A joint report by Boardwave and McKinsey & Company identifies five key interventions needed for Europe to transform its potential into global leadership in software at a critical moment for the sector.
Europe stands at a historic opportunity to position itself at the forefront of global technological innovation. This is the conclusion of the report titled “Europe’s Moonshot Moment: Scaling the European Tech Sector,” prepared by the software leaders’ network Boardwave in collaboration with McKinsey & Company, and presented today after analyzing the situation and outlook for the European tech sector based on over 100 interviews with industry leaders.
Europe: Maturity, but Facing Scaling Challenges
According to the study, the continent already has more than 280 software companies that exceed 100 million euros in annual recurring revenue (ARR), with prominent examples like Spotify, Revolut, Adyen, and Vinted. However, the pace of scaling remains slow: on average, it takes European companies 15 years to reach that figure, five years longer than their U.S. counterparts. Moreover, only about 3% to 5% of European firms that reach 100 million in ARR grow to the billion-euro threshold, compared to 10% in the United States.
Among the causes cited in the report are market fragmentation, the conservatism of many large corporations, and the lower availability of funding in advanced growth stages compared to the dynamism of early-stage investment.
All the Ingredients, But Lacking a Unified Vision
Despite these obstacles, the authors view the current context as the best opportunity in decades to make the leap: “Europe already has the essential elements to create the next generation of global software champions: talent, vibrant founder networks, and rapidly maturing capital,” states Ruben Schaubroeck, senior partner at McKinsey.
Additionally, tailwinds such as the rise of generative artificial intelligence, the emergence of digital sovereignty, the success of local success stories, and new policies supporting the ecosystem, including the recent Startup and Scaleup Strategy launched by the European Union, all contribute to this potential.
Five Priorities to Unlock Growth
The report identifies five key interventions to turn this potential into results:
- Expand late-stage funding (“scale-up”) to help companies grow from 30 to 100 million euros in ARR and beyond.
- Support ecosystems of serial founders by encouraging entrepreneurs with previous successes to launch new startups.
- Facilitate cross-border mobility of commercial and sales talent to accelerate international growth.
- Stimulate enterprise demand for European software through incentives and support for purchasing local solutions.
- Strengthen public-private partnerships to share risks and promote innovation in strategic technologies.
Critical Moment: From Fragmentation to Global Leadership
The study highlights that Europe is at a “genuine turning point”: the combination of talent, capital, and ambition has never been stronger. However, it warns that if rapid and coordinated action is not taken, the continent risks falling behind U.S. or Asian giants.
Phill Robinson, CEO and co-founder of Boardwave, sums it up: “We need to act as a single innovation ecosystem, not as 27 distinct ones. That is the key to this ‘moonshot moment’ for Europe. If we connect and act now, we can lead—not just in Europe, but globally.”
A Strategy for the New Generation of Digital Giants
The recently introduced EU Startup and Scaleup Strategy includes proposals such as the anticipated “28th regime,” which would allow companies to operate under a single set of rules across the 27 member states, simplifying taxes, employment, and insolvency. This measure aims to facilitate the growth of startups and scaleups without the administrative barriers that still burden the sector.
Robinson emphasizes: “If implemented boldly and swiftly, it can help Europe transition from fragmented success stories to systemic growth on a continental scale.”
Europe, Is It on the Verge of Its Golden Decade for Software?
The independent report, not commissioned by any organization or company, concludes with a call to action: the sector has all the ingredients to succeed, but the time to seize this opportunity is limited. The key now is to unite talent, capital, and strategic vision to make Europe the epicenter of the next wave of global technological innovation.