There was an event today aimed at presenting technology companies to private equity firms. Klaus Hommels, one of the first angel investors in Skype, QXL and XING, made some interesting comments around his belief that European media businesses aren’t buying up start-up’s, which forces VC’s/founders to look to the US for exits.

I wasn’t there but I have spoken to someone that was and TechCrunch Europe also blogged about Mr Hommels’ comments, which you can read here.

I agree with Hommels’ view but I think it needs closer analysis as to why.

I sold my tech business to a European tech company in 2007. I can name a bunch of other tech entities that have done the same since, including WeLoveLocal (acquired by GCAP), eMediate (acquired by AdPepper) and the most high profile of all, FriendsReunited (acquired  by ITV).

But there are other ways to achieve exits and relinquishing majority shareholding at the 3-5 year point when the business is generating meaningful revenues (t/o in the millions) is a really good way for  founders to realise value and still retain some equity. In most cases at this point the board changes, investors change and the founders step aside from day-to-day involvement. Not the same as a full exit but in my opinion, still just as attractive as it delivers value and ROI for investors, rewards shareholders and continues to build value for the founders, most likely at a much higher valuation than the previous round.

Again, I can name quite a few founders that have taken this route.

But I digress, back to the real issue debated by Hommels.

I think its a bit unfair to make the comparison between a US and a UK tech business. All of the major tech companies are US based, be it web, mobile or software. The eco system in the US is so more sophisticated and mature than it is in Europe and as such, the mind set is totally different.

For a start, US VC’s and investors actually have an appetite to invest in start-up’s, which promotes much more creativity and entrepreneurialism and enables start-up’s to grow and reach a proof of principle much earlier than European equivalents would. And because the big tech players are all in the US, naturally there is going to be significantly more opportunity to find an exit than in Europe.

Secondly, media in the UK is typically broadcast or publishing. Both are struggling to keep pace with todays technologies and are desperate to  protect their traditional offline revenues. As  result most are not liquid enough to go on the acqusition trail in the way US media firms do, whilst at the same time they are focused on not allowing digital to disrupt their flag ship offline brands.

And finally, what’s wrong with a European start up engineering a sale to a non-European business?

There are some fantastic European-based companies out there. What we need is more support and belief from investors, and a change in investors’ (both VC’s and Angels) preferences to only invest in proven, post-revenue companies. For me, this is the biggest one and the main reason why the US currently dominate the tech space. Its the reason why there are still lots of acquisitions in the US and until this changes, Europe will can’t compete.

It’s a shame US investors typically won’t look at investments outside the US, especially those in the Valley.