E495 | Will McQuillan, Frontline: Breaking the “Europe vs. US” Myth (EUVC Summit 2025)

24:38And we should talk about that now. So both the market data, but also just sentiment with the actual people that are investing and active in the ecosystem. I said, let's talk about data and let's talk about the market. You have a very interesting stat in your talk, which said that when European B2B tech companies IPO, more than 40 % of their revenue comes from the US. But at the same time, and this is the thing that surprises everyone, I think, the reverse is also the same. So the US B2B tech companies that IPO, they see 30 to 40 % of their revenue coming from Europe. This number baffles everyone And I don't think there's a lot that make that guess if you ask them.

25:18So could you tell me a bit about what this teaches you and what you think the message should be to the market about this? Yeah. And again, for you who didn't see the talk, this is data looking at kind of the last 10 years of B2B tech IPOs in Europe and the US. And we originally did it looking at US to Europe. I think a lot of people assume that European companies have to expand the US. And the reality is it's true. 40 % of revenue in IPO for the average B2B company IPO-ing in Europe, that's a huge proportion of their revenue. I think a European company who's not thinking about the US, at least the B2B companies for sure, is really leaving an enormous portion of the market out of their scope.

25:59But I think that to your point, where people often misunderstand it is this isn't just a one-way dependent. It's not just like, oh, European companies have to win the US. It is absolutely both ways. And when we speak to most US investors and US CEOs, and we ask them, actually European VCs as well, when we ask them, how much revenue does a US company have in Europe when they're IPO-ing, right? And almost always, they'll say somewhere between 5 % and 10%. There was someone at the summit the other day who guessed 3 % when I asked them the question before the talk, right? The answer is 30 % to 40%.

26:31They are almost as dependent in vice versa ways. That is a huge proportion of their revenues to be coming from Europe. And so there's no question about it. If you're building a huge B2B global company in the US, if you want to build an IPO track company, you need to be winning Europe too. And not just having a foot on the ground there. You need to have substantial market share coming from Europe. And I think that, and not only that, but when you dive into the data, we have, just to plug one of our reports, we have the US playbook and we also have the European expansion report, which dives into a lot of this data.

27:08But effectively, when you look at the companies that are closer to the 40 % of the revenue in Europe and IPO, the US companies, they perform better in IPO than the ones that are lower at the mid-20s to 30%. So again, it's not even just like, it's a big part of your market share, but also it helps you perform better in IPO. That's what the IPO investors are saying by the data company. And Will, now we're going to shift a bit to actually tap your brain, not as a commenter on market dynamics and so on, but rather as a VC that's helping build companies, because I'd love to ask you about the collaboration as a competitive advantage, so to say.

27:45So you state just what you did just before, but you also have concrete examples in your talk with DARPA and CERN and BioNTech and Pfizer that really show how the partnerships that span oceans allow us to create innovation in a way that is rarely seen in other places. Where do you see that this playbook can be applied to the companies that are building both in the US, but let's focus primarily on the European seed stage companies. How do you help them go to the States and get this collaboration made? What is the core thing for a VC that's trying to do their best work to learn? Yeah. And again, just maybe to give the context of that point, And, you know, initially I was looking for examples of like big world-changing things that have happened through European and US collaboration.

28:36And the more I looked, I was like, oh, that happened through European, the Large Hadron Collider or like, or the International Space Station or the example of the talk, you know, the COVID-19 example, which is a ridiculous example of European and US collaboration. The internet, again, European-US collaboration. And even like the transatlantic cables, which I kind of put a map up on in the talk, again, would never have happened without engineers and investors on both sides of the Atlantic working together. That suddenly made me realize like, okay, you know, I think for a lot of VCs, for a lot of entrepreneurs, for a lot of policymakers, they work in this area, not just to build big companies.

29:10They work in it to try and advance humanity, advance, build like world-changing sciences and technologies. And the more I looked into it, so much of it was around collaboration. And that's why we just for us it over overemphasizes the importance of this and then to your question you know for european companies looking to expand it to the u.s and have collaboration there i think there there are many different aspects about that and i think i spoke in more length of the last podcast and i'd recommend people to look at our european expansion our u.s sorry playbook and where it goes into like you know 90 pages of like detail we kind of we made the report as a tool for for a european entrepreneur getting on the plate to the u.s you can easily digest and reflect on it by the time you've landed.

29:51But effectively, a lot of it's around understanding what your go-to market is and how that might change in the US, how you might need to localize or change your product. A lot of people think immediately Silicon Valley is the right place to expand, but actually, when you look at the data, the vast majority of European companies choose East Coast because when it comes to collaboration, it's much easier from a time zone perspective to build and manage your teams across both. But if all your customers are valuable, then maybe you need to make that work either way. And so I think there is no, this is the right way to do it.

30:21It is different per company, but there are a lot of learnings for a lot of the companies that have already done it. And I'd highly recommend people to read that report. And for the VCs who are advising their companies, I mean, Frontline are always surprised at how many VCs we speak to who encourage their companies to stay in Europe for a long time before they start expanding to the US. And we think that is a mistake. And we think that the data clearly shows that. And companies that expand earlier almost always will perform better. And there are, of course, exceptions. And there are certain types of companies that might be better suited to stay a bit longer.

30:55But for the majority of B2B technology companies, you should be thinking about the US from very early on in your journey. And thinking about that means spending time there, understanding it. It's not just thinking in three years' time we're going to expand there. It's actually investing time and resources into that as well. And I think we see European companies doing that too late, and they're missing out on a lot of potential growth in the US. Just a note here, we did in the conversation with Will Prendergast also talk more about that and the playbook specifically. So I won't dive much further there.

31:29Instead, I'd love to ask you. Sorry, maybe not to interrupt you, but maybe one thing to understand is like, what is the driving force of why we encourage European companies to go earlier into the US and US companies to come later into Europe? the thing that most people need to understand is that most of the risk takers in Europe left on boats like 150 years ago to the US. And so the founding culture of the US was a group of very risk-taking Europeans. The founding current culture of the US is a bunch of very risk-taking Europeans. So by definition, that was their founding culture, this idea of taking risk.

32:05and what was left was a Europe that had a lot less risk takers and therefore a more conservative culture. Now, is there risk takers in Europe today? Of course there are. The average company in Europe when making business decisions is more conservative than the average US company is. US companies are far more likely to work with an early stage company. And so what we see is our early stage companies in Europe get faster traction. So their lead time reduces, their account sizes increase when they start expanding to the US. Now, the whole point of our US to Europe strategies, Europe is still a huge market, but it's a little bit more conservative.

32:38So expanding throughout Europe is so much easier once you have that bit of extra traction. And that early traction, we believe is far easier to get in the US. And that's kind of the foundational reasons why we do them at different stages. Do you think, Will, and now I'm going to ask you to get in trouble here. Do you think that your European counterparts are for the wrong self-absorbed reasons, well, they have a good value add, they have good network, they have all the reasons to kind of feel more important and more value adding and helpful to the founders if they stay in Europe. And do you think that it's for that type of reason?

33:19Do you think it's because they just don't understand what you just described? Why do you think that we are seeing European VCs maybe keeping their companies too long. Yeah. I don't want to generalize about European venture capital. The reality is we started Frontline like 2012. And at that time, European venture capital wasn't in a great place, in my opinion. It is now evolved enormously since then. I think some of the other speakers spoke to how much more venture capital funding there is in European ecosystem. And many of those newer funds are great funds. And I don't want to say to entrepreneurs, you should never work with a European investor and all the European investors are small-minded investors.

33:58I don't think that that's true. I think there's lots of really great European investors that if I was an entrepreneur, I'd be extremely happy to work with. To your point though, a lot of people always find it easier to do what they know and to expand in areas that they know. It's often simpler to take the easy path than the right path. The easy path doesn't necessarily mean to be the wrong path, but it isn't necessarily the best path to go. And we're trying to maximize the potential for each of these entrepreneurs and the companies that they're building. And we believe the best way to maximize that is through that early US expansion.

34:32And we've kind of designed our firm around that. Different people will have different views to that. And sometimes that's driven because it's the easier route. Sometimes it's driven because of LP desires. Sometimes it's driven through patriotism. But that's our viewpoint. And it also, we see it as a magnet and filter where we think the most ambitious entrepreneurs also understand that in Europe they know that if they want to build a global company they've got to win the U.S. market and the earlier they started that the better chance they have and we try to specialize in helping them do that and so we think that also by creating our firm around that helps us kind of show the best entrepreneurs that they should be working with people like us if we just talk for a second about round composition who do you get into the round?

35:16Do you think that if you're doing a seed stage round, you're as a founder or an angel or whatever that's trying to help put that together or making a mistake if you're not either having US investors in the round or someone with the mindset of you and the strong value add around going to the US? I think every entrepreneur should think about what are the biggest challenges I'm going to face in the next 18 to 24 months and who are the best investors for helping me do that and helping me solve those problems or helping me get past those challenges. And that might be angels, that might be venture capital funds, that might mean you do a one fund takes the whole round.

35:57It might be that you have two funds doing, you might have a fund with a number of angels or micro funds, there's some amazing micro funds and solar GPs in the ecosystem at the moment in Europe. So like, I think it's really specific. And we always, when we meet with entrepreneurs, we'll ask them, what do we think their biggest challenges are? Because I know I will be able to solve every one of their big challenges. And I'll then try to specifically help bring in investors who I think can help solve those challenges. And it isn't always a US investor. It isn't always a European investor. It can totally vary.

36:24But I try and see who can really open up the right doors or put out the big fires that might be coming because every company is slightly different. And so that's why I think you need to give a bit more of a nuanced answer to that. There isn't that you should just have US investors and US thinking investors in your run. Will, I want to spend the last couple of minutes that we have together on talking a bit about the consequences of everything you're seeing here for the ecosystem builders and politicians and policymakers. because what I am feeling, so it's been forever that in Europe, we had Marius also coming on stage, former ex-CXO at UiPath coming on stage, showing a map of Europe saying, if this map, which is full of dots, is showing every European version of Silicon Valley that has ever been proclaimed by policymakers.

37:22And everyone laughed because, of course, the map was completely dotted. And this has kind of been a bit my mission when I'm talking to policymakers, especially here in Denmark, is you've got to remember that you cannot just always try and build a local version of whatever, because if you want to do anything in venture, it's by design global and at the very least European. so you can't bring the best Danish investors together to talk about this ecosystem because you're only going to get maybe one or two that are globally amongst the best and then the rest are not amongst the best, which means they're not bringing the best playbook there and they're not bringing the right considerations to form.

38:02I kind of am afraid that we're now, because even though we are seeing globalization maybe retracting a little bit, I do think that this, as you're also starting out with, this statement of putting Europe versus the US all the time. If we end up building too much our ecosystems around European sovereignty, we might be doing the same mistakes again, but just on a European level, because we're not centering the development of the AI ecosystem in Paris around a corridor to the US, but instead we're building it around Europe. Or do you think we're making a mistake here? Okay, there was a lot to unpack there.

38:42And like, I'm not a policy expert, a politician or a diplomat. I am. My general belief is that we should always be focusing on creating more talent. So, you know, if you're asking me to kind of wave magic wands, I'd love people to because the great thing about venture is we can take really long term bets and really long term views. And like, I would love to see just more focus on funding great universities across Europe, that I think would help our ecosystem. Our universities are substantially underfunded in Europe compared to US universities. If you want to do a Europe versus the US, that's kind of where the question is leading.

39:16And so the reality is that I'd love to see more of that. I think that will lead to far more amazing technologies and sciences developed in Europe. The other thing though is not to forget that just because a company is created in the US doesn't mean that's not great for Europe. you know, Google employs, I mean, I don't know what the number is, tens of thousands, over a hundred thousand people in Europe. I don't know what the number is, but definitely tens of thousands of people in Europe. So would Facebook. So would a lot of these are meta. So a lot of these big US tech companies, a lot of European big companies employ tens of thousands of people in the US too.

39:48Again, if we can continue to promote the collaboration to me, the more collaboration, the bigger, the better things that we can build. And I think the US and Europe has had this incredible collaboration. You know, I would love if there were other regions of the world that we created more collaboration with two at the moment we've just got you know a hundred year track record of great collaboration between us and europe so i just don't think we should throw that away and forget about it or think that it's the wrong thing to be doing i also think if i was to wave a magic wand you know never going to happen well not never but not going to happen anytime soon is you know brexit was a real blow for the european uh ecosystem you know you've got london which is one of the biggest hubs in europe suddenly cut off properly from the rest of the the towers in Europe or largely cut all.

40:27I think that's a real blow. And so slowly, I think there won't be a, hey, Brexit's gone. But I think slowly unwinding that, anything politicians can do to unwind that will make a better European ecosystem in general. Well, that was definitely not something that will probably fall poorly with anyone in our audience, but it could get you a beating in certain bars. I'd love to ask you, Will, because I was talking to my dad, actually, the other day about the fact that so this whole discussion or pitting Europe versus the US and trying to almost, to me, it feels like unwind a lot of the entanglement that we already have or the dependencies.

41:11I'm a bit like, okay, we're definitely seeing some interesting things come out of the White House. We probably have a bit of a new situation and the world could go in a different direction that we had thought. But let's just agree that it's probably a better thing that we still tap into the most powerful alliance that we've had for years and years and years, and also the strongest players. And my conversation with my dad was specifically around this untanglement or ripping out the US created tech stack of Microsoft and Google and so on from critical infrastructure and so on here in Denmark, where I'm a bit like, I get that you are a bit afraid that they might have a kill switch or whatever with respect to critical infrastructure for us and even non-critical, honestly.

42:08But really, it's not a very likely scenario. And the fact of the matter is that everything that's happening today with AI is allowing the behemoths to do incredible strides forward compared to what a small scale company in Denmark offering the same type of infrastructure service can. As an example, I'm getting everything recorded with Google and they're allowing me to search everything by the click of a button. I'd much rather that my healthcare system was allowed to do that by tapping into the US tech ecosystem and their services rather than us trying to create some weird Danish version that is then not, at least it can't be killed by the US.

42:55Yeah. I mean, it's hard to argue against a Danish person on their views though, because I think you guys constantly get named like happiest country in the world, don't you? Yeah, we're very happy. Yeah, yeah, yeah. But no, I think, look, I'm biased. I clearly have a more globalist view and I think that collaboration across regions, across cultures, creates better sciences, technologies advances humanity i think the data and history clearly shows that and equally i think that that takes longer term thinking and it takes and longer term thinking is very hard for politicians because politicians are looking for near-term votes they're looking for near-term press positivity and especially and again this negatively driven social media world so i can understand why it's hard for politicians to to not always kind of like if you're a danish politician why are you going to be saying hey we should be supporting u.s companies and landing in europe like does that win you a lot of votes in denmark maybe but you cutting a ribbon beside a new cool startup office in denmark and copenhagen probably wins you more votes in the press and with your constituents so i think it's hard for politicians i'm not trying to say it's easy and i don't think i have the answers for them but i'm definitely not a politician and i'm focused on like what does it take to kind of support the top entrepreneurs and i'm like maybe the final point I made in my talk, which made me a good point to end, is like, I'm not delusional.

44:20There is more friction now to do business across the Atlantic than there was a year ago, two years ago. But I feel like that's the responsibility of the investors, both in the US and Europe, to be helping the entrepreneurs to cover that cross-Atlantic collaboration. Because the data is clear. You got to win both markets if you want to build global companies. And yes, it's harder to do that now. But then it's on the investors to make sure that we can help our entrepreneurs to continue to do that and get past that bridge. Yeah. Well, final question. Throughout the podcast, I've been trying to get you in trouble asking you to take a stance on policy questions.

44:54You've said multiple times, I'm not a politician. Definitely not a politician. The role of VCs in politics, do you think that there is one or do you think we should stay to our swim lane? I think VCs already have a pretty good reputation for being arrogant. And I think there's plenty of US technologists and VCs at the moment who are diving the headfirst into politics. Like the reality is I can talk to you or your audience about technology, building companies, entrepreneurship, but I'm not an expert in how to manage a healthcare system or prison reform or like social care systems. And realistically, we are a small element that tries its best to have a big impact.

45:39But there's still so many parts that politicians have to juggle and manage that are far beyond my pagan grade. I think technology and science is incredibly important for furthering everything. But investment in it does not guarantee it comes from your country, your constituency, and you have to take a global view to it. And that's why I think it's hard for politicians. So I prefer to argue kind of how to build kind of something bigger. I think as a politician, I think that would be hard for me to do. And so it doesn't attract me to jump into politics. If politicians want advice, I'll always give it.

46:12But that's because I like to talk. So yeah. So you won't be able to easily pull me into running for office anytime soon, I don't think. I do definitely not want any VCs to run for office. I don't think that. That is not my mission. My mission, though, is to get the technologists that are backing the future and spending all their time thinking about what allows us to build a better future and what technologies do we need to bet on? How will they impact society? All these things. If we don't get into that conversation more as VCs, I think we're leaving a lot at the table. And I think that the US playbook that we've seen play out, definitely not one to copy.

46:54On the one hand, at least not their stances. I think actually their operational playbook is quite interesting. When we look at what they have been able to achieve in the tech ecosystem and power to affect their changes and what they think in their mind in policy is quite interesting. And I do think it's quite important. I do think one of our powers in Europe is that we are nuanced and we are also more humble. Even the braggy VCs we have are more humble than the non-bracky US VCs in many places, I think. So for that reason, I really think that your voice is incredibly important to get into those hallways more.

47:34Thank you, Andreas. That's exactly what my ego needs to hear. And I was about to say, I deliberately spoke for so long about this that you will not be able to replicate or to reciprocate. So well, now I just have to say thank you so much for taking the time and going a minute over time with me. That's good. Andreas, thank you for the time as always. And thank you everyone for listening. Before you go, I just want to give a massive shout out to the partners who made the EUVC Summit and awards possible. So please do not tune out. We're partnered with these firms because they're great people with offerings that we know from our friends in the ecosystem are truly world-class.

48:10First up, I want to give a big thanks to HSBC Innovation Banking. They helped us incept the awards in the very beginning. and truly they are the leading bank for anyone in European venture. There's a reason why everyone knows them. Google Cloud, they were our venue hosted the summit. What a team, what a big effort they put on to help us. We're hugely grateful. Make sure to reach out to Arabella or Oksana at the Google Cloud team to hear how they can help you as well as your portfolio. Massive credits goes to them. Ace Alternatives, we have so many friends in the Berlin ecosystem partnered with these guys.

48:45just the best fund ops team around. And as with any good restaurant, where the locals are is also where you get the best service. And now they're expanding across Europe, so they're definitely someone to talk to. Hainspoon, they're longtime partners of ours in both our own legal work. They're great supporters of us here at EUEC, and I definitely think that they are one of the go-to legal teams to have in your corner. CW Communications, our dear friends who helped us secure CNBC, Bloomberg, Financial Times, and many more for this summer. It's a joy working with Dan and Kathy and the team. Fundcraft, Digital Native, Full Suite, Lux Headquarter, and a great partner as you grow your firm out of Luxembourg.

49:26Definitely a fund admin to consider in your stack. I can only say that the team are incredible to work with. I'm very thankful that I've gotten to know them. I think they're one of the up-and-coming fund admins that you want to be thinking about. Portfolio IQ by Synaptic. You may know them for the Discover tool, which is branded on a Synaptic, but Portfolio IQ is absolutely a product you should know because there's no one that understands intelligence better than this team. And finally, Goodwin. They are a truly world-class legal partner you can trust. They're hands-on, business-oriented, and expert in everything and anything transatlantic.

50:03So those were our partners for the summit and awards. I know this This might have been a bit long and boring, but really, if you have these guys on your side, I don't think your firm could be in any better hands. And also they're helping us do what we're doing every day for you.