Philippa Kaur

IF YOU WANT to understand how Asia’s view of the world order has changed, consider the remarks of Lee Hsien Loong, Singapore’s prime minister. Asked recently if China was rising and the United States was declining, he replied in a qualified way: “If you take a long view, you really have to bet on America recovering from whatever things it does to itself.” Across the region firms and politicians are adapting to a new geopolitical reality, as was evident at the Bloomberg New Economy Forum in Singapore last week.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

JUST TWO companies, Vista Outdoor and Olin Corp, meet the bulk of America’s demand for ammunition, and chiefly through two long-established brands. Remington, part of Vista, was founded in 1816, and Winchester Ammunition, owned by Olin Corp, started in 1866. Because of soaring demand for bullets, both firms are enjoying the sort of heady growth that only new businesses usually enjoy.Three times a day, queues of pick-up trucks appear outside Remington’s ammunition plant on the outskirts of Little Rock, Arkansas, to bear away the fruits of round-the-clock shifts. It is a sharp reversal from last summer, when Remington went bankrupt for the second time since 2018. Production had been reduced to a trickle of bullets made from whatever raw materials could be coaxed from suppliers, who had no certainty of being paid.Even as Remington languished—it was then owned by a private-equity firm, Cerberus Capital, which appeared more focused on complex financial transactions than on expanding the firm’s sales—the ammo market took off. The biggest factor was covid-19 and associated restrictions, which encouraged millions of people outdoors to hunt and target-shoot. Background checks on gun purchases, a measure commonly used to track the market, had been increasing annually, but last year they shot up by an unprecedented 40%.Remington has been able to increase prices seven times. It has unfilled orders worth billions of dollars. Retailers of ammunition surveyed by the National Shooting Sports Foundation (NSSF), a trade group, said they could have sold three times more ammunition during the first half of 2021 had it been available. Vista, Remington’s new parent, has infused working capital and increased the size of its workforce. The unit’s operating profits this year are expected to be similar to the $81m that Vista paid for the business. As for Winchester Ammunition, its revenues for the third quarter nearly doubled year on year, to $400m, and its gross operating profits nearly quadrupled.The ammunition and gun industries pray the good times will last. In the past demand surges came when gun-owners—mostly white and male—feared new restrictions. Now it is about new demographic groups. A survey by the NSSF shows that the proportion of recreational shooters who are female has increased from 19% to 25% between 2006 and 2019. By now 28% of gun owners are Hispanic, 25% are black and 19% are Asian. Gun clubs are springing up for every niche. The Pink Pistols, for example, a shooting and social group for sexual minorities, has 48 chapters across America. Its motto: “Pick on someone your own calibre”.Political opposition to firearms remains strong, causing businesses to shift operations of late to places that might be a tad friendlier. Remington’s licensed firearms division is moving from New York to Georgia, where gun laws are more permissive, and Smith & Wesson, another legendary brand, has recently said it will up sticks from Massachusetts to Tennessee. But customers for guns and ammo seem to be popping up everywhere.■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Business section of the print edition under the headline “Reloaded” More

IN THE NOT-SO-DISTANT past, bosses did not have to worry as much about their workforces. Newcomers could absorb the corporate culture osmotically. Workers’ families were invisible, not constantly interrupting Zoom calls. Employees had a job, not a voice. Now firms have to “be intentional” (management-speak for thinking) about everything from the point of the office to how staff communicate with each other. Retention is the latest area to require attention.The spike in staff departures known as the Great Resignation is centred on America: a record 3% of the workforce there quit their jobs in September. But employees in other places are also footloose. Resignations explain why job-to-job moves in Britain reached a record high in the third quarter of this year.Some of the churn is transitory. It was hard to act on pent-up job dissatisfaction while economies were in free fall, so there is a post-pandemic backlog of job switches to clear. And more quitting now is not the same as sustained job-hopping later. As Melissa Swift of Mercer, a consultancy, notes, white-collar workers in search of higher purpose will choose a new employer carefully and stay longer.But there is also reason to believe that higher rates of churn are here to stay. The prevalence of remote working means that more roles are plausible options for more jobseekers. And the pandemic has driven home the precariousness of life at the bottom of the income ladder. Resignation rates are highest in industries, like hospitality, that are full of low-wage workers who have lots of potentially risky face-to-face contact with colleagues and customers.One conventional solution—identifying a few star performers and bunging them extra money—is not a retention strategy if large chunks of the workforce are thinking differently about their jobs. What should managers be doing?First, they should systematically gauge the retention risk that their firm faces. Working out what has driven people to quit is too late; rather than exit interviews, forward-thinking firms conduct “stay interviews” to find out what keeps employees. Focusing on teams cut back during the pandemic is another tactic: burnout rates are likely to be higher in departments that took lay-offs. Understanding a firm’s vulnerability to other employers is also key. When behemoths like Amazon or Walmart raise wages or add perks, the effects ripple beyond retailing.Second, managers need to pull different levers to retain different types of people. Salaries matter to everyone but for lower-wage workers in particular, benefits like health care have also become central. A recent survey of young Americans by Jefferies, an investment bank, found that health concerns were the prime reason why people with only a high-school education had quit their jobs.It’s a similar story for flexible working. For white-collar types the split between office and home is what counts. For blue-collar workers, single parents especially, scheduling matters—when their shifts start and end, and how much leeway they have to manage their time.Firms also need to think harder about the career paths that entry-level employees can take. In a recent survey of large firms conducted by the Institute for Corporate Productivity, a research outfit, a majority admitted they did not have adequate data about the skills of their workers, making it harder to spot talent. A quarter reckoned that LinkedIn knew more about their workforce’s capabilities than their own firms did.Third, managers should plan for how to find new workers. Remote working makes it easier to lose people but also to bring freelancers on board quickly. Qualification demands can be relaxed. In recent years IBM has removed the requirement for undergraduate degrees from over half of its American job openings. And there is no better time for firms to take aim at dim-witted regulation. In response to a shortage of lorry drivers, Britain’s government has decided to combine separate tests for driving rigid and articulated lorries into one.The Great Resignation should also prompt a question that rarely gets asked—exactly what level of churn is right? It is more expensive to hire new employees than to keep current ones. Yet by that logic, companies would never want anyone to quit. The mix of old and new is what matters. Existing hands provide cultural ballast; joiners bring fresh skills and perspectives. Keeping good employees happy is vital. But people are like water: there is such a thing as too much retention.This article appeared in the Business section of the print edition under the headline “Managing the Great Resignation” More

ITALIAN HIGH finance usually starts winding down for the year in the first week of December when Milan, the country’s business capital, celebrates Ambrose, its patron saint. Not so this year. Over the weekend a new dossier dropped into the in-tray of Mario Draghi, the prime minister, that will keep him and bankers busy into the new year.On November 21st KKR, a New York-based private-equity firm, launched a €10.8bn ($12bn) bid to buy Telecom Italia (TIM), Italy’s biggest telecoms operator. The friendly bid would be the biggest private-equity buyout ever in Europe. It needs both the approval of the firm’s board members and of the government, which can veto a takeover of a national champion.Shares in TIM gained 30% after the announcement, but Vivendi, TIM’s largest shareholder, threw a spanner in the works, saying it had no intention to sell its 24% stake. The French media firm says the offer is too low. That is a more than usually moot point. The cash offer gives an enterprise value (including debt) of €33.2bn, and represents a 46% premium on the closing price before KKR bid. But the €0.50 per share KKR could offer is only about half of what Vivendi spent, on average, when it bought its first stake in mid-2015.TIM has been in terrible shape for years. Its shares had fallen by 70% since Vivendi bought in; under its current boss, Luigi Gubitosi (pictured) it has issued two profit warnings since July. KKR could take control of TIM without Vivendi’s shares by buying at least 51% of shares. Yet the two big shareholders would have to agree broadly what is needed to overhaul TIM as KKR needs a two-thirds majority of shareholder votes if it is to perform radical surgery.TIM’s problems date back to 1999 when a leveraged buyout by Roberto Colaninno, boss of Olivetti, a smaller telecoms firm, saddled the company with huge debts. After that it was unable to invest enough in its infrastructure to eventually fend off foreign entrants Wind, Iliad and Vodafone. At home Telecom Italia is notorious for political interference, bad governance and squabbling shareholders. As if that were not enough, its workforce is bloated, with around 50,000 employees in Italy.KKR wants to spin off the firm’s infrastructure business from its services business. The hope is that a separation would give more focus to each unit and allow each to claim the right amount of investment. Analysts expect KKR to move the infrastructure unit into a separate holding firm where it will be the majority investor. Cassa Depositi e Prestiti, Italy’s state development bank, which owns 10% of TIM, is expected to remain a minority investor, letting the Italian state keep a hand in a strategic sector.Mr Draghi is widely believed to favour the deal. Yet he would not welcome a fight between KKR and Vivendi, which is controlled by Vincent Bolloré, a French corporate raider. Such a scrap could boost populist rivals. Matteo Salvini, leader of the far-right Northern League party which is part of the coalition government, is calling for TIM’s management to be changed, to block a takeover.■This article appeared in the Business section of the print edition under the headline “Tim’s troubles” More

IF YOU WANT to understand how Asia’s view of the world order has changed, consider the remarks of Lee Hsien Loong, Singapore’s prime minister. Asked recently if China was rising and the United States was declining, he replied in a qualified way: “If you take a long view, you really have to bet on America recovering from whatever things it does to itself.” Across the region firms and politicians are adapting to a new geopolitical reality, as was evident at the Bloomberg New Economy Forum in Singapore last week.Designed to be more useful than Davos, less Utopian than COP26 and less wooden than China’s Boao forum, the summit convenes some of the figures who built Sino-American links over the past decades, and bosses and investors responsible for over $20trn of market value. Amid hygienically controlled flesh-pressing, and relentless nasal swabbing, you could get a sense of the tensions between the world’s two biggest economies. It was clear that calls to divide them into two camps are wildly unrealistic.Asia matters because of its size, with 36% of the world’s GDP, 31% of its stockmarket capitalisation, and 11% of the sales of S&P 500 firms. The region is likely to grow faster than the rest of the world. It is also where the struggle between America and China is played out overtly, with the two systems competing side by side. China dominates trade. Of the 20 major Asian economies, 15 have China as their largest goods-trading partner. Yet most countries also rely on America. In many cases it is their defence partner and the dollar is the currency in which most Asian trade and capital flows take place (in contrast to Europe, which has the euro).The region’s balancing act has got harder as America and China have turned inward, partly in response to the perceived shortcomings of freewheeling global capitalism. A widely held view is that America’s system of government has been permanently impaired by cronyism and populism. As a result its promises are taken less seriously. Gina Raimondo, the commerce secretary, said America would launch a new Asian economic “framework” in 2022 (it has not joined CPTPP, a regional free-trade deal). Her proposal was greeted only politely, given the Biden administration’s protectionism and the risk that Donald Trump wins the election in 2024.China has also become unpredictable. Most executives and officials are sanguine about the crisis at Evergrande, a property firm. They believe that China’s technocrats are in control and can avoid a systemic financial crisis. Many sympathise with China’s antitrust crackdown on big tech. But there is deep unease at Xi Jinping’s totalitarian impulses and his broader assault on business. Whereas before, well-connected foreigners would have been given reassurances by China’s economic reformers in private meetings, now they have to make do with stilted video calls monitored by the Communist Party. Ties are fraying even within companies. One founder of an Asian firm with a Chinese parent company has not met the owners for two years. Few expect China to reopen its borders until after the Party Congress in late 2022, and even then only if the population has been re-jabbed with better vaccines.One response to estrangement is separation. America’s Trumpian right and progressive left would like their country to be more self-sufficient, while Mr Xi’s “dual-circulation” campaign is aimed at producing more goods at home. There are some signs on the ground of Asia’s investment patterns shifting and becoming less centred on greater China. India’s biggest business, Tata Group, is investing in electric vehicles and battery production at home. On November 9th TSMC, the world’s largest semiconductor company, said it would build a new plant in Japan in co-operation with Sony. Most banks are wary of expanding in turbulent Hong Kong.But the overall picture is still one of intense interdependency. China has 75% of global battery manufacturing capacity. Even after its new investments, TSMC will have over 80% of its plant in Taiwan, which China claims as its territory. The impossibility of Asia decoupling from China is brought home by a tech boss who reckons 80% of goods sold on South-East Asia’s booming e-commerce platforms are from the Middle Kingdom. Were multinational firms to spend as they are today, they would need 16 years to replace the cumulative stock of cross-border investment in Asia. Even if they could, few firms want to exit China’s economy.As you might expect, most firms want to be geopolitical hybrids that hedge their bets. Singapore’s firms lead the way. DBS Bank has a third of its deposits in dollars and is expanding in India and China. Temasek and GIC, two sovereign-wealth funds, have about a third of their combined assets in America and a fifth in China. SGX, the exchange, is integrated with Western markets but makes a fifth or so of its business from Chinese investors. American and Chinese firms are adopting Singapore-style dexterity. TikTok, an app owned by ByteDance, a Chinese firm, has an army of staff in Singapore: the idea is to show that it is independent of the Chinese state. Jamie Dimon, the boss of JPMorgan Chase, has just visited Hong Kong and said he was “not swayed by geopolitical winds”: the bank has boosted its exposure to greater China by 9% since 2019, to $26.5bn. On November 24th he apologised for joking that the bank would outlast the Chinese Communist Party.Testing timesIf the worst relations between China and America for decades have not prompted decoupling in Asia, what might? The confrontation could yet escalate but both sides seem keen to avoid that for now. Wang Qishan, China’s vice-president, declared that “isolation leads to backwardness”. Regulatory and technological shifts could eventually end American dominance in finance and drag Asia more firmly into China’s orbit. One boss reckons the opening of China’s capital markets will ultimately be as consequential in finance as its membership of the World Trade Organisation in 2001 was for trade. But for now investors and firms—and Singaporean prime ministers—face years of carefully straddling the divide.■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Business section of the print edition under the headline “In the flesh” More

THE ECONOMIC development of Vietnam now has a permanent monument in one of the world’s most prestigious seats of learning. After a $207m investment announced early this month by Sovico, a Vietnamese holding firm, the University of Oxford’s Linacre College (for graduate students) is set to be renamed after Nguyen Thi Phuong Thao, its chairwoman.Thao College is a marker of a significant shift. As recently as 2012 Vietnam was a land without dollar billionaires. Today six are thought to have joined the club, according to Forbes, a magazine. A surging stockmarket means the list is likely to get longer. Whereas American and Chinese billionaires are in the cross-hairs from their respective governments, Vietnam’s wealthy entrepreneurs are the beneficiaries of the authorities’ ambition to foster internationally competitive national champions.Top of the list is Pham Nhat Vuong, founder of Vingroup, a sprawling conglomerate—and the first to enter the billionaires’ club, in 2013. It is hard to find parts of the domestic-services sector that Vingroup has not touched, from tourism to hospitals, from pharmacies to education to car-making. It vies with Vinhomes, the property arm it spun off in 2018, as Vietnam’s largest private firm by market capitalisation. Each is worth a little over $15bn, a scale that could admit an American firm to the S&P 500 index.Mr Vuong has since been joined by more tycoons, including Ms Thao. Masan Group, a consumer-focused conglomerate, and Techcombank, one of the country’s largest lenders, have close links through their founders, Nguyen Dang Quang and Ho Hung Anh. All four share a curious start to their entrepreneurial stories: they originally launched commercial ventures in the former Soviet Union.The Soviet link is a function of Vietnam’s modern economic and political history. In 1985 Vietnam had a GDP per person of around $500 in today’s dollars, one of the lowest in the world at the time. Until the collapse of the Soviet bloc, bright and politically connected students in Vietnam gained opportunities to study in Russia and its various satellites; in 1980 around 3,000 did so, alongside youngsters from other communist-run places.Those who found themselves in the region in the late 1980s and early 1990s uncovered more opportunities for profit than in Vietnam. Mr Vuong launched a brand of instant noodles, Mivina, which became a domestic staple in Ukraine. Ms Thao made her first million dollars at university in Moscow, importing office equipment and consumer items from East Asia.Later, as Vietnam’s development continued, they were some of the few citizens outside the country with starter fortunes to invest at home. The government welcomed back this so-called “patriotic capital,” according to Bill Hayton, author of a book on the country’s rapid rise. “They were getting bigger at the time the party state needed them, so it became a sort of symbiotic relationship,” he says.In recent years the state’s relationship with the tycoons has grown even closer. Nguyen Xuan Phuc, the prime minister, spoke recently of Vietnam’s need to produce internationally competitive business giants to continue its rapid growth. That friendly attitude can translate into an easy ride; such unofficial government assistance is particularly handy for gaining use rights to prime plots of land, which—as in mainland China and Hong Kong—is technically owned wholly by the state. While most of the firms led by the billionaires cater to Vietnam’s middle class, much of their wealth comes from property and banking, according to research by Nguyen Xuan Thanh of Fulbright University Vietnam.Finance and property are the typical domains of oligarchs across the world: operating in a one-party state in such industries requires permissions, licences and close political relationships.While useful in its own right, diversifying beyond areas that benefit from political patronage can serve as a signal to sponsors that they are backing exciting entrepreneurs. Outside investment brings a further sheen of credibility. This month SK Group, one of South Korea’s largest conglomerates, announced a $340m investment in Masan Group’s consumer-retail arm. That follows a $400m investment from Alibaba, a Chinese e-commerce giant, earlier this year. SK Group also owns 6% of Vingroup.Former oligarchs who stuck to the old-school playbook of banking and property have not felt the warm glow of state support consistently. Nguyen Duc Kien, founder of Asia Commercial Bank, and Ha Van Tham, chairman of OceanBank, were given lengthy prison sentences for corruption in 2014 and 2017 respectively. Mr. Tham’s deputy was sentenced to death at the same time. As the experience of many oligarchs both in Vietnam and around the world shows, being in government’s good books can be a tremendous advantage but also carries risks. For the current crop, their reputation as valuable entrepreneurs and innovators will be key to remaining in the state’s good graces.■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Business section of the print edition under the headline “Back from the USSR” More

APPLE’S PURPOSE has always been to empower the users of its wares. “People are inherently creative. They will use tools in ways the toolmakers never thought possible,” once opined Steve Jobs, the computer maker’s late co-founder. So it was always odd that the firm went to great lengths to stop customers fixing its products. Repair manuals were kept secret; genuine replacement parts were hard to come by; and, most recently, replacing the screen of the latest iPhone disabled the gadget’s facial-recognition feature.No longer. In a series of moves that surprised many, Apple earlier this month promised a software fix to make the new iPhone model more repairable, and on November 17th announced that it will allow individuals to mend their devices and provide manuals, tools and parts. Even its critics applauded, especially the leaders of a growing global “right-to-repair” movement including Kyle Wiens, the boss of iFixit, a website that sells parts and publishes free repair guides.Yet the likely impact of the “Self Service Repair” programme is unclear. A new online store will open from early next year. Owners who return used parts for recycling will get credit toward a purchase. Independent repair shops can join in, without signing onerous agreements with Apple. And, crucially, repairs by individuals will no longer void the warranty (damage done while tinkering is not covered).But the toolmaker is ceding less ground than first appears. Apple’s replacement parts, like its premium devices, cost a pretty penny. A new screen for the iPhone 12 is priced at $268. Nor is it clear to what extent Apple will make its devices easier to repair. Because even swapping a battery requires removing the easily breakable screen, not many will try this at home.Still, if Apple went further, its repair programme could become a model for the smartphone and, perhaps, the wider electronics industry. Even its current form will push rival device-makers to follow suit. “When it comes to repairs, Samsung Electronics is doing even worse than Apple,” says Mr Wiens. Apple’s move, he adds, has in one fell swoop given the lie to many arguments that electronics firms use against making gadgets easier to repair, such as that people might hurt themselves.Apple has also managed to get ahead of the regulatory trend, says Nabil Nasr of the Rochester Institute of Technology, who is working on a study for the Group of Seven (G7) wealthiest democracies about the life cycle of consumer-electronics products. Regulators, he explains, are tackling the problem of e-waste—it may soon become difficult for firms to comply with all the mandates. In America, for instance, legislatures in 27 states are now discussing right-to-repair bills. The European Union is also moving towards passing such rules.Apple-watchers wonder if the firm will try the same strategy elsewhere in its business. It could make pre-emptive concessions, for example, in the heated controversy about how it governs the app store on the iPhone. On November 9th a federal judge in California denied Apple’s request to stay part of a recent ruling. This requires it by December 9th to allow app developers to inform their users how they can pay them directly and avoid Apple’s fees of up to 30% of the purchase price. Perhaps Apple might loosen up there, too.■This article appeared in the Business section of the print edition under the headline “iMac, iPhone, iRepair” More

THE IDEA of a Europe hostile to entrepreneurs would once have seemed laughable. At its 17th-century peak the Dutch East India Company’s appetite for capital to fuel its growth was so voracious that it demanded the invention of the public stockmarket. Investors then did not balk at its violent treatment of native peoples. The turn of the 20th century saw the founding of giants like L’Oréal, today’s highest-earning beauty empire, and Denmark’s AP Moller Maersk, the largest container-shipping line. Most of Germany’s Mittelstand firms, employers of more than half of all the country’s workers, were born at the same time.That a continent shattered by two world wars produced far fewer businesses destined for high growth in the second half of the 20th century is perhaps unsurprising. But Europe never recovered its appetite for high-growth business creation. In the past three decades, America has spawned four behemoths—Google, Amazon, Tesla and Facebook, now known as Meta—whose valuations have topped $1trn. (Meta’s has since fallen back below this threshold.) Not one of Europe’s corporate youths, meanwhile, has risen as high as $100bn. One champion of the 2000s, Skype, was in 2011 bought for $8.5bn by Microsoft. The other, Spotify, is today worth only $48bn. SAP, the closest thing the continent has to a tech giant, was founded three years before Microsoft and is worth less than a fifteenth of it.Yet change is in the air. The European firms founded in the decade after the global financial crisis of 2007-09 are coming of age much more impressively than their older cousins. Venture capitalists, who want to sniff out the next Google while it is still being run from the founders’ kitchen tables, are homing in on European startups. There are many more to choose from. European entrepreneurs who would once have gone west to start a business are now likely to start up at home rather than in Silicon Valley.A new influx of capital is proof of an altered mood. Ten years ago, European firms grabbed less than a tenth of all venture capital (VC) money invested globally, though the European Union’s share of global GDP was a little over a fifth. This year has seen dealmaking volumes soar in many regions, but particularly in Europe, which now attracts around 18% of global VC funding, according to Dealroom, a data provider (see chart 1). All the cash has pumped up the value of European startups. The continent now boasts 65 “unicorn cities”, or those which have produced a privately-held startup worth more than $1bn. That is more than any other region.The continent’s previous paucity of funding was not for lack of returns. Measured by total value (cash returned to investors plus current portfolio value) as a multiple of capital risked, the average European VC fund founded in the past two decades has not fared materially worse than the average American one (see chart 2). Nevertheless, American venture capitalists have long thought of Europe as “a place to take their families on summer holiday not somewhere to start a business,” says Danny Rimer of Index Ventures, a VC firm headquartered in San Francisco and London.Now they are voting with their feet. Sequoia, an American firm that was an early backer of Apple, Google, WhatsApp and YouTube, announced last year that it would open their first European office in London, and started recruiting local partners. Among native investment houses, the muttering is about when, not if, other American VC outfits will follow.Venture capitalists are chasing a generation of startups that has benefited from the trail blazed by their predecessors. The likes of Skype and Spotify may not have reached the dizzying valuations of their American peers, but they showed would-be entrepreneurs that it was possible to start a successful tech company in Europe and scale it at speed, explains Michael Moritz of Sequoia. Now, says Mr Moritz, “it’s no longer frowned upon if you’re young and bright to leave university and join a tech company, or to drop out and found one.” They also provided startups with a pool of potential employees and board members with prior experience of working for fast-growing, innovative companies.The combination of seasoned executives and access to experienced talent has fuelled the growth of a cluster of European firms founded after the ructions of the financial crisis that are now reaching maturity. More importantly, notes Hussein Kanji of Hoxton Ventures, another VC firm, they include companies starting to dominate their respective niches. The huge new category of social media was won by Facebook, he notes. “Now Spotify is the winner in music streaming, Klarna is the winner in buy-now-pay-later and UiPath is the winner in robotic process automation—they’re all European,” he says. With returns in the world of tech flowing disproportionately to the firms in first place, that makes Europe too attractive a prospect for global investors to ignore.The boom extends far beyond a few of the largest firms. For Xavier Niel, a billionaire French tech founder-turned-investor, repeat founders in Europe are the key. They are launching new waves of companies, he says, meaning “more entrepreneurs, more talent, more capital, more success, it’s a flywheel in progress”. Rachel Delacour sold her first business, BIME Analytics, a business analytics platform, in 2015 for $45m, six years after co-founding it in Montpellier. She started Sweep, which helps companies track carbon emissions, last year. “Now that I’m starting this second business, I know right from the off that it can be a global story”, says Ms Delacour.It also helps that Europeans working for early-stage companies are becoming owners. A recent analysis by Index Ventures of 350 European startups found that 15-17% of firms on average is owned by its employees. That is up from 10% five years ago, although it is still below the comparable figure of 20-23% for American startups. Workers’ increased willingness to be part-remunerated with stock options makes it easier for startups to compete with deeper-pocketed firms for talent, says Mr Rimer.Technological trends have also been driving costs down and enabling would-be founders to get their firms off the ground at home in Europe rather leaving for California. Starting an internet business used to involve buying banks of servers and the space to store them. The advent of cloud computing means firms can instead rent processing power from hyperscale clouds like Amazon Web Services and smaller offices. The pandemic has forced fund managers to accept doing due diligence and deals over Zoom. That lowers the importance of geographical proximity.Two big questions hover over Europe’s entrepreneurial renaissance. The first is the extent to which the capital being poured into it is simply spillover from the liquidity that has flooded markets since the onset of the pandemic. Since the start of the pandemic, the world’s four largest central banks have collectively pumped more than $9trn-worth of cash into the global financial system, driving down bond yields. That has sent investors into ever-riskier asset classes in pursuit of returns. Early-stage equity investment in a previously calcified continent is a prime candidate. As central banks dial back their asset-purchase programmes, the yields on safer assets will start to look less anaemic, putting Europe’s ample VC funding at risk.Another important question is whether the boom results in Europe building its own, American-style tech behemoths, or simply a cluster of middling firms that are gobbled up by larger, possibly non-European acquirers. That, in turn, will determine whether the continent’s entrepreneurial moment flares out or ignites something bigger. Governments have devised schemes to catalyse business creation for decades, but the answer turns out to be simple. “There is nothing that beats examples of success to inspire confidence in people,” says Mr Moritz. It is up to today’s European giants-in-waiting to decide how much inspiration to provide. More