I attended a Bryan Garnier seminar on ecommerce this morning and one of the panelists pointed out the small size of the European quoted stocks compared with the US.
Combined Market Cap of EU Ecommerce Companies Below: £2.1bn
Combined Market Cap of US Ecommerce Companies Below: £57.7bn
One can argue about Bryan Garnier’s choice of companies but the message is clear enough – European ecommerce companies are much, much smaller than those in the US.
At the conference this was presented in a positive light – apparently there is demand from global equities investors for more exposure to European ecommerce. That is good to hear and I’m sure we will all do our best to give it to them, particularly as there is a preference for companies valued over $1bn 🙂
I care about this for another reason though, because of what it means for the European startup ecosystem. A small quoted ecommerce sector has the following implications when compared with the US (amongst others):
- Less analyst attention on the sector making it harder to IPO
- European companies seeking an M&A exit need to court US buyers which is harder than courting domestic buyers
- Fewer experienced employees and entrepreneurs going into startups
These arguments hold for all sectors, not just ecommerce.
The good news is that this is starting to change. Companies like CSR, Autonomy, ARM and Software AG have recently joined SAP global leaders in significant markets and the progress at Skype is encouraging for us all. Building an ecosystem takes time for a number of reasons – emergence of a critical mass of angels and growth of support systems for entrepreneurs are two of the most talked about elements. The existence of large indigenous tech businesses is another.