5 ms·

Not sure that the premise of this article is even correct. I can think of a lot of successful European startups -- Minecraft, Spotify, Skype, DeepMind, the lis

by vonnik 11y ago

Not sure that the premise of this article is even correct. I can think of a lot of successful European startups -- Minecraft, Spotify, Skype, DeepMind, the list goes on... -- and just as many startups led by Europeans that have succeeded in America (Lending Club, etc.). But if Europe has trouble supporting "unicorns", there are probably a couple reasons: 1) Gaps in the funding ladder. 2) Talent flight. 3) A preference for regulation. 4) Countries, like France, that combine technological conservativism with social rigidity.

stretchwithme 11y ago
Its number two, the ability to move to somewhere where you can keep more of what you create.
- briandear 11y ago
  Why is this downvoted? It is exceptionally valid. Starting a company in France subjects you to almost punitive labor laws, horrible taxes and regulation about almost very aspect of your business. Even doing something as simple as buying a rental property and leasing it out in France is loaded with difficulty. For example, an eviction can take years. Leases are standard for three years with the tenant being able to exit the lease with one month notice with no penalty. Capital gains taxes discourage the free movement of capital. If I want to sell a building and invest the proceeds, I am hit with an insane tax which provides a huge disincentive to moving capital from fixed assets to potentially more risky but higher return startup investments. France shuts down during August. I was in mid deal with some equity investors in July and pretty much the entire process was suspended until now. The French are also in love with paper. To get business class internet in a residence requires me actually registering and forming a French company. In the U.S., I can call any provider and with days have whatever services I want without having to "prove" I have a business 'need.' I certainly can't speak for all of the EU, but France is high on the list as a difficult place to get anything done quickly. In the UK, even opening a business bank account for a non-UK resident with a UK registered company is literally impossible. They are so paranoid over money laundering that essentially the banking industry is not accessible to anyone who wants to do business in the UK but isn't a resident. The regulatory environment in the EU is harsh. Investors are not necessarily risk adverse but they do have to be much more deliberate because every transaction is regulated and thus incurs a cost or a tax. For example, to buy any property in France, you have to pay a Notaire 8% of the purchase price just to legalize the sale. This is exclusive of normal agent commissions and closing costs. Imagine adding 8% to every asset sale on top of VAT of 20%. You're looking at a transaction cost of 28% to just pay the government! There is no such thing as a 1031 exchange either. Taxes and regulation is the surest way to crush innovation. Combining that with the violence-filled reaction to Uber, the hysterical response to AirBnB and the obsession with physical paper and it's no wonder that France is a horrible startup environment. Also, let's not forget the billion+ dollar exit for Daily Motion that was blocked by the French government. If if you were to build a unicorn you wouldn't be able to do anything with it except maybe cut it up and cook it in a sous vide: provided it wasn't imported from Spain or Poland in which case the farmers would drive tractors into Paris and set piles of shit on fire in protest. I am not making a judgement on is European Socialism a good thing or not; I am merely stating reasons that it is difficult to expect high returns in such an environment.
  - yxhuvud 11y ago
    It is downvoted because most European unicorns happen to be from the second highest taxed country in the world. Which accidentally also shut down in the summer. Complaining about bureaucracy sounds like a more believable theory considering that the Swedish one is pretty streamlined all things considered, but that is a totally separate issue than the sheer amount of taxes paid.
  - aianus 11y ago
    > If if you were to build a unicorn you wouldn't be able to do anything with it except maybe cut it up and cook it in a sous vide: provided it wasn't imported from Spain or Poland in which case the farmers would drive tractors into Paris and set piles of shit on fire in protest. I died.
skimpycompiler 11y ago
Yep, also Outfit7 is definitely a good example how even in smaller countries one can achieve great success, I believe that founder became the richest man in Slovenia due to the success of his apps. It's quite weird that Europe can be considered a bad place to succeed. Slovenia is a cheaper country than US, talent pool is still large enough, a startup in European countries like Serbia, Slovenia, Croatia and similar can last way longer and employ more people for the same millions that US startups burn through incredibly fast. Not to mention the expensive standards of living in silicon valley.
qiqing 11y ago
The article also doesn't mention an obvious bias, that is, if a startup starts in Europe, there are a lot of incentives for that startup to move to the U.S. early in its life cycle. In that scenario, the startups who become successful (and who originated elsewhere) all get counted as U.S. successes. This would vastly undercount both the total number of startups elsewhere as well as the number of successful startups.
- ThomPete 11y ago
  This is entirely correct and I know several founders who did so, but thats not really the point I am trying to make (which admittedly I didn't make well) The question that still stands is why they are moving the the US.
  - Marazan 11y ago
    Because the network effect of Silicon Valley is profound. Investors are looking to fund companies with global reach that will break down communication barriers, render national boundaries meaningless and bring us all close together. . . as long as they are located in California.
    - ThomPete 11y ago
      Yes and so the question is why does Europe not have anything like that. It does have some places liked London, Berlin and Stockholm but they are all missing a few things. This is what I am trying to explore.
      - Marazan 11y ago
        You're looking at a power law. Just like Cities in a country follow a power distribution of population (I just doubled checked that rule for UK and they indeed follow an almost perfect power distribution) so "Start up" areas will also follow a power distribution - but due to the extreme mobility of start-up founders and capital that will be applied globally not nationally. Silicon Valley being the pre-eminent location for start-ups is a positive feedback loop which puts it at the extreme tip of the power distribution.
ThomPete 11y ago
Not sure exactly what you mean. I both mention that there are European startups and that there are popular european startup founders in the US. Not sure how much more clear I could make it.
jacquesm 11y ago
Teamviewer to add to your list and here are a couple more: https://techberlin.com/articles/16-biggest-exits-so-far/ https://techberlin.com/articles/16-biggest-exits-so-far/

by vonnik 11y ago

stretchwithme 11y ago

Its number two, the ability to move to somewhere where you can keep more of what you create.

briandear 11y ago
Why is this downvoted? It is exceptionally valid. Starting a company in France subjects you to almost punitive labor laws, horrible taxes and regulation about almost very aspect of your business. Even doing something as simple as buying a rental property and leasing it out in France is loaded with difficulty. For example, an eviction can take years. Leases are standard for three years with the tenant being able to exit the lease with one month notice with no penalty. Capital gains taxes discourage the free movement of capital. If I want to sell a building and invest the proceeds, I am hit with an insane tax which provides a huge disincentive to moving capital from fixed assets to potentially more risky but higher return startup investments. France shuts down during August. I was in mid deal with some equity investors in July and pretty much the entire process was suspended until now. The French are also in love with paper. To get business class internet in a residence requires me actually registering and forming a French company. In the U.S., I can call any provider and with days have whatever services I want without having to "prove" I have a business 'need.' I certainly can't speak for all of the EU, but France is high on the list as a difficult place to get anything done quickly. In the UK, even opening a business bank account for a non-UK resident with a UK registered company is literally impossible. They are so paranoid over money laundering that essentially the banking industry is not accessible to anyone who wants to do business in the UK but isn't a resident. The regulatory environment in the EU is harsh. Investors are not necessarily risk adverse but they do have to be much more deliberate because every transaction is regulated and thus incurs a cost or a tax. For example, to buy any property in France, you have to pay a Notaire 8% of the purchase price just to legalize the sale. This is exclusive of normal agent commissions and closing costs. Imagine adding 8% to every asset sale on top of VAT of 20%. You're looking at a transaction cost of 28% to just pay the government! There is no such thing as a 1031 exchange either. Taxes and regulation is the surest way to crush innovation. Combining that with the violence-filled reaction to Uber, the hysterical response to AirBnB and the obsession with physical paper and it's no wonder that France is a horrible startup environment. Also, let's not forget the billion+ dollar exit for Daily Motion that was blocked by the French government. If if you were to build a unicorn you wouldn't be able to do anything with it except maybe cut it up and cook it in a sous vide: provided it wasn't imported from Spain or Poland in which case the farmers would drive tractors into Paris and set piles of shit on fire in protest. I am not making a judgement on is European Socialism a good thing or not; I am merely stating reasons that it is difficult to expect high returns in such an environment.
- yxhuvud 11y ago
  It is downvoted because most European unicorns happen to be from the second highest taxed country in the world. Which accidentally also shut down in the summer. Complaining about bureaucracy sounds like a more believable theory considering that the Swedish one is pretty streamlined all things considered, but that is a totally separate issue than the sheer amount of taxes paid.
- aianus 11y ago
  > If if you were to build a unicorn you wouldn't be able to do anything with it except maybe cut it up and cook it in a sous vide: provided it wasn't imported from Spain or Poland in which case the farmers would drive tractors into Paris and set piles of shit on fire in protest. I died.

skimpycompiler 11y ago

Yep, also Outfit7 is definitely a good example how even in smaller countries one can achieve great success, I believe that founder became the richest man in Slovenia due to the success of his apps. It's quite weird that Europe can be considered a bad place to succeed. Slovenia is a cheaper country than US, talent pool is still large enough, a startup in European countries like Serbia, Slovenia, Croatia and similar can last way longer and employ more people for the same millions that US startups burn through incredibly fast. Not to mention the expensive standards of living in silicon valley.

qiqing 11y ago

The article also doesn't mention an obvious bias, that is, if a startup starts in Europe, there are a lot of incentives for that startup to move to the U.S. early in its life cycle. In that scenario, the startups who become successful (and who originated elsewhere) all get counted as U.S. successes. This would vastly undercount both the total number of startups elsewhere as well as the number of successful startups.

ThomPete 11y ago
This is entirely correct and I know several founders who did so, but thats not really the point I am trying to make (which admittedly I didn't make well) The question that still stands is why they are moving the the US.
- Marazan 11y ago
  Because the network effect of Silicon Valley is profound. Investors are looking to fund companies with global reach that will break down communication barriers, render national boundaries meaningless and bring us all close together. . . as long as they are located in California.
  - ThomPete 11y ago
    Yes and so the question is why does Europe not have anything like that. It does have some places liked London, Berlin and Stockholm but they are all missing a few things. This is what I am trying to explore.
    - Marazan 11y ago
      You're looking at a power law. Just like Cities in a country follow a power distribution of population (I just doubled checked that rule for UK and they indeed follow an almost perfect power distribution) so "Start up" areas will also follow a power distribution - but due to the extreme mobility of start-up founders and capital that will be applied globally not nationally. Silicon Valley being the pre-eminent location for start-ups is a positive feedback loop which puts it at the extreme tip of the power distribution.

ThomPete 11y ago

Not sure exactly what you mean. I both mention that there are European startups and that there are popular european startup founders in the US. Not sure how much more clear I could make it.

jacquesm 11y ago

Teamviewer to add to your list and here are a couple more: https://techberlin.com/articles/16-biggest-exits-so-far/ https://techberlin.com/articles/16-biggest-exits-so-far/