Startup in Europe? | Hacker News Reader

Startup in Europe?

5 pointsloxs20 comments

We have all read Paul Graham's writings about why the USA and Silicon Valley are the best places to start business. I have no troubles believing him. But some of us are less lucky to have been born in Europe (although it could be far worse). And I know it's possible to start an American company, even if I have no US passport, but still, that involves traveling to the USA (with all the hindrances like visas etc.). I live in one of the newer (cheaper) members of the EU and with the money needed for such a journey, I could easily live for months (and maybe even a year) while developing my product. So I guess, I'll first try doing it here.

Could anyone suggest better (or less worse) European country for starting an IT company? I'm talking about the legal part only, not living there.

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Here's a great spreadsheet comparing a lot of countries around the word:

http://www.doingbusiness.org/documents/Simulator_2010.xls

It's from the World Bank, comparing how easy it is to do business in different countries. Last time I checked, US was 4th, the UK was 5th, and Ireland (where I live) was 7th.

If you want to consider Ireland, it's got a very 'pro-business' attitude, strong US connections, well-educated, English-speaking workforce, political stability, little bureaucracy, many grants and supports available from state agencies to promote entrepreneurship, and a very low corporate tax rate of just 12.5% (there's further tax breaks available if you are doing R&D). However, it's expensive here.

As regards taxes, Accenture moved their Global HQ here from the Bahamas because of tax advantages, and many multinationals have their European HQ here also (Microsoft, IBM, Google, Apple, Pfizer & most of the Big Pharmas). Also, from what you have said, I'm guessing you are Eastern European - well there are many of your countrymen here, so you won't feel totally homesick ;-)

Despite all that, I'm actually considering travelling to Silicon Valley in September to scope it out, and to try to determine if I would like working in a startup (i.e. if I would be suited to doing my own startup at some point). My work contract expires then, and I've taken on board some good advice from a successful American entrepreneur who strongly recommended it.

So I'm in a somewhat similar position to you. I'm seriously considering moving to Silicon Valley to at least give it a shot, the odds of success are much higher for all the reasons mentioned in pg essays and the articles on 'moving to Silicon Valley' that appear from time to time here on HN.

Thanks! An English speaking country is certainly a good idea (as I am most comfortable with English, not counting my native Bulgarian). And you are right :), I have friends working in Ireland, so it won't be a problem to come there and stay at their place while working on initiating a company.

I agree with all you said about Silicon Valley. But we are already a nice team here. We have several "hobby" projects (which all failed back then) behind. And now we are going to do it "for real". Of course, we may be moving somewhere else in the future, especially if we come to the need to hire more people. But for now we are just going to live cheap in Bulgaria and work :).

You're welcome. The very best of luck to you!

In my opinion, if you're looking only at legal requirements, the Valley is an awful place to start a company as an European entrepreneur. I explored a few years ago the opportunity to start a business there and it didn't take me long to realize that legal fees would eat up all my capital before I had even a chance to start writing a line of code. Moving your business there once it gains a bit of traction (and funding) is probably a better idea if that's what you want to achieve.

Now, legal issues are tricky everywhere. But one thing you need to think about is how labor intensive will your business be ? Some countries like France or Spain make it almost impossible to fire people whereas countries like Ireland or Switzerland offer much more flexibility.

But chances are high that you won't start by hiring a lot, right? Then, what you need to focus on is: how easy is it to grow a business and what would happen if you fail. You want to be able to add shareholder easily, while keeping administrative duties under control and you don't want to get into too much trouble if you need to file for bankruptcy. I heard Germany and the UK might be good choice if that's what you're looking for (not very sure though, please check ;)

Finally, if your startup will not be labor intensive, nor capital intensive at first, my advice is: don't overthink legal aspects. Go where you have the best networking opportunities while being able to hire great people at best cost. And that might just be exactly where you're living now...

Oh, one last thing. Europe has everything you'll ever need in terms of talents and capital. So I don't agree when you say that you're "less lucky to have been born in Europe". But that's another story ;)

Just staying where you are now seems like the best default option, unless you have a particular reason to believe you'll be better off elsewhere. What kind of business? My impression is that regulation varies quite a bit by type of business. For example, if you want to sell a new piece of hardware, some countries are nearly impossible, while others are somewhat easier. But if you just want to put up some webpages and make income from AdSense, most countries don't care much at all.

I am talking about SaaS web application. Where I am now (Bulgaria) is not necessarily the best option. We have lots of leftover laws (from the communist regime) which make life hard, especially for a "modern" company. For example I have to pay to an accountant (the government requires it), so that he can sign up my tax declarations. Of course, Bulgaria is not too bad. I'm just trying to find some better place.

It would be great to have a google maps of location of hacker news members world wide, so that we could engage in local communities

For western Europe I would also suggest Luxembourg. Living there is also quite expensive ( but you may live in one of the neighbouring countries)... European HQ of Ebay,Skype,Paypal,Amazon,ITunes are all located in Luxembourg for IP, tax, regulatory (e-commerce) reasons.It's also easier to find motivated multilingual people.

Best European country for starting an IT company? Are you talking about taxes? If your question is not related to taxes I don't know why a country would be better than another, specially if your company is all about developing a product and then selling it either as a product or online as a service.

I am talking about less taxes, less beaurocracy, less stupid artificial hindrances.

I would go to Estonia.

Why?

Low taxes, little bureaucracy, good programmers, good startup culture (skype, for example, was programmed there), business-friendly place, good ties with Finland and Sweden, wifi everywhere, widespread use of the web.

The thing that impressed me most, however, was when I read that they are a nation of only 1.4 million people, so they have to go after every opportunity they have in order to make things more efficient. The Government's goal is actually to make the public sector so efficient that they can fire state employees and "free up resources", i.e. workers, for the private sector. Of course, this policy must have created some problems in the last 2 yeas, but overall the impression is that they are a country on the right path. Finally, the three Baltic Republics - I have visited Estonia and Latvia, but not Lithuania - are countries that share many traits with Scandinavian countries and that look up to Scandinavian countries. I personally expect them to do very very well.

Thanks, I'll certainly investigate further

Does Switzerland count? Pro: stable economy, access to capital, beautiful. Con: expensive

I don't know. "beautiful" doesn't count for sure :).

What about this:

1) get a high-paying job in a European country 2) after 6 months, start doing a lousy job & get yourself fired. 3) Leach on generous social security until your startup takes off. 4) ... 5) Profit!

I've heard in France, you don't even need to do a lousy job. You just need to ask to be "voluntarily fired", and you can receive benefits. If you have a startup, you can receive those benefits indefinitely.

Some companies would agree to fire you on your demand, but it not very legal, so bigger one might not do it. You'll have to get good relation with your management to do it.

You can received unemployement help for 2 years, given that you worked enough before (it is roughly 70% of your salary, but decreasing over time ). You can also ask a part of that money up front, but that will cut your right.

There is also an interesting "autoentrepreneur" status that is nice if you want to boostrap something that allow you to be registered as a company but ask you minimal accounting, simplify registration and only tax you if you earn anything. It's important because company are taxed more than in the US.

Salaries are lower too (it's not very easy to accumulate 6mo/1year of cash in advance ), few peoples speak english, so you really need to speak french to start something in France.

I don't know in another countries, but where I live, social security pays you for unemployment 4 months per worked year. That means that with only 6 months worked you would only receive 2 months of unemployment pay, and if you don't have any children it is only 1000 euro/month (better than nothing...). On the other hand, if you have worked several years (6 or more), you can accumulate up to 2 years of unemployment pay, and if you then decide to become an enterpreneur, you can capitalize all of this and you can have up to 100% of this in cash for your business.

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