Could the coronavirus crisis — and the way different countries have responded — make Silicon Valley VCs more bullish on European startups? That’s the thesis put forward by Salman Ullah, co-founder and managing director of Merus Capital.
As COVID-19 spreads globally, he argues that countries with national healthcare — along with fiscal and monetary policies that balance the interests of citizens versus those of corporations — are better positioned to navigate the pandemic.
More broadly, investors prefer to invest in stable and resilient economies, and resilience depends on the ability of governments to respond to a crisis, let alone one on such an unprecedented scale. For investors, the strength of national infrastructure and political institutions in many European countries is a net positive — and a stark contrast to Trump’s U.S.
Germany, where Merus has already made several investments, is cited as an example of a European country that has become more attractive to Silicon Valley investors in recent years. Not only is the cost of starting up in Germany lower, but Ullah argues there’s been a “cultural shift” amongst young people who now view startups as a viable career path, while the coronavirus crisis — and the German government’s response — is making ecosystems such as Berlin and Munich even more attractive.
“Your dollar goes much further in Europe, rents are lower, everyone gets free healthcare, essentially,” says Ullah during a call. “And the level of education and expertise in computer science in particular is no better or worse than in the U.S. And I think the pandemic has just kind of reinforced that.”
In a time of such uncertainly and the economic shock that comes with that, Ullah notes that in European countries like Germany, citizens aren’t worried about the personal cost of healthcare. He also points to the way German finance minister Olaf Scholz has pledged unlimited credit for businesses affected by the pandemic alongside an expansion of its short-time work scheme, which gives support for companies that are forced to reduce working hours of their employees.
Written by Steve O’Hear
This news first appeared on https://techcrunch.com/2020/04/20/you-have-to-be-a-moron-to-think-libertarianism-is-real/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29 under the title “‘You have to be a moron to think libertarianism is real’”. Bolchha Nepal is not responsible or affiliated towards the opinion expressed in this news article.