One of Europe’s leading tech investors today called on large enterprises on the Forbes 2000 list to start spending money on European tech startups in the same way that forward-thinking Silicon Valley tech firms are spending money on US startups.
Speaking at the annual Web Summit conference, Saul Klein, a partner at London-headquartered venture capital firm Index Ventures, claimed that companies on the Forbes 2000 list, which collectively spend over a trillion dollars a year on IT, aren’t adopting new technologies as willingly as the likes of Google and Facebook.
To support his case, he pointed to Apple and Facebook, which have partnered with San Francisco-headquartered startup Stripe recently, even though it is just four-years-old.
The payment integration platform, founded by Irish brothers John Collison and Patrick Collison, provides developers with a set of unified APIs and tools that enable businesses to accept and manage online payments.
Klein argued that Forbes 2000 companies, which includes the likes of JPMorgan, HSBC, Shell and Volkswagen, need to move away from investing in the big vendors, or "Big IT", if they want to be seen as innovative, adding that the average life span of a company on the S&P 500 Index is diminishing rapidly and the technology they’re choosing isn’t doing much to save them.
“Financial services spend a fortune on tech but when’s the last time you felt your bank was doing a better job of delivering a tech service than Google or Facebook or Amazon or Twitter,” said Klein in Dublin today.
Klein attributed some of the reluctance from large enterprises to buy new technologies as a cultural issue.
Often the people responsible for driving new technologies into large enterprises are chief technology officers (CTOs), he said, but a recent study by Index Ventures revealed that just four companies on the Fortune 100 list actually have a CTO.
“They’re the ones with the inside track on what new technology can do,” he said.
Klein also argued that the boards of the biggest companies in the world need to be held more accountable for their technology spend, which can run over a billion pounds a year in many cases.
He suggested that they create a public dashboard similar to gov.uk, which reveals how much they’re spending with new technology companies.
Index Ventures is an active investor in many of the startups that stand to benefit if large organisations move away from spending with the traditional vendors.