Overcoming the European tech IPO challenge

Investment Rating - The report indicates a significant economic disadvantage for Europe in the tech IPO market compared to the US, suggesting a need for strategic improvements to enhance competitiveness and economic growth [2][4]. Core Insights - Europe has experienced a substantial economic loss due to tech companies opting for US listings, with a total capital raised through IPOs in the US being approximately 340 billion USD more than in Europe from 2015 to 2023 [7][9]. - The average market capitalization of tech IPOs in Europe is significantly lower than that in the US, with a ratio of 11.6 times higher for US tech IPOs [9][11]. - The fragmented nature of European capital markets is a key factor driving companies to list in the US, highlighting the need for a more unified and tech-focused exchange in Europe [2][58]. Summary by Sections Economic Disadvantage - Europe has a lower IPO market capitalization compared to the US, resulting from fewer listings and lower valuations at listing [2][4]. - The total market cap of tech companies at IPO in the US is 1,654 billion USD, while in Europe it is only 142 billion USD [11][9]. Venture Capital Landscape - Venture capital funding in Europe is underdeveloped, accounting for only 1.0% of GDP compared to 1.5% in the US [6]. - The report emphasizes that venture capital historically shows attractive long-term returns and is a key driver for economic growth [5]. IPO Market Performance - From 2015 to 2023, European tech IPOs raised significantly less capital than their US counterparts, with European companies raising only 22% of their total valuation through IPOs compared to 27% in the US [7][10]. - The average yearly tech IPO value in the US is substantially higher, with a peak valuation of 901 billion USD compared to 93 billion USD in Europe [10][11]. Market Fragmentation - The European stock market is characterized by a fragmented structure with 35 different exchanges, compared to only three major exchanges in the US [58]. - The lack of a centralized "European Tech company hub" contributes to the challenges faced by European companies in attracting international investors [58][61].