For tech businesses across the world, Silicon Valley is often seen as the promised land. The ultimate goal of many a startup founder is to jet off to America as soon as possible, pitching their idea and finding immediate fortune. Yet while it’s worked in a few cases, there are a thousand more where it hasn’t, and a perfectly good idea has been pushed too far, too fast.
Speak to many people in Silicon Valley, and you’ll find that the grass seems greener on the other side of the Atlantic. The argument for keeping your tech business in Europe over the long term is growing, even if Silicon Valley’s influence hasn’t diminished. Here are just six reasons why you might want to keep your tech business in Europe, and postpone your trip to the Golden State.
Infrastructure
While your needs will vary according to the demands of your business, tech companies are generally at an advantage when it comes to infrastructure. If you’re making software, you may only need a good internet connection – and that shouldn’t be too hard to find in Europe. Most major cities now have widespread fibre-to-door connectivity, and in places such as the Netherlands, fibre coverage spans the entire country.
If you’re in the software business – or dependent on regular meetings and importing talent – there are few better places to be than Europe. As well as some of the world’s best road and rail links, Europe also boasts many of the world’s largest and best connected airports, and a number of deep sea ports. Freedom of movement within the EU and the close distance also makes travel cheap and easy – allowing you to connect and communicate more easily than in America.
Funding
Conventional wisdom states that to break out and achieve that vaunted ‘tech exit’, your business needs to move to America. That’s often been borne out by statistics in previous years, where the U.S. – and specifically California – led by miles in venture funding. Yet the pendulum is swinging, and the marker set by Spotify (the world’s biggest exit in 2018) is lighting the way for businesses across the continent.
Publicly-owned lenders and investment banks such as BpiFrance and The British Business Bank have pledged billions in funding, while EU-wide funds such as Horizon 2020 have helped to launch thousands of R&D projects. Many countries in Europe are actively competing for the best business benefits, with Italy leading the way in R&D tax credits and the Netherlands boasting at least 100 venture capital firms, not to mention angel investors and incubators. With a record-breaking €21.2 billion invested in European businesses in 2018, why go anywhere else?
Talent
It should be news to no-one that Europe is home to many of the world’s most prestigious universities, but Oxford and Cambridge are only the tip of the iceberg when it comes to talent. Europe boasts 36 of the Times World University Rankings’ top 100 establishments, compared to 37 in the United States.
Where Europe differs is that many of these institutions are geographically far closer to each other. EU freedom of movement allows talent to move freely between countries, while there are also numerous visa schemes for foreign workers, including specific tech visas in countries such as France. This makes it extremely easy to source talent, something that can prove problematic with U.S. visa restrictions and the low rate of unemployment.
Many cities in Europe also have reputations for specific industries, with fintech centred on London (home to 250,000 software developers in total), Stockholm focused on entertainment and networking (Spotify, Skype, King, Truecaller) and Helsinki famous for game and app development (Rovio, Supercell, Remedy Entertainment). The great advantage of a tech business is also the opportunity for remote and freelance work, opening your pool of talent up even further.
Regulation
This might seem like an odd one, but tech regulation is a growing trend, and Europe is right at its forefront. While U.S. tech firms don’t like it, European regulators have used the bloc’s financial clout to impose restrictions on tech companies designed to protect privacy, and punish firms who fail to regulate their content.
As concerns grow over the impact of social media and other technologies on people’s wellbeing – and the sometimes frightening implications of mass data collection – Europe’s example is likely to spread to other parts of the world. Even if it doesn’t, every tech business worth its salt has to comply with EU law to trade there – allowing you to develop with these rules and restrictions in mind.
This can also apply in reverse. Regulation is much lighter than the United States in some areas, such as the banking sector in the UK. Combined with London’s natural expertise in the finance sector, this loose regulatory approach has led to an explosion of UK fintech companies. By capitalising on these differences, you can set yourself apart from U.S. rivals, and have them coming to you for advice.
Cost of living
Whatever you think about Silicon Valley, there’s no doubting that it’s an expensive place to live and work. Indeed, rent in San Francisco is 2.5 times the national average, and the Bay Area is considered the most expensive place in the world to build. By contrast, many parts of Europe offer enough elements of the Silicon Valley experience at a much lower cost.
While access to investors and certain decision makers or other firms may be better in Silicon Valley, Europe isn’t lacking for startup hubs that will put less of a dent in your earnings. Talent-rich areas like Berlin and Paris boast rents of half the San Francisco average or less. You’ll also benefit from equivalent talent without having to pay Silicon Valley wages, and a higher quality of life in many areas thanks to great food, culture and countryside.
Geography
Being in Europe provides you with access to a host of different markets. Many of them have shared values, but they also have different interests, are at different stages of growth, and afford different opportunities. Take the example of universal healthcare, which gives healthtech firms the opportunity to secure contracts for entire countries, as opposed to many individual companies in the US. And cities with one particular speciality are destinations for talent, building connections and fostering growth.
Being in western Europe in particular also positions you perfectly between timezones. As well as being in close proximity to the rest of Europe and Africa, you’re also within touching distance of the U.S. East Coast and much of Asia. It also provides you with easy physical access to these many different markets, with extremely strong transport links across much of Europe (and further afield) by road, rail, sea and air.
About the Author
Former journalist Katya Puyraud is the co-owner of Euro Start Entreprises, specialising in company formation in Europe. Since 2007 Euro Start Entreprises has helped budding digital nomads, entrepreneurs and expanding SMEs to open their companies in over 30 countries worldwide.
