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Europe’s Moonshot Moment: The Software Sector on the Cusp of Global Leadership

In a groundbreaking report published by Boardwave and McKinsey & Company, the European software sector is recognized for its unprecedented opportunity to seize global leadership in technological innovation. The report, titled Europe's Moonshot Moment: Scaling the European Tech Sector, was synthesized from over 100 interviews and analyses of key leaders in the European tech landscape. It emphasizes a coordinated effort necessary for leveraging the continent's strengths in talent, innovation, and capital into sustainable, worldwide outcomes.

The European Software Landscape

Europe has matured as a technology hub, boasting more than 280 software companies generating upwards of €100 million in annual recurring revenue (ARR). However, a notable stagnation persists as many companies hover around the €30 million ARR mark, which hinders their potential to emerge as global players. This limitation, according to the report, is not attributed to a lack of resources; rather, it is a result of insufficient collective action among founders, investors, corporate leaders, and government entities.

Charting a New Course for Growth

The report identifies five critical areas of intervention essential for unlocking growth:
1. Increased Late-Stage Funding: Assisting companies in transitioning from €30 million to €100 million in ARR.
2. Fostering Recidivist Founder Ecosystems: Transitioning exits into new startups.
3. Enhancing Cross-Border Market Talent Mobility: Expanding sales and marketing efforts.
4. Stimulating Demand for European Software: Generating interest through public procurement and incentive programs.
5. Strengthening Public-Private Partnerships: Alleviating innovation risks in strategic tech sectors.

These targeted interventions aim to initiate a domino effect, propelling promising companies into the global limelight.

A Time of Optimism

Phill Robinson, CEO and co-founder of Boardwave, articulated a prevailing sentiment of optimism within the ecosystem, emphasizing Europe’s potential to cultivate the next generation of global champions. He stated, "The European technology landscape is evolving faster than ever, echoing not just a sense of urgency but also confidence in our capacity to succeed. However, without coordinated expansion, we risk missing our moment."

Complementing this perspective, Ruben Schaubroeck, a principal at McKinsey & Company, remarked that Europe is equipped with critical elements such as deep talent pools and dynamic founder networks necessary for nurturing future software champions. He pointed out that shifting dynamics, such as the rise of generative AI and the relocation of strategic supply chains, are creating new opportunities that Europe must harness.

A Moonshot Moment

Converging forces signify what the report describes as a “moonshot moment” for Europe. Breakthrough technologies like generative AI lower global scalability barriers, while political shifts facilitate cross-border initiatives. Additionally, success stories from multinational firms like Mistral, Celonis, and Spotify serve as an inspiration for upcoming ventures. The combination of public and private initiatives expands access to capital, further enhancing entrepreneurial support.

Building Connections

The report stresses that fostering connections between founders, talent, capital, and institutions is pivotal for ensuring widespread progress. Robinson reiterated, "We must function as a unified innovation ecosystem rather than fragmented entities. This moonshot moment can propel us to lead not just in Europe but globally."

About boardwave

Boardwave stands as the largest European network for ambitious software sector leaders, boasting over 2,200 members, including founders, CEOs, and executive directors. By providing critical connections, insights, and support, Boardwave empowers its members to advance in their respective journeys. The free membership includes tailored events and industry-leading expert content, along with direct access to top investors and advisors.

About McKinsey & Company

McKinsey is a global management consulting firm dedicated to assisting organizations in accelerating sustainable and inclusive growth. The firm collaborates with clients across public, private, and social sectors to solve complex challenges and effect positive change. By melding bold strategies with transformative technologies, McKinsey guides organizations towards lasting performance improvements and innovations that nurture workforce success for generations to come.