From startup perspective, the EU is slow, money-starved and suffocating in bureucracy
What the title says
I’m writing this post because of a random LinkedIn discussion in which a thesis was that Europe’s startup problems are not slowness, money, and bureaucracy.
I happen to have written a book about it, even if it’s a bit old right now, and I disagree. A major set of EU startup problems are indeed slowness, money and bureaucracy.
Here are my references (asking AI tools because I don’t want to spend time manually digging up updated information - nothing significantly changed since 2021):
Speed: Opening a company lasts from 3 days to 25, depending on the EU country (https://www.perplexity.ai/search/how-long-does-it-take-to-estab-Ssa8thJNSKm.UNH1etZk6A), While it's immediate in most US states (https://www.perplexity.ai/search/how-long-does-it-take-to-open-7ijbB2xbSP.QCsBvVwx4IQ). Not that opening a company is the most important operation, but it's indicative of the overall efficiency.
Money: EU VC funding is 2x+ larger (yes, 200%+) than what's available in the US. https://www.forbes.com/sites/kjartanrist/2024/06/04/will-europe-ever-match-the-us-for-startup-investment-and-growth/ . Again, VC is not the only way companies get funded, but it's really indicative of European risk-aversion. Another way to look at it is: US firms are 40% more likely to acquire VC investments: https://cepa.org/article/across-the-pond-for-profits-european-startups-head-to-the-us/ .
Bureaucracy: Ease of doing business is much better in the US than in the EU: https://chatgpt.com/s/dr_684733931fb081919a20819aa9f2b500 . As a personal example. my home country, Croatia, is changing the rules of doing basic business, like accounting and the ways receipts are issued, every several years, requiring massive upgrades to financial software, bleeding resources from honest businesses to create a (completely ineffective) façade of battling corruption.
Additionally. Europe is such a fragmented market that EU startups don’t have the resources not only to address the various legislative environments in individual countries where they want any non-trivial presence, but also to translate their offers to the national languages and cultures in the EU. Instead, successful EU startups are selling on the US market.
EU’s approach to “fix” the lack of VCs by “helicoptering money” to startups has IMO had the opposite approach. The lack of consequences from failed projects in that kind of environment just made the efforts much less serious. My pet peeve is that for some weird reason, it looks like the EU insists that startups should be related to academic research. I’ve read through many calls for funds that could have helped me, but almost all required cooperation with academic institutions to get maximum points - and I left academia precisely because it’s generally inefficient and wasteful on a level that startups simply cannot afford to be. Even projects that were started to monitor EU startup ecosystems stopped/failed after EU funding ran out - while a better solution could be to establish them on commercial grounds. Ridiculously, this particular project appears to be “continued” as a separate project, which also stopped/failed - at least 2 more times - making the results either completely unreachable or at best, non-comparable. IDK, to me this seems like a terrible waste.