Europe may not have as many venture capitalists, innovative companies, and fluid markets as the United States, but the region is surely emerging as a place to seek venture capital and public funding for technology companies.

Entrepreneurs, venture capitalists, and bankers stressed that Tuesday at the Red Herring Venture Market Europe conference in Paris, where many of the top 100 European technology companies selected by Red Herring’s editorial team came together (see Top 100 European Companies).

The conference included optimistic companies and venture capitalists who were seeking possible investments in the long-ignored market, which has a reputation as a difficult business environment because of rigid labor laws, aversion to risks, and multiple currencies and languages.

However, in the last year, the number of venture-backed technology public offerings in Europe was the same as in the United States. Judy Gibbons, a venture partner at London-based Accel Partners, said the European venture market is changing as a result of the flattening of the world.

“The talent is here and the ability to innovate and develop innovative companies is not exclusive to the U.S.,” Ms. Gibbons said.

Broadband and Internet technologies have allowed Europe to seek outside help from developing countries to create software and services, said Peter Ohnemus, CEO of software maker ASSET4.

“I believe if you combine the European market with India [and China], it works as a great combination,” Mr. Ohnemus said.

To be sure, Europe still has plenty of problems to tackle that companies in the United States don’t, such as its rigid labor laws that don’t let companies lay off people easily. “I believe that Europe’s labor laws are a joke,” Mr. Ohnemus said.

Ms. Gibbons said Europe’s strength lies in companies that will converge the worlds of PCs and mobile, as broadband and mobile penetration is one of the highest in the world. One of her firm’s investments is in a company called WeeWorld, which allows consumers to create avatars to be used in instant messaging on PCs and mobile phones.

Knockoffs

While some venture capitalists said there were enough innovative companies coming out of Europe, such as Skype and MySQL, European entrepreneurs can also bank on copying American products and services and bring them to the European market.

George Coelho, partner with London-based Benchmark Capital, gave the example of LoveFilm, a copy of the Netflix business model from the U.S., where members can rent DVDs by mail.

He said the venture market in Europe is still highly untapped because most VCs are chasing India and China’s growing economies rather than pursuing opportunities in Europe.

“Copying is OK and it’s hard for everyone to be everywhere at the same time, so we are concentrating on Europe,” Mr. Coelho said.

Even large American companies like Microsoft are trying to leverage startup power in Europe to better its offerings or sell its tools and platforms for startups. About 33 percent of the Red Herring top 100 European companies are either engaged in the Microsoft Partner Program or with the emerging business team. Some of the other top 100 companies approached Microsoft on Tuesday to explore partnerships with the software giant.

Raphael Bachmann, chief executive of SpeedScript, showed interest in how to get the company’s text-typing mechanism for small mobile devices used more widely on Windows Mobile or Windows Tablet PC, said David Rowe, director of the emerging business team at the European operations of Microsoft.

Funding and IPO Dreams

Avichai Levy, CEO of Israel-based mobile search company Targetize, said Europe has gone through plenty of changes in the past three years that encourage him to look for venture capital in the region as opposed to the United States.

“Today, we are much more conscious of the European option,” Mr. Levy said.

Given a backdrop of the September 11 attacks, complex Sarbanes-Oxley (SarbOx) compliance rules, and the post-bubble doldrums of the United States, Mr. Levy finds Europe more “sophisticated.” He said he sees lots more technology-related events in Europe—events for which he would have had to visit the United States a few years ago.

Europe is also seeing the phenomenon of technology companies wanting to go public on one of its several stock exchanges in part because stringent compliance rules in the United States are proving to be costly.

“The opportunity to go public in Europe is competitive because SarbOx has put a lid on flotations in the United States,” said Anne Glover, partner with Amadeus Capital in London. “Bankers are beginning to stay in Europe.”

Some bankers at the conference said going public in markets closer to home is a better idea because investors are more aware. European investors are more knowledgeable now, and better understand how to correctly value a company.

Also, because of the large volume of companies in the U.S., European companies tend to attract less attention.

“They can become irrelevant on the Nasdaq,” Benjamin Robertson, head of European software and IT services at UBS. “But in the U.K. market, they are more relevant.”