Solo, Male, With a Master’s: 75% of European Founders Go It Alone

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The typical European start-up has no garage and no founding team, just one man with a master’s degree. That is the picture painted by “Heartbeat,” a new report from the Berlin-based venture capital firm Cherry Ventures. The investors examined 10,000 European companies in their first 18 months, with 10,000 founders in 89 cities and more than €5 billion in capital raised. The sample includes both venture-backed and bootstrapped companies across all industries. These are the 10 most interesting findings.

1. Three in Four Found Alone

Of every 100 young companies, 75 have a single founder, 19 start with two and only 6 with three or more. “The ‘minimum viable company’ has shrunk,” Cherry Ventures writes. Still, this is a snapshot of the earliest phase, not a final team size. And capital changes the picture: Among companies without institutional money, 79 percent are solo founded, compared with only 46 percent among those that have closed a first funding round. A Vienna-based founder who reached $3 million in annual recurring revenue without a team or venture capital shows that going it alone can work.

2. Women Found Only One in 10 Start-Ups

Women make up 10.1 percent of founders. The share is lowest in A.I. applications, at 7.5 percent, and highest in health, at 16.6 percent. Cherry Ventures notes that the often-cited figure of 13 percent does not measure the share of female founders but their share of funding. A recent EY study also showed how wide the funding gap is: Almost 95 percent of start-up funding went to all-male teams.

3. The Master’s Beats the M.B.A.

Master’s degrees appear 4.3 times as often among founders as M.B.A.s. In deep tech, the gap is even wider: There, almost 10 doctorates come for every M.B.A. “Teams have not disappeared. They have retreated to the places where you still need a credential to begin,” the report says.

4. Co-Founders Meet at Work, Not at University

Those who do found as a team usually met their partners at work. A shared former employer is 3.2 times as common as a shared university (257 versus 80 pairs). The biggest founder factory is McKinsey, with seven pairs, followed by Cambridge, the Technical University of Munich, ETH Zurich and Imperial College London with five each, and Meta and Google with four each.

5. Only 7 Percent Went Through an Accelerator

Of the 10,000 founders, only 657 have been through an accelerator program, or 7 percent. Most of them come from Y Combinator (185), followed at a distance by Antler (58). That has consequences: According to the report, most start-ups only become visible through demo days and accelerator cohorts, so the majority stay under the radar for a long time.

6. Amsterdam and Zurich Are the Founder Capitals

Relative to population, nowhere produces as many founders as Amsterdam (34.5 founders per 100,000 residents) and Zurich (34.4). They are followed by Stockholm (28.3), Dublin (26.6) and Copenhagen (26.5). London comes in at only 18.0 but is the largest hub in absolute terms, accounting for about one in five company formations in Europe. The German hot spots trail further behind: Munich has 15.4 and Berlin 11.7. And Austria? Vienna ranks 15th of 89 cities with 102 recorded formations, 1.66 times the rate of an average European city. Vienna is strongest in A.I.-first software, which accounts for 27 percent of its new companies. Graz ranks only 71st with 14 formations, with consumer start-ups and conventional SaaS accounting for the largest shares, at 29 percent each.

7. A.I. Has Overtaken SaaS

A.I.-first software companies are now the largest category, at 22.5 percent, just ahead of conventional SaaS at 20.9 percent. They are followed by fintech (11.4 percent), consumer (11.3 percent) and health (9.3 percent). Despite record investment in defense, defense start-ups account for only 0.8 percent of all new companies, while climate and energy make up 3.1 percent.

8. Munich Is Europe’s Hardware Capital

749 companies, or 7.5 percent, build physical products, from robots and new materials to spacecraft. Nowhere is the share as high as in Munich, which forms hardware companies at more than twice the European average. It is followed by Zurich, Milan, Stockholm and Berlin, while London sits well below the average. Munich also forms about twice as many climate start-ups as a typical city, and Zurich more than twice as many in deep tech.

9. Europe Trains Silicon Valley

Of the founders examined in San Francisco, 72 percent were educated in Europe, mainly at Imperial College London, ETH Zurich, Cambridge, HEC Paris and Oxford. The difference in funding is huge: 56.4 percent of the start-ups in San Francisco have already raised capital, compared with only 11.2 percent in Europe. At 29 of the 44 funded companies in San Francisco, the amount is exactly the same: $126,225 (about €112,000). That is no coincidence: 17 of the 62 founders there with education records list Y Combinator.

10. A U.S. Degree Brings Twice the Money

The effect also works in the other direction: 86 of the people founding companies in Europe studied in the United States, at schools like Stanford, Berkeley or M.I.T., and a third of them are based in London. Their median first check, at $3.25 million (about €2.9 million), is twice as large as that of founders with a European degree ($1.63 million, about €1.45 million). They also start with larger teams, averaging 2.6 people instead of 1.78.

The Brain Drain Follows a Pattern

The figures from San Francisco show how the brain drain works: Europe pays for the education, and the capital and the company formation then come from the United States. Those who start in San Francisco are five times as likely to have already raised money as those in Europe.

It is not entirely a one-way street, however. According to Cherry Ventures, 86 people with U.S. degrees are also founding companies in Europe, a third of them in London. And the European Commission wants to use its start-up strategy, “Choose Europe to Start and Scale,” and a Europe-wide legal form called EU Inc to keep start-ups from moving abroad to grow.

How Cherry Ventures Counted

The data comes from Cherry Ventures’ own deal flow and was cross-checked against Crunchbase, Dealroom, Harmonic and Evertrace. Only companies no more than 18 months old with at most one institutional funding round were included. That limits the findings: Many solo founders are likely to bring in co-founders later, and companies that do not show up in a venture capitalist’s deal flow are missing from the statistics.