Macron’s dream of a European metaverse is far from a reality

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European businesses, investors, and talent are all vying for a ticket on the metaverse hype train. Even political heavyweights are making moves — or, at least, pronouncements.

French President Emmanuel Macron wants to build “a European metaverse” to challenge US and Chinese tech giants. The EU’s digital chief, Margrethe Vestager, meanwhile, is mulling new antitrust regulation. But their ambitions are a long way from being realized.

“The reality is there is no European big tech player of relevance in that whole metaverse future,” says Rolf Illenberger, the cofounder of Munich’s VRdirect, a virtual reality platform for enterprises. “It’s being defined by US and Asian players. Those are the two regions where this technology is going to develop.”

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In the US, the tech titans of Meta, Microsoft, and Apple are set for leading roles, while Roblox and Decentraland already offer popular proto-metaverse platforms. 

Their biggest global challengers are based in Asia. Bytedance, the owner of TikTok and VR hardware giant Pico, is the strongest contender, but further competition is emerging at the likes of Huawei, Tencent, and the Sandbox virtual world.

European startups lag behind their US and Asian counterparts.

Europe, by contrast, is largely limited to niche operators and startups. These range from Finland’s Varjo, which produces upmarket headsets, to Estonia’s Ready Player Me, a cross-game avatar platform that recently bagged $56 million in a funding round led by VC giant Andreessen Horowitz.

Jake Stott, CEO of Web3 and metaverse ad agency Hype, is also optimistic that Europe’s renowned fintech sector can produce future payment providers in the space. He acknowledges, however, that they face significant challenges.

“Historically, European startups have lagged behind their US and Asian counterparts when it comes to producing unicorns,” he says. “Europe also trails behind the US in terms of venture capital raised. This is perhaps one of the areas where government support can help the continent’s fledgling metaverse ecosystem — by removing barriers to growth and creating incentives for VCs.”

Europe’s metaverse funding problem

Petri Rajahalme has his own plans to plug the funding gap. The Finnish entrepreneur and his business partner, Dave Hayes, recently launched FOV Ventures, the first VC firm to specialize in early-stage metaverse companies in Europe. In March, the duo announced a €25m fund for startups at the pre-seed or seed stage. 

“We’re not lacking in talent, that’s for sure,” says Rajalhlme. “If you look at historical M&A, a lot of the companies that US [businesses] have snagged up are talent coming from Europe… The big question is how do you keep that talent in Europe?”

Rajahalme (right) was formerly Managing Director at the Nordic XR Startups fund, while Haynes (left) previously led HTC’s $100m Vive X fund in EMEA.