Why Should Startups Stay In Europe? 8 Misconceptions About Starting In The US

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Marc Wesselink is General Partner Alumni & Selection for our E-commerce and Smart City & Living programs in Amsterdam. In this blog post, he is sharing his thoughts on why startups should stay in Europe instead of going to the US.

I hear a lot of startups talking about going to the US and looking for a better life there. Is it true that starting your business in the US gives you higher chances to succeed? I don’t think so and here are some common misconceptions:

  1. The US is a bigger market than Europe

It is not. In fact, the EU Gross domestic product (GDP) is greater than the US (see the chart below). GDP is one of the primary indicators used to gauge the size of a country’s economy. It represents the total dollar value of all goods and services produced over a specific period – you can think of it as the size of the economy.

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  1. The US has more money than Europe

No. The total savings of the EU countries make $17.59 trillion (with ten zeros!), and the US has a total savings of $13 billion less. Although Venture Capital is much more available in the US than in the EU, you also have more startups competing for that same money.

  1. You have to have multi-language systems if you’re in Europe

Did Facebook translate its app into local languages when they launched in Europe? AirBnB? Uber? Google? No. They first launched an English version. A Chinese investor told me that the most popular apps in China were all in English… So, I suggest you start first in English, see which country delivers traction the fastest and, based on the feedback of the users, adapt it locally.

  1. The US has one legal entity

Regarding the taxes, The United States are not that United. Each state has a different tax system, different % of VAT, and different legal entities with different liabilities. So that is not an argument.

Europe has a new type of corporate entity called Societas Europaea since 2012. It has a high subscribed capital, but it is a widely accepted entity. Besides that, a UK Ltd is also a very common accepted entity on the planet.

  1. The US has more investors than Europe

Agreed, but also more startups that are reaching out to them. It is very crowded in the US, and if you have a good idea, you are not the only one looking for money.

In fact, there are a lot of angel networks in the EU as well. Take a look at the website of EBAN or this crowdsourced list of the EU-based VC firms, and you will see that Europe also has a lot of public money available. One of our mentors picked up € 1.1 MIO of public funds from Horizon2020, which is a massive €79 billion funding program for companies in the EU and will be giving grants between 2014 and 2020. The EIF is another EU-based investment institution which supports EU-based SMEs with innovation and the EU just launched an Investment Project Portal on 1st of June which is called EIPP.

  1. The US has higher valuations than Europe

True, but also a higher cost of living so you can do less for the same money. Great story about an alumnus of TechStars who picked up $400K of funding and relocated to Morocco to increase their runway with 400%! It is a known fact that salaries are skyrocketing in Silicon Valley and its surroundings. According to this website, you need to have twice as much money in San Francisco compared to Amsterdam and even four times as much as Cape Town.

  1. There are more successful startups in the US than in Europe

That depends on how you look at it. Percentage-wise startups in the US perform less. Here is a good read about a few myths being busted. Also, a lot of successful startups are founded by European founders. Tech.eu posted an interesting article about it, and here is a list of all European unicorns since 2000. According to Angellist, there are 37.492 startups in Europe, 105.368 in the USA and 32.491 in Asia.

  1. You need the US to become a global company

There are a lot of European businesses that became global players without focusing on the US first. Read about Skype, Spotify, Allegro, Adyen, Booking, JustEat. Tech.eu wrote a fantastic article about it. LeWeb also wrote an article about it.

Conclusion

Stop looking at the US and thinking that the grass is much greener over there. Focus on your backyard! If you need help, apply to one of our programs, and we will make sure that you will be busy in the next three years conquering Europe. If you must go to the US, we also have programs in New York and Miami for you 😉


Applications for our Amsterdam-based E-commerce program are now open! Apply now to get intensive mentorship, access to our international network, free office space, and funding.

The post Why Should Startups Stay In Europe? 8 Misconceptions About Starting In The US appeared first on Startupbootcamp.

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