by Gerhard Fasol
Hermann Hauser in a recent article on Project Syndicate, entitled “The Struggle for Technology Sovereignty in Europe” argues for “the UK and EU to jointly establish a €100 billion ($120 billion) Technology Sovereignty Fund to counter the $100 billion that the US is spending on its technology sovereignty and the even larger amounts China is mobilizing”. I argue here, that we should be thinking that 27+1 countries could create much larger funds in a world where single individuals like Masayoshi Son can create funds of that order.
Hermann Hauser became an entrepreneur right after finishing his PhD in the Cavendish Lab (Cambridge University, UK) around 1978 – on the same lab bench in the Cavendish as myself – and is arguably Europe’s first and most important technology venture investor. Hermann Hauser can be seen as the initiator of Europe’s VC industry. Hermann Hauser is also one of the co-founders of ARM and many other high-tech companies. For a discussion with Hermann see:
The thought of a €100 billion Technology Sovereignty Fund is of course a fantastic plan. As a starting point, thats of course a great idea, however in my opinion, much much more is needed. My thought would be that for European Technology Sovereignty, five or ten, or even more funds of that €100 billion size will be needed. In my opinion, better not only by governments, but by private individuals like European versions of Masayoshi Son.
Three thoughts, which I will illustrate below
- a €100 billion fund for 27+1 countries is a lot smaller than the US$ 391 billion the single man Masayoshi Son is estimated to control (Vision funds plus three companies)
- a €100 billion fund for 27+1 countries is much smaller than the sovereign funds of very much smaller countries:
- Singapore (5.7 million people), sovereign funds: US$ 715 billion
- Norway (5.3 million people), sovereign funds: US$ 1327 billion
- My third point is that the assets in question (ARM) in Hermann Hauser’s Project Syndicate article would already use a large part of the proposed €100 billion fund.
To put a €100 billion fund for 27 EU Countries + UK into context:
Just one single man (Masayoshi Son, from a Korean immigrant family to Japan) controls at least two funds + and to some extent several companies, worth in total on the order of US$ 391 billion as follows:
- the current “fair value” of the first + second Vision Funds is reported as US$ 154 Billion.
- In addition, Masayoshi Son also controls (to some extent) the listed companies, which he often uses as acquisition and finance vehicles:
- SoftBank Group Corp [TSE: 9984]: market cap = US$ 130 billion
- SoftBank Corp [TSE: 9434]: market cap = US$ 67 billion
- Z Holdings Corp [TSE:4689]: market cap = US$ 40 billion (includes Yahoo Japan Corp + LINE)
That is just one single man, who created all this from zero, not 27+1 countries.
Or as another comparison, Singapore has built at least two sovereign funds in total estimated to be worth US$ 715 billion. Singapore is one single relatively small country compared to 27+1 European countries (population of Singapore is about 5 million, about the same as Norway, and about the same as the Berlin region)
- Singapore Sovereign Wealth Fund GIC estimated value US$ 488 billion
- Temasec Holdings US$ 227 billion
Norway’s sovereign funds (population about 5 million):
- Sovereign Pension Fund – Foreign US$ 1300 billion assets
- Sovereign Pension Fund – Norway US$ 27 billion assets
My third point is that a single €100 billion fund is of comparable size of developed assets in question. eg. ARM’s current value would be a substantial part of a potential €100 billion fund. This means that after acquiring two or three companies of the value of ARM this fund would already be exhausted.
As another example, the strategic German mRNA company BioNTech (which among other therapies developed the BioNTech Covid Vaccine in cooperation with Pfizer) has a current market cap of US$ 51 billion. If a situation would arise that such a Sovereign fund would acquire a company such as BioNTech, that would again use up a large fraction – if not almost all of this fund. In my opinion, although of course a €100 billion fund investing in European technology companies in addition to existing substantial VC and investment funds would be great, this is not huge – even relatively small – compared both to the value of many assets in question, and also to the funds some private individuals (eg Masayoshi Son) or 5 million people countries (like Singapore or Norway) manage to build.
So I think many more than a single €100 billion fund would be needed for Technology Sovereignty – I hope circumstances will develop where even more can be invested in European ventures than today. Hermann Hauser’s proposal is certainly a great step in the right direction- many more such steps would be great!
(c) 2021 Gerhard Fasol