Discover more from European Straits
The EU as a VC. DeepTech Is Complicated. Making Vaccines Work. Haven Failed. Inflation.
Today: My column in Sifted about the European Union investing in startups. Essays from last week. Capital Call.
The Agenda 👇
In Sifted: maybe the government shouldn’t invest in startups
DeepTech or not DeepTech? It’s complicated!
What do we need for the vaccine campaign to deliver?
Everyone fails from time to time, even Jeff Bezos
Some thoughts on inflation as we’re shifting paradigms
Sign up to Capital Call, the European VC weekly digest
🇪🇺 One of the big lessons in the European startup world last week was that not all money is the same. The announcement that the EU would be directly investing in startups (as opposed to being an LP in venture funds) led to a wide spate of reactions.
As you can probably guess, my own was pretty negative. Historically, the ways that governments have effectively supported startups have not included direct investments; indeed, I find it highly unlikely that any positive returns will be generated. And that won’t just be a loss of taxpayer money: By focusing on this kind of investing, governments are missing real opportunities to create new, important institutions able to tackle today’s big problems.
👉 Read the whole column here: Beware EU money in startups.
🙏 DeepTech: Many Roads May Lead There, But There’s Only One Rome
Last month, I published an article in Sifted on how European policymakers, investors and entrepreneurs are oftentimes distracted by the siren’s call of ‘DeepTech’. My point was that there are many, many problems that can be solved using existing technology, even if that doesn’t sound as sexy as telling people that you’re building some new, futuristic technology to save us all. The conversation then continued with Zoë Chambers of Octopus Ventures writing a thoughtful rebuttal.
I wrote to my friend Bill Janeway to get his take on things. Bill’s extensive experience with both the technological and business aspects of the tech world makes him one of the voices that I personally find most enlightening on these topics. He wrote back to me and was kind enough to allow his response to be reprinted in this edition.
His answer is rich in both examples and how theory interacts with reality. And one point that I think is universally applicable is his framing of the various weights that should be given to evaluating market risks (distribution, fragmented markets, etc.) vs. technical risks—where, I might add, he does note that “successfully resolving market risk does appear to generate more reward than resolving technical risk”.
👉 Read all of Bill’s excellent take in DeepTech: Many Roads May Lead There, But There’s Only One Rome.
👩⚕️A Few Thoughts About Vaccines and the Healthcare System
One of the few pieces of globally good news lately has been the incredibly fast development of vaccines that protect against COVID-19. Of course, times being what they are, no good news goes unpunished. And so we’re now confronted with what appear to be very slow vaccine rollouts in many parts of the world (Israel being the rare exception), with some countries facing significant skepticism from their citizens regarding their willingness to be vaccinated.
My home country of France is in one of the worst positions, both with very few people being vaccinated in the early days of the campaign and with many (some polling placing it at 60%!) saying they don’t want the shot. Unfortunately, and perhaps obviously, this isn’t only due to the COVID-19 context itself. Vaccinations in France have been a point of contention for well over a decade now, in no small part due to a general lack of trust in the government.
I believe healthcare is an area where technology really can go a long way toward reversing that trend. By moving from paperwork to digital health records, by giving people more power over their healthcare via well-designed apps instead of bureaucratic top-down concepts such as ‘obligatory’ vaccines, we could begin to overcome the lack of trust in our health systems thanks to a radically better patient experience.
That’s the only way to really arrive at the goal, which after all isn’t about any “obligation”, but rather about having an entire population that’s effectively vaccinated and protected against diseases that have caused many, many deaths all around the world.
👉 Read more in A Few Thoughts About Vaccines and the Healthcare System.
🩺 Why Did Haven Fail?
If you were putting together a business dream team, you could probably do worse than choosing Jeff Bezos, Jamie Dimon and Warren Buffett. Alas, even having those three, as well as their respective organizations, is no guarantee of success, as we were all reminded with the recent shuttering of Haven, which aimed at improving the notoriously messy US healthcare system.
Given the participants, there’s been no lack of analysis regarding why Haven was never able to really get off the ground, and I include a number of key passages that I found enlightening. One additional point that I think is quite important is the difficulty of conducting a joint venture that not only needs to tackle a very difficult external problem (in this case, providing top-notch healthcare), but also internal problems related to aligning the individual interests and strategies of everyone involved.
Nonetheless, I don’t think this is the end of the story. Amazon is certainly still pursuing healthcare plays, as seen in their expansion into the online pharmacy space. And while it’s clear that healthcare is an area where government frameworks are critical, I still believe there’s much room for innovation coming from private companies, as seen in recent examples from UnitedHealth, Kaiser Permanente and Oscar.
👉 I take a look at how things stand in Why Did Haven Fail?
💸 Will Inflation Make a Comeback?
In the field of macroeconomics, one of the biggest questions in our low-interest-rate world has been that of inflation. Images of people hauling suitcases of banknotes down to the bakery, to say nothing of the Weimar Republic giving way to Hitler’s regime, makes inflation one of the more feared players in all of economics.
But for all the fear surrounding it, we in the Western world really haven’t dealt with significant inflation since the mid-1980s! And so many people have simply come to believe that it won’t ever return. Yet there were specific developments during these past decades—including lengthier, more responsive global supply chains—that effectively acted to hold inflation at bay.
What happens in a fragmenting world where those supply chains are being further called into question thanks to a renewed push for sovereignty in the wake of the COVID-19 crisis? What happens when that same crisis is leading governments to spend billions in order to keep their economies afloat? And what happens when the current techno-economic paradigm of the Entrepreneurial Age reaches maturity and, eventually, exhaustion?
👉 I dive deeper in Will Inflation Make a Comeback?
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🇪🇺 Reading European Straits is more than enough to stay on top of most things regarding technology and the current Entrepreneurial Age. But if your interest is more focused on European tech and specifically venture capital, you should sign up for Capital Call—the weekly European VC digest I curate with my friends Willy Braun, a cofounder of Daphni, and Vincent Touati-Tomas, who handles marketing at Northzone in London. Check out the latest editions and sign up so as not to miss the next one—to be sent tomorrow morning (Thursday): Capital Call 👀
From The Problem With Taxpayer Money in Startups (December 2019):
The direction set by the state is a necessary complement to the policy enablers. Once the government sets the direction, entrepreneurs are all too happy to hack their way into profiting as much off these enablers as they can. They might not genuinely care about winning that particular war, but given their hunger for the resources you put at their disposal (basic research, money, exit opportunities), they’re happy to oblige and align their priorities with the general direction. In our experience at The Family, entrepreneurs are like junkies: they will say and do anything to get ahold of that cash they need to grow even faster.
All recent editions:
Will Inflation Make a Comeback?—for subscribers only.
Why Did Haven Fail?—for subscribers only.
A Few Thoughts About Vaccines and the Healthcare System—for subscribers only.
My Worldview in 10 Ideas—for everyone.
A Few Notes on Israel 🇮🇱—for subscribers only.
COVID-19: A Retrospective—for subscribers only.
All About Industrial Policy—for everyone.
All About Capital Allocation—for everyone.
All About the Great Fragmentation—for everyone.
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From Munich, Germany 🇩🇪