Follow the money..

How relevant is the problem of insufficient early funding and VC funding for new social media related business ideas in Europe? And for growth? how can it be solved?

1) Looking at geography..

Since 1960 we have seen two dominant features of VC industry (see WEF report Global Entrepreneurship and the Successful Growth Strategies of Early-Stage Companies-2011):

1. The investor (VC firms) was based in US (specially Silicon Valley and Boston)

2. The investee (individual companies receiving venture funding) was based mostly in US..

The question now: is there the same pattern for social media business now?

2) Venture Capital Funding Stages

If we look venture sources database that let us distinguish social media businesses, could we see any difference between US and EU on VC funding stages? Dow Jones distinguishes four development stages: two pre-revenue (start-up and product development) and two revenue (pre-profit and profitable). Could we see what happens & trends in both continent?

3) Headcount of Venture-Backed Companies

Which are the average of headcount per start-up across the various geographies for social media related businesses?

4) Exits of Venture-Backed Companies

Does the dream of EU social media start-ups to be acquired by US companies? what are the patterns, if they are, in the exits of VC backed companies?

5) Growth Funding

“The lack of growth funding systematically rates first in all studies as the biggest problem facing high-tech high-growth entrepreneurs – European high-tech entrepreneurs typically only raise one fifth of the funding raised by US competitors, across all high-tech industries” (EU VC funding). In the social media industries, is this difference even bigger? Does it makes it very difficult for the best European business to compete with (most US) companies that raise many more times more growth funding?.

more?

We need to get evidence on venture capital investment in new social media related business both in Europe and United States to understand if is there the main problem and why..

 

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