It's most pronounced in new EU countries that get flooded with these funds.
That's wrong. There are four real reasons:
1) our pension systems are mostly government run and on a rolling scheme (i.e. payments from current workers fund current pensioners, in exchange for future-redeemable points). That means that there is a lot less of "dumb cash" lying around in pension funds that screams to be invested for decades... historically that cash used to be put into "safe bets" such as government bonds but their returns are at below-inflation rates, and the only thing that is "profitable" is spreading out the cash over either the big tech companies or small startups.
2) networking. Just look who's in the "angel investor" rounds: people, both founders and early employees who got lots of money in the dotcom era or in the IPOs of the last years - they are all concentrated in the SV area, and enjoy the benefits of close personal contact, and then of course there is YC and a couple of less known clones which come in later. We simply do not have such networks in Europe.
3) risk aversity. Europeans do not like risk, the most obvious example being us Germans who are notorious for being risk averse, so risk averse that our car companies, 12 years after Tesla hit the market, still believe they can make "clean ICE" cars (by investing in synth-fuel tech). A side effect of that is the infamous Wirecard scandal - they were hyped so hard by everyone including our Chancellor who went lobbying in China simply because they were the only company other than dinosaur SAP who were German, were in digital business, and had (on the paper...) good business numbers.
4) "rags to riches" mentality: us Europeans have generally decent social security networks, stable government funded education - basically, you don't have that mentality, starting with young people, to "always hustle" to survive. We live mostly generally comfortable lives, but we're not driven to exploit whatever and wherever we can, simply because we don't need to.
The end result: we don't have venture capital simply because there has been no need for it for decades, it's only a recent trend here.
https://www.calpers.ca.gov/page/investments/asset-classes/pr...
I don’t know where you’re located, but at least here in The Netherlands we seem to have a fairly healthy startup ecosystem, where grants seem to be more of an afterthought because there’s a fair amount of VC money or bootstrapped startups.
Again, I’m not claiming that our startup climate is anything like what your see in SV, but it’s definitely a fairly healthy scene, and it would be an insult to characterize these as grant chasers.
Mollie & Adyen have had success because of the walled garden iDeal payment system of the Dutch banks. Eindhoven was a very innovative region until Philips decided to move HQ.
Even Sweden produced more unicorns with a population size a 1/3 of the Netherlands.
Maybe you have had more luck with raising money but I experienced a lot of stupidity from private investors.
So I'd wonder how many funds are truly private. And for those that aren't I'd like to see if any bureaucracy gets pushed onto to the startups they fund.
Say EU-funded VCs, due to the special obligations they're under will often make startups comply with many of the same stuff. So even though a startup might not be a grant recipient themselves they will ultimately have to submit to that regime too.
https://venturebeat.com/2014/02/11/gameon-teams-with-dutch-g...
https://business.gov.nl/financing-your-business/funding-and-....
https://business.gov.nl/starting-your-business/launching-an-...
https://nlfunding.co/ provides a list of all VCs active in The Netherlands, and while a few obvious ones are working with EU grants, I have no reason to believe most of them do.
Regardless, my response was mostly to the “EU startups are grant chasers” comment, which I still believe is an unfair depiction.
Potato potato. Most "startups" in the US are nothing but VC money chasers and often lose billions of infinite investor money (looking at you, Uber) for indefinite periods of time. How is this different from grants other than it's "free" government money in one case and "free" VC money in the other?
When you get a grant you're subject to many rules. You usually have to submit a budget and money will only get disbursed in accordance with that plan. And there may be many limitations as to what the budget can contain in the first place. Say only X percent can go towards Y class of spending.
Your startup is doing poorly and you want to downsize? Well you can't because you budgeted for X people. Want to cut or increase salaries? You can't. I mean you could fire these people but you'd be forfeiting the funds. So people don't.
Then there's pressure. [Private] VC is an honor system. There are very few legal obligations but you're expected to perform. Your continued access to funds will mostly depend on how you're perceived by the VCs.
With grants you only need to follow legal requirements. No pressure to perform. The agencies only care about you following the rules. When applying for more money, again, you need to fulfill a bunch of requirements. There's not much of a reputation system. If you get denied but meet all the formal requirements you can often sue and win.
And since there's no dilution there's no limit to how many different grants you can take.