“The US is the only place in the world where you can raise your first €100 million before buying your first suit.” 

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This bold statement by Larry Summers underscores the dominance of the United States in entrepreneurship, innovation and financial markets.

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The contrast between the US and Europe could not be clearer:

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All eight US companies valued above €1 trillion were created in the past 50 years.

In the same timeframe, Europe has not produced one single €100 billion company.

So why has the US surged ahead while Europe lags behind?

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US Stock Markets: Quality and Productivity in Action

Capital flows into US equity markets tell part of the story. 

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In 2024, US equity inflows hit $404.7 billion, while Europe experienced outflows of $52.5 billion. 

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Investors seem to be drawn to the depth and dynamism of US markets, which are supported by a robust ecosystem for entrepreneurship and technological innovation. 

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For example, there are more data centres in the USA than there are in all the other countries worldwide combined.

The S&P 500 exemplifies this confidence. Over time, the index has evolved with the times in its quality and composition:

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In 1980, 70% of the S&P 500 consisted of asset-heavy sectors like manufacturing and real estate.Today, 50% of the index is innovation-driven, featuring asset-light companies that rely on intellectual property, such as tech players.

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Additionally, S&P 500 companies have enjoyed increased productivity, with revenue per worker improving since 2020 thanks to the adoption of AI technologies. 

The Entrepreneurial Advantage

In my view, innovation thrives in the US because its ecosystem supports entrepreneurs at every stage. 

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Whether it is venture capital funding that allows companies to scale quickly or its collective culture of risk-taking, the US has built a financial system that is unmatched worldwide.

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In Europe, the story is different. 

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Despite arguably having brilliant talent and ideas, scaling up in Europe is far more challenging due to fragmented regulations and restrictive frameworks. 

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A startup trying to expand across Europe must navigate 27 different regulatory systems. In contrast, the US offers a unified market where entrepreneurs can scale quickly.

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Additionally, in the US, failure is not a career-ending event. 

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Mechanisms such as Chapter 11 bankruptcy allow entrepreneurs to reset and pivot if an idea fails, which fosters innovation. 

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Europe’s stigma around failure and its cumbersome bankruptcy laws discourage second chances. 

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It arguably also keeps talented entrepreneurs from taking calculated risks and, worse, from choosing entrepreneurship altogether.

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The Real Story Behind “US Exceptionalism”

While the US is often celebrated for its exceptionalism, some of its growth has been fueled by aggressive fiscal stimulus.

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Post-pandemic, the US injected nearly double the fiscal stimulus into its economy compared to Europe. 

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This primary deficit spending, i.e. government spending minus tax revenue, has helped it achieve nearly three times the GDP growth of Europe.

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However, this debt-fueled growth is both a strength and a vulnerability, especially if the monetary policy cycle turns and interest rates start to increase at some point.

Lessons for Europe

Europe has immense talent and resources, but it must address structural challenges if it wishes to retain its relevance on the global stage. 

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Here are six key action points to start with:

Simplify Starting a Business
A unified regulatory framework across the EU could significantly reduce bureaucracy in the same way that, for example, Schengen travel increased cross-border business.

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Embrace Failure
Adopt bankruptcy frameworks like Chapter 11 to help entrepreneurs rebuild without stigma. Failure should be seen as part of the learning process, not the end of a career.

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Improve Access to Capital
Create funding mechanisms that rival the ease of raising venture capital in the US. Simplify public listing processes and incentivize more investors to back startups.

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Reduce Overregulation
While regulation is necessary, more balance is needed to create a business-friendlier environment.

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Support Self-Employment
Provide tax incentives and private pension benefits for the self-employed, similar to those in the US, to encourage more individuals to pursue entrepreneurship as a career.

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Boost Financial Literacy
Empower people to understand investing, share ownership and entrepreneurship. Financial literacy isn’t just for the rich — it should be a key driver of economic participation and growth.

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Conclusion

The US continues to dominate global innovation and financial markets thanks to its culture of risk-taking, investment-friendly policies and a financial ecosystem that enables businesses to scale rapidly.

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I believe that Europe has the potential to compete, but only if it addresses the systemic barriers holding back its talent and innovation.

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The question remains: Will Europe wake up and create the conditions for its entrepreneurs to thrive, or will we continue to watch the US dominate the global stage? 

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The time for action is now.