Om Malik: Europe, the New Center of Innovation

Todays guest column comes from Om Malik, founder and editor of GigaOM.com, a daily news and analysis website following technologies, innovation and startups.

Skype, Last.fm, Netvibes, and StarDoll – what do these startups have in common? First, they are all backed by Index Ventures, a London-based venture fund formed by Danny Rimer, a former general partner with the now-defunct Barksdale Group, and a former analyst at Hambrecht & Quist. But, more than that, these four companies are at the leading edge of a new wave of innovation coming out of Europe.

Europe? The stodgy, socialist leaning, technology shunning, and overtly bureaucratic Europe? Yes, that Europe!

One of the main reasons I suddenly am finding a sense of optimism about Europe is the increasing broadband penetration across the pond. From England to Estonia, from France to Finland, the high-speed connections – and I mean really fast connections, not the stuff we get in the United States – are available everywhere at extremely affordable prices. German supermarkets and British cell phone retailers are selling broadband connections like you and I buy a pack of Marlboros.

To think of these as simply bit carrying pipes would be a mistake. The broadband pipes are all being knit together into what is a new kind of a platform. A platform that can support cutting edge web-based services: From ephemeral Web 2.0 stuff, to on-demand video. An entire generation is growing up on this platform. As speed becomes a non-issue, the innovators can let their imaginations roam, and can come up with new and cool kind of applications and products.

History teaches us vital lessons. The early U.S. dominance of Internet and the emergence of brands such as Yahoo and eBay were primarily because U.S. had cheap dial-up Internet access before everyone else. South Korea and Japan are at the leading edge of wireless innovation because they were the first ones to build ubiquitous mobile networks, and build services on top of that. Paris-based Vpod.TV is a good example. The online video company is betting that most users would video-blog and post it to vpod.tv’s website using their 3G mobile phones.

Europe has broadband going for it, and not just wireline. Third-generation wireless services are beginning to find their way to the market, and soon will result in new opportunities. Some of them we don’t even know. But we can read tealeaves…

has broadband going for it, and not just wireline. Third-generation wireless services are beginning to find their way to the market, and soon will result in new opportunities. Some of them we don’t even know. But we can read tealeaves… Skype, and its disruptive voice-over-the-Internet business model, came about because its co-founders assumed that there will always be high-speed Internet connections everywhere. Similarly, the highly competitive market place has give hopes to Spanish WiFi services company, Fon. London-based Last.fm assumes a high-speed connection is handy for us to listen to music suitable to our tastes online, all the time.

As a venture investor, the $2.6 billion acquisition of Skype, or Cisco buying KISS Technology — a start-up company that specialized in network-connected consumer electronics devices — is proof that even in Europe, there are big paydays. Surprisingly, venture capital is one aspect of the innovation equation, which isn’t quite clear.

London has a healthy VC market place – Accel Partners has been around for a while, and Benchmark Capital is also getting aggressive in its efforts to mine the European opportunities. Index Ventures is fast becoming a Sequoia of Europe, getting its pick of the top European technology deals. In France there is Innovacom, and in Germany Wellington Partners. But that’s it. I smell an opportunity – a more tangible one than say China. And the wine is better too.

has a healthy VC market place – Accel Partners has been around for a while, and Benchmark Capital is also getting aggressive in its efforts to mine the European opportunities. Index Ventures is fast becoming a Sequoia of Europe, getting its pick of the top European technology deals. In there is Innovacom, and in Germany Wellington Partners. But that’s it. I smell an opportunity – a more tangible one than say . And the wine is better too.