European regulators <3 startups

Hi, it’s Jillian in Brussels. Europe is trying to hold onto its startups. But first...Today’s must-reads:• Broadcom agreed to buy VMware for [View in browser]( [Bloomberg]( Hi, it’s Jillian in Brussels. Europe is trying to hold onto its startups. But first... Today’s must-reads: • Broadcom agreed to buy VMware for [about $61 billion]( • Apple is planning to keep iPhone production [roughly flat]( in 2022 • Microsoft will [slow hiring]( in its Windows, Office and Teams groups Meet the EU’s startup recruiter Mariya Gabriel is tired of hearing about startups leaving Europe. How do you attract talent to the continent, “if always we're talking about the brain drain or the lack of support?” I spoke to Gabriel, the European commissioner in charge of innovation, earlier this year. She’s spent more than two years trying to grow startups on the continent, and then—just as difficult—to keep them here once they gain traction. Recently, there have been some signs of success. Last year the continent [more than doubled]( its number of unicorns. Investment in EU startups tripled to [100 billion euros]( in 2021. And in the first quarter of 2022, average early-stage EU startup valuations hit $56 million, up 60% from last year’s average, according to PitchBook [data](. At the same time, of course, a correction has been looming. High-flying European companies like Gorillas and Klarna have each cut hundreds of jobs this week alone. Money remains a stumbling block for European venture companies, Gabriel says. Take UiPath, which specializes in robotic process automation software. The company was founded in Bucharest in 2005 and became Europe’s first cloud decacorn, valued earlier this year at more than $40 billion. Its co-founder, Daniel Dines, was the richest man in Romania. But Dines moved the company to New York City after he raised $40 million in the second round of investment. European companies want to stay in Europe, Gabriel said: “They all would like to be in Europe, to stay in Europe, to invest in Europe, to create jobs in Europe.” But it’s not a guarantee that they will. The US has an estimated four to five times as much venture capital money sloshing around to help companies scale up, and the UK has become Europe’s VC capital. Meanwhile, a startup in the EU faces regulatory red tape that makes it hard to experiment. Companies here often can’t offer new employees stock options in the same way US companies can, or, in some countries, even provide startup visas. There are also different rules in different countries, creating a patchwork of regulations. For example, in some EU nations it takes a week to incorporate a company, while in another it takes 60 days. The EU has “27 legislations and 27 languages—very often we forget this,” Gabriel said. “That's a real obstacle.” That hasn’t stopped countries like Estonia and Portugal from becoming startup hubs. Earlier this year, France [reached its goal]( of producing 25 unicorns, three years ahead of schedule. And Germany now holds the crown for the highest number of startups in the union. Gabriel is trying to build on Europe’s momentum, crafting a new European Innovation Agenda, which is on track to be adopted this summer. She has plans to step up government investment in deep tech, provide so-called “regulatory sandboxes” to allow entrepreneurs to experiment and streamline rules around hiring. Gabriel also wants to ensure smaller countries like her native Bulgaria also benefit from the startup boom seen in recent years. But while European startups have made big gains, the global tech boom of recent years now looks increasingly tenuous. Even UiPath’s valuation plunged to less than $10 billion in the tech stock crash. If technology companies keep getting battered in the public markets, entrepreneurs’ lives are going to get significantly harder—no matter how much officials like Gabriel try to help. —[Jillian Deutsch](mailto:jdeutsch24@bloomberg.net) The big story The tech rout is overdue. The market’s current state of collapse isn’t just the inevitable result of macroeconomic forces like high interest rates and inflation. It’s also the best opportunity in more than a decade to reckon with the [tech industry’s excess](. What else you need to know PayPal began laying off staffers in risk management and operations this week as it [tries to shore up profit]( after growth has stagnated. Instacart is planning to slow the pace of hiring as it prepares for an [initial public offering](. Dell is selling more [commercial PCs](. A programming note: Fully Charged will be off on Monday and back on Tuesday. Have a good weekend! Follow Us More from Bloomberg Dig gadgets or video games? [Sign up for Power On]( to get Apple scoops, consumer tech news and more in your inbox on Sundays. [Sign up for Game On]( to go deep inside the video game business, delivered on Fridays. Why not try both? Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights.​​​​​​​ You received this message because you are subscribed to Bloomberg's Fully Charged newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](