when there’s hundreds of vendors in a very smart market, it’s not a good sign. Does that mean that there are blind spots and unexplored opportunities in markets that are not“sexy”?


“Absolutely. I’ll give you a few examples that come straight to my mind. Should we go after a known market of users that(already) love a cornerstone, super expensive, full-featured, difficult to use and impossible to change platform? What are our chances if we compete there?  Wouldn’t it be wiser for us to develop an LMS that is super easy to use and disruptively priced?”

“Or another one. Should we go after a Digital Signage market that has great market trends behind and a lot of users that need something super cheap and very easy to deploy? Yes! But is that choice a wise one? US Venture Capitals do not talk at all about Digital Signage. Wouldn’t it be wiser for us to go after Cryptocurrency instead?A market that VCs talk about? No! I think you get my point.”

When I look at the most successful entrepreneurs, they all have something in common: they did something different. They pursued a different aspect of what everybody else was doing.” 


“I’d like to make a point on focus and on ‘really understanding’ who you want to serve. A great example of this is that almost 60% of Silicon Valley companies go to zero,if you take a look at their exits. If, as an investor, I have a 5-billiondollar fund, then I need to generate 3 billion dollars in returns, because my limited partners have opportunity cost. And if I fail, they’re not going to put their money on me, they’re going to move on to the next fund.

That means that the remaining 40% have to generate such outcomes for me, as an investor, to be in business. So, in order to draw interest, I have to have a big market. And so, what ends up happening is that they focus on big markets, such as AI.

Take a look at DataRobot, for example. You see big companies that focus on ‘AI for everything’. But, since that is a very big market, it’s very hard to become an expert. It’s hard to build the best AI platform for retail, for manufacturing, for supply-chain, for finance etc.”

It all sounds like common sense. But as we’ve pointed out many times on this blog, common sense is… not that common. Basically, the statement above helps perfectly describe how Starttech operates. On the basis of investing in specific markets, with specific products where the risk is limited. It’s about choosing the right kind of startup market type.

Like Dimitris added to the discussion:

“Startups should not be afraid to narrow down their target market to a very specific use case, so that they can become so good at it. Because when you get traction in that, and since you are good and so focused, then perhaps you can widen your scope over time. This is one of the beauties of the European startup ecosystem.”

Look at the example of DocuSign, the US-based digital signage company. It’s a classic case of a sound vertical market strategy for startups. Here’s what Phil said about it:


“Now it’s a multi-billion dollar company, but if you look at their positioning when they started(when they had 1 million in revenue),it was the following:‘we are the best enterprise-grade digital signature solution in the market’,but if you looked under the covers, 75% of their revenues were real-estate brokers. So, their positioning was re-focused on real-estate brokers. And the vision they presented to the world was that ‘We’re going to be the best ever”. 

In the background, they had a really clear view of who their buyer was. And they went after that buyer, because it’s really easy to build a product road map around a defined buyer. It’s easy to market to a defined buyer. It’s easy to support a defined buyer.

When you’re under a million in revenue and you’ve got 15 or 50 use cases, with 50 different buyers who have different needs, and they use different taxonomy to describe their problems, it’s difficult. It’s difficult for your support team, for your product team, for your sales team, and for your marketing team.

So, start with a focused view of who your customer is. And there is no reason why that can’t be underneath a very broad vision. And then, over time, you can expand that ideal customer profile more and more. But there is nothing wrong with having a very narrow view of a buyer that is a great fit for your product early.

The other thing that I’ll say, is investing critically in growth. We’re growth investors, we love growth, but the other thing that I see companies making a mistake with, is trying to put money into companies without first having any conviction around the result. It’s much better to test and iterate and then, when you find what’s working then what’s not, you really lean in.

We see a lot of companies in the Valley that don’t work out. Companies that two years before, they were the darlings, we’ve heard that they were doing really, really great and their burn rate grows faster than their revenue, that’s their profile. The moment the investors lose confidence and stop providing capital, these companies failed. They never had a good, real-market model. The only reason they were growing was that they kept putting more and more capital in. And the minute they stop putting capital in, they die. That’s not a real business.”

Q4: What’s your perception regarding the European startup ecosystem, compared to the US one?Are we just an imitation of it, or are we more conservative compared to what you mentioned about Silicon Valley?


“We’ve got a lot of our investments in European companies and we cooperate with many European entrepreneurs. I’d say the perception in the US is that Europeans are broadly conservative compared to US ones. And that’s true, both for the investors and the entrepreneurs.The perception is that the European market is accelerating in terms of entrepreneurship, there’s a change compared to 15 or 20 years ago.”

“I would say that (part of ) the European market is starting to fall in the same track: they’re chasing the Valley now. There’s a lot of extreme drive on ‘why can’t we be the Valley too?”

“But I say to that, ‘guys why do you want that? You want 70% loss rates? No, right?’ So, what’s sad for me is that the European startup ecosystem, as a market, has a unique opportunity to have its own variant of entrepreneurship, but I don’t see that right now. I see a lot of copycatting, of ‘We want to be like Silicon Valley’. There’s a sitcom about Silicon Valley and that show is painfully accurate. Are you sure you want that? Not sure you do. So, I think that your opportunity of your own market brand of entrepreneurship could be different and better.”


“No one can deny that what’s happening in Silicon Valley has been proven to be incorrect. But, there are really amazing Technical Universities around Europe that produce amazing talent. And since the world is more accessible than ever, you can sell software from wherever you are.I mean look at Epignosis, Yodeck and Stackmasters.

I think that what you see now is more US Venture Capital firms spending more time in Europe. And that’s great. I’ve seen a lot of that activity in Paris, in Madrid, in London, in Germany. And, of course,in Athens with some Greek companies leading the innovation game,  such as Workable. It’s true, some of these firms are even expanding their offices here.”

A finely-tuned European startup ecosystem

Clearly, the original and authentic side of the European startup ecosystem — not those copycat VC’s and/or startups — is one that offers a route to growth, success and, who knows, maybe even Unicorn status or a big exit. 


Graham Wood Graham Wood

The Starttech Ventures Storyteller. Studied Journalism with Business at the University of Central Lancashire. Has worked in various product marketing management positions for the likes of Nokia, Samsung and Vodafone, as well as in several journalism and media roles since 2000.