In my experience working with some former European entrepreneurs, the startup problem isn’t really directly related to anything about social democracy or safety nets or even taxes.
They talked about how difficult, painful, and risky it was for them to start and operate a company at every turn. Even things like bankruptcy and allowing founders to move on with their lives if their startup fails, which we take for granted here, are not a given in European countries.
It’s not just the government to blame. The private banking and even societal norms are very different in ways that we don’t even consider in the United States.
The US is very friendly to funding and building startups. I didn’t appreciate it until talking to ex-founders from various European countries as well as many founders here who explicitly left EU countries for America because they wanted to start a company.