The flipside of this is that Europe should probably not be compared to single countries like the US or Israel.
The comparable entities are North America, the Middle East and Europe. Then things would change.
Individual countries in Europe, particularly the Scandanavians, have loads of small IT companies funded from VC capital and as others have said government grants. The Dutch, the UK and Germany would probably also do reasonalbly well.
The comparable entities are North America, the Middle East and Europe. Then things would change. <-- No, here is why, if you're in Israel you have access to all that it has to offer, same for the US, and same for Europe (EU). The point is 'how much money is there to go around / potential recipient.'
Europe is far less a single economic block than the US or Israel. An American VC is far more likely to invest in a London based startup than one in say Germany, purely because of cultural and language barriers.
