Hermann Hauser, co-founder of the prominent chip design firm Arm Holdings, presents himself as a pivotal figure in the technological evolution of Apple Inc. His partnership with former Apple Chief Executive Officer John Sculley in the early 1990s led to the development of the Arm processor, a groundbreaking chip design that has since powered a multitude of electronic devices globally. At the inception of Arm, Sculley’s investment of $1.5 million secured a 43% stake in the company, an investment that would yield Apple around $800 million as those shares were divested over time. In a retrospective interview with PC Mag, Sculley remarked that this financial maneuver was crucial for maintaining Apple’s operations until the return of Steve Jobs. Illustrating his belief in their impact, Hauser states, “We are responsible for the survival of Apple.”
Currently, Arm Holdings boasts a market capitalization of $136 billion. While the company went public on NASDAQ last year, it remains headquartered in the United Kingdom, representing the largest technology firm in the nation and positioning itself among Europe’s tech giants, trailing behind Dutch semiconductor leader ASML and German software titan SAP.
Having departed from Arm’s operations, Mr. Hauser founded Amadeus Capital Partners, a venture capital firm dedicated to nurturing European deep-tech startups. Despite the progress made in the European tech sector since his initial investments, Hauser emphasizes the ongoing necessity for fostering billion-dollar companies like Arm within the region. He identifies two primary barriers: funding and talent acquisition.
The financing challenges for startups, particularly in growth stages, are well-documented. A recent analysis by the European Investment Bank indicates that European scale-ups, averaging a decade of operation, raised less than $300 million, which stands in stark contrast to the nearly $500 million raised by similar companies in San Francisco. Nevertheless, Hauser argues that the scarcity of capital is compounded by the difficulties in attracting experienced management talent to oversee the growth of these startups.
“In Silicon Valley, one can approach a leader of a $500 million to $1 billion division from established companies like Apple or Google, inviting them to manage a new venture,” he explains. He notes that Europe lacks a culture where seasoned executives from billion-dollar organizations transition to startups or scale-ups. The absence of significant tech giants in Europe results in a leadership landscape less inclined to take such entrepreneurial risks, as successful European companies tend to be entrenched in traditional industries such as retail or pharmaceuticals.
Hauser posits that a robust culture of innovation can be cultivated through the retention of European tech companies, enabling greater support for management development within these firms. This, in turn, would enhance the regional pool of talent available to nurture emerging startups. Convincing promising tech companies to pursue public listing within Europe is paramount for creating this ecosystem. Despite UK government efforts to attract Arm’s IPO to the London Stock Exchange, the company chose NASDAQ for its public debut, a decision that Hauser attributes to the limited liquidity of European exchanges for a $55 billion offering.
However, he underscores that typical tech companies in Europe are more likely to go public within a few billion dollars—an amount well within the realm of European stock exchanges. Promoting the establishment of more tech companies in Europe is, according to Hauser, essential for developing a conducive environment capable of supporting enterprises throughout their lifecycle from inception to IPO.
While Europe is not yet in a virtuous cycle that fosters consistent funding for startups, Hauser insists that it is making substantial progress from where it stood a decade ago. He remarks, “We are behind, it is true, but we have had a very impressive growth path compared to 10 years ago. Therefore, I oppose the notion that we are stagnant.”
Looking forward, Hauser expresses optimism regarding the potential of recent European startups, such as the French AI firm Mistral, to achieve multi-billion-dollar exits. He anticipates that, should Mistral succeed, it would set a precedent for European tech IPOs, consequently inspiring a broader trend across the region’s emerging tech landscape.
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