In December 2018, I was invited to be part of the Joint European Disruptive Initiative (JEDI). As discussed in a previous post in French, the Jedi organization aims at reproducing America’s DARPA (Defense Advanced Research Projects Agency) in Europe.
Today, according to André Loesekrug-Pietri, the founder of JEDI, Europe is “losing the technological battle”. As shown below, eight out of the 10 companies are American, the other two are Chinese. None of them are European nor French. This stands in stark contrast to the turn of the 20th century where most novel corporations in photography, Cinema, automobile, chemistry, cosmetics, were European or French. What’s also interesting in the graph is that seven of the 10 top organizations come from tech. Digital appears as the new paradigm for growth.
American and Chinese companies are courting European consumers
American and Chinese technology players are targeting European consumers in various industries including automobile, online information search, movies distribution and production, as well as retail. So it looks like European markets are battleground for American and Chinese technology companies. This is not a problem in itself but it does raise the issue of why the world’s largest commercial union has appeared unable to build global innovative leaders that could compete with their American and Chinese counterpart.
So why is Europe losing the technology battle?
Maybe it’s due to a lack of funding? As shown in the graph below, approximately half of all VC money invested in artificial intelligence originates from China ahead of the US and Europe.
This is all the more important considering that digital technology allows for ubiquitous distribution and therefore creates a “winner takes all” economy where the leader captures up to 90% of market share.
So this is why JEDI is so crucial for European prosperity and growth. It is not just another R&D program but rather attempts to restore European competitiveness in forward-looking industries.
So, how does JEDI make this happen?
JEDI is building a bridge between ground breaking disruptive research and venture capital. DARPA is successful in funding projects that seem too long term for VC money. In other words, DARPA is funding technology developments that may only pay out in 10 or 15 years. Europe also has a tradition of financing ambitious R&D programs. But, as André points out: “it’s not about the money, it’s the method, stupid!”
In fact, Europe’s horizon 2020 program has invested approximately $85 billion in innovation when DARPA has not invested more than $60 billion between 1958 and 2018. In other words, while DARPA is investing about $1 billion a year, Europe is an allocating whopping $14 billion a year. And yet, what does Europe have to show for it? Where is the equivalent of the Internet invention, the GPS, drones and Siri?
So how to make this work? It’s a question of failing fast, identifying priorities, allocating massive capital to global problems, and “think big!” Below is the investment process that JEDI is following :