YEurope, Chaos and Innovation

Computers, rubble, cables, posters, video consoles, electronics, measuring machines, books, proximity sensors, a disco ball, and a lot of geeks. So delightfully chaotic. All of this is called Metalab, and I'm standing in the middle of it. You won't guess what is going on inside if you pass by it, but here it is, ten meters from Vienna's castle-like town hall. It is an inconspicuous basement, spanning five rooms; a hacker's paradise, financed partially by public funds. It's a self-run lab that strives to bring more technological innovation in a typically conservative Europe.

I'm in Vienna because my team is competing in YEurope, a seed funding contest created by Metalab's founder. It is the first contest of its kind in Europe and it boils down to finding the most promising tech startups. YEurope is a meeting place between talented young entrepreneurs and investors with experience and/or money. The best teams get funded for the first 3-5 months, in exchange for 2-10% of the stock of the new company. Not all companies turn to profit but statistically it is a win-win situation because even if one in ten of the funded companies becomes big in the future, the stock pays for the loses on the other nine companies and the investors even make a decent profit.

The rules, the format and even the application form are modeled after a US contest called YCombinator. YCombinator is such a big success that a few hundred highly intelligent people apply for it yearly. But they don't apply for the "measly" few thousands of dollars that are on the line, they apply because of the mentorship, support, and social networking opportunities they will get once they are among the winners.

In Europe risk and subsequent bankruptcy equates to failure, because the two-guys-in-a-garage way of starting a business is not considered viable. In the US on the other hand there is a real bootstrap culture that has brought us companies like Google and Microsoft. Funding in Europe is only available to well-established companies with a good track record. Twenty year-olds that get millions of dollars in funding based only on their idea and a mockup is something unheard of. Europe is lagging behind in innovation and the EU is just starting to feel worried about this. I'm not saying they should completely emulate the US way of bringing up innovation, but they should at least think of establishing a few "Metalabs" here and there.

(The text refers to Friday 15th of June 2007)