Despite a large funding gap at the later stage, the state of technology investment in Europe is strong, according to Skype’s billionaire founder and the founder of the global venture capital firm Atomico, Niklas Zennstrom.

For Zennstrom, the explosion of entrepreneurial talent in cities like Paris, Lisbon, and really across Europe is a sign that Europe’s startup market is having a moment.

In terms of the total number of startups, Europe is roughly on par with the U.S., Zennstrom says. But where U.S. tech investment has outpaced its counterparts across the Atlantic is in later stage funding. There’s

There’s 14 times the amount of later stage capital committed in the U.S. versus Europe, says Zennstrom. And while the overhang of capital in the U.S. has led to the reinforcement of bad behavior when it comes to profligate spending, it’s also potentially limited the upside of European exits.

That cash gap would disappear if European pension funds would allocate just .6% more of their capital under management to venture investments, Zennstrom said.

Despite this lag of institutional capital, Zennstrom pointed to an explosion of startup companies getting increasingly more professional.

And even if pension funds aren’t waking up to the opportunity startups present, the large European corporations are seeing opportunities. In part, that’s because so many aspects of their businesses are being transformed by new technologies, Zennstrom says.

Technology entrepreneurship has become contagious and it’s spreading which is fantastic.

— Niklas Zennstrom, founder of Skype and the VC firm Atomico

“When I speak to CEOs and the people who are behind these companies, the families who own these companies… they think long term. They understand more and more [that] today that everything will become digitized,” says Zennstrom.

Increasingly, corporations are beginning to make direct investments and family offices are becoming more active as well.

That local activity is helping to drive the development of these startup ecosystems and hubs in places outside of the Berlin, London, Stockholm nexus that has formed the core of Europe’s venture industry for years.

“Technology entrepreneurship has become contagious and it’s spreading which is fantastic,” says Zennstrom.

Indeed, at this point, Paris has attracted more capital for its startup scene than Germany, according to Zennstrom.

Ultimately though, Zennstrom expects Brittania to continue to rule the roost when it comes to the European market — even with the looming challenges brought on by Brexit.

“I launched Skype in Sweden and I wanted to stay in Europe. Then I decided London is the best place in Euope to launch a global company. London is the global hub of Europe,” says Zennstrom.

The only risk to that title would be if the UK tightens its immigration policies for top talent.

“Whatever happens [the government] need to make sure that companies… tech companies… have access to the best talent in the world,” Zennstrom says.

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