Paris Is No Silicon Valley—Yet

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Closely affiliated with the Skype duo are Danny and Neil Rimer of Index Ventures. Based in London and Switzerland, the Rimers have led Index to become some of the most successful investors in the emerging Web, backing hot European deals that a few years back even the Silicon Valley elite wouldn't touch. Thanks to successes at Skype, MySQL, Last FM, and others, Index is going to have one of the best-performing portfolios of this era. Other investors are paying attention. Increasingly, Silicon Valley firms that once considered Europe a fly-over continent are co-investing with Index whenever they can. Some are even setting up shop in London.

Krim's Rising Star

Another entrepreneur to watch is Tariq Krim, of the hot London- and Paris-based startup Netvibes, a site that pulls together your favorite blogs, social networks, and Web sites into a personal portal or dashboard. It, too, is an Index company, and has gotten funding from Valley heavyweights Andreessen and Accel Partners. Netvibes received international attention early on, and Krim has become a poster child for emerging entrepreneurialism on the stodgy continent. Arrington dubbed him "the French Kevin Rose," and last year the Economist called Krim "a paragon of Europe's new generation of Internet entrepreneurs."

Krim is learning from the masters, traveling to San Francisco several times a year and cultivating ties with such kingmakers as Andreessen. Among his takeaways: giving employees more stock than they ask for. It will help build a talent base he can tap for this company—or the next one he starts—and employees who own part of the company will work harder and be more loyal.

Few Precedents

One of the most interesting people I met at the conference is approaching the cultural problem from a completely different angle. Yoav Andrew Leitersdorf has co-founded a firm called YL Ventures that is very different from Index. Instead of trying to build a European version of Sequoia, with its eye to investing over the long haul, Leitersdorf has a very practical, smart strategy: Invest in companies that have a good idea, nurture them for about a year or so, and then sell them to big U.S. conglomerates for $25 million to $50 million. There's no pretense of changing the world, no plan for the big initial public offering. He's about taking ideas and turning them into acquirable assets quickly—and minting legions of high-tech European millionaires in the process.

It may seem greedy, if not anathema, to the venture capitalist intent on creating the next great Google or Microsoft (MSFT) of the world out of a garage. But, as Leitersdorf explains, it's necessary if Europe's startup culture is going to truly emerge. More mature startup markets take these smallish exits for granted. It's the backup plan to becoming the next huge public company. Entrepreneurs figure they can always sell for something.

But in Europe there's no such precedent. By building a base of smart techies and ambitious entrepreneurs who have made their first millions, a firm like YL Ventures is also helping to create that class of people who know they don't have to re-create Skype to get a financial reward for quitting their jobs and following their dream—a whole collection of young, optimistic serial Web entrepreneurs.

That's all Europe has ever really lacked. The money is there, and the U.S. has no lock on smart, educated people. Europe just needs that willingness to take risk, which any Valley-ite knows is grounded in that odd mixture of greed, optimism, and a belief you can change the world. And there's no reason those qualities have to be limited to the ugly Americans across the pond.

Sarah Lacy has been a business reporter for 10 years, most recently covering technology for BusinessWeek. Her book, Once You're Lucky, Twice You're Good: The Rebirth of Silicon Valley and the Rise of Web 2.0, will be published by Gotham Books in May, 2008. She is also Silicon Valley host of Yahoo Finance's Tech Ticker.