Skip Silicon Valley: Why Smart Startups Start In Europe
forbes.com
forbes.com
In Europe, you get other valuable things, like a vibrant place, health coverage, etc. I'd put Canada in the same bag.
IMHO, the ideal plan is a fully owned company (ala O'Reilly) which pays for its own growth. You'll still be able to find outside investment later- except you will make the terms, instead of getting pennies.
Call me selfish (and that's a compliment to me :-), but I'd prefer the money to be in my pocket than in the VC pocket.
This seems wrongheaded and a bit presumptuous. There are no shortage of startups with no realistic business plan - there are also startups with a business model that requires substantial initial capital.
Silicon Valley is built on high-risk, high-reward, high-capital companies - there's a reason why "lifestyle business" (lower-risk, lower-reward, lower-capital) is a dirty word there.
It seems like you're swinging the pendulum all the way to the other end where we start making fun of people who take VC money.
I've been part of companies that are fully owned and never took VC money to get off the ground. They do reasonably well, but they are also pretty strictly limited to ideas with very low capital requirements.
I'd also spend a good bit of time studying the tax code of any country I start a business in. Some countries, like Australia, tax capital gains at the same rate as income, which is bad news for anyone who put sweat and tears into a startup for years. You'll get punished when you take a nice exit.
Anyone visiting the country but not resident here is also entitled to emergency care, e.g. if you fall off your bike as a tourist and have to go to the hospital, there is no charge. Same if you have a heart attack while visiting.
Am I entitled to NHS treatment when I visit England? http://www.nhs.uk/chq/Pages/1086.aspx
Am I entitled to NHS treatment when I move to England? http://www.nhs.uk/chq/pages/1087.aspx
I wouldn't be too sure about that.
What you're thinking of is the Foreign Earned Income Exclusion, which allows you to exclude the first $95,100 of foreign earned income from your taxes, if you live outside the U.S. more than 330 days a year. In my case there's no real reason to do that, because the foreign tax credit I get for my Danish taxes zeroes out my US tax liability. The main people who benefit from the $95k exclusion are those working in low-tax jurisdictions, e.g. American expats in Saudi Arabia. In their case it allows them not to avoid double-taxation (which is what the tax credit prevents), but any taxation at all.
Anyone doing startups or tech in Montreal or Vancouver? How's the environment?
"Another legal obligation that is very common in Europe and unheard of in the USA is state-mandated severance pay packages. This is a direct impediment to start ups, the reason being that most start ups fail and in the USA there is an understanding of this. In the USA employees demand stock options as upside should the start up succeed knowing that there will be no severance package should the start up fail. But I have yet to find a place in Europe where employees or governments truly understand this. Not only are forced severance pay packages a problem because most start ups fail and they still have to pay them, but also because start ups are constantly trying out people and the concept of trying out people is very costly in Europe. In some countries like France, forced severance packages of people who have been with you say only half a year can be as high as double their earnings during that time. For most Europeans stock options are considered a scam to pay them less."
I agree with your overall thesis, but bear in mind that in the US stock options are frequently used as a reason to pay people less.
/s
Lack of VC is not the core issue IMHO, I guess it's just the consequence of smaller markets. Biger markets = bigger VC money.
If I were, say, Czech, I'd seriously consider doing stuff in the Czech Republic for a while, if I could bootstrap, then raise capital globally (maybe with a small office in the US if that helped). But I sure wouldn't go from the US as a USAian to Europe to start something unless it was inherently a European-local business.
The "whales" in that industry are wives of financiers, sheikhs and commodities barons, along with celebrities. The next best group to sell to are the financiers, sheikhs, and commodities barons themselves. The globalized Patrick Bateman. All of these groups are well represented in Europe, especially London.
The next tier down in customer is the highly urbanized 20-34 year old. Due to the constraints of urban living when this group has extra cash they tend to buy $400 bags and shoes, rather than put it into a car or mortgage payment. There are far more people in this group located in Europe and Asia than there are in the USA.
It probably doesn't make sense to start many other sorts of online business in London, but fashion is an exception.
The problem for technical people creating startups in Europe isn't just lack of capital. It's risk-adverseness and occasionally classism. Unless you're creating a pure internet startup you will need to work with other businesses and your first issue is in convincing them to take a risk on you; if you've not got an MBA from x University, some friends in the industry and a couple of entrepreneurship awards it's only harder to do this.
The other ways up are really silly. Incubators that want you to social proof yourself with a number of popular advisors, etc. Also known as "You have to be in to get in." Or the weird government schemes that will give you a nice loan to pay-off, or the very dodgy-looking startup schools which want you to pay a fee to have them parrot obvious advice at you "Be Lean! Be Agile! Fill Out This Canvas!" The only important things are the right connections and an opportunity to prove yourself and what's there is often about legitimising the institution above giving the player an opportunity to legitimise themselves.
But, as with all things, just because something's difficult doesn't mean you shouldn't try. Better to try, fail and learn than to continue as a bystander.
If you rely on pageviews alone, maybe, but your audience then is English anyhow, as local language stuff just doesn't bring enough eyeballs.
If you rely on selling shit, then any US startup has a homogenous market of 313 million people, one legal framework and (roughly) one tax framework. In Europe? You're quite literally fucked.
A startup, by definition, is supposed to grow quickly. Which is inherently harder in Europe. Not starting in the US is quite frankly asinine.
/European myself, working for US startup, moving to US
but yes, outside of software, China is exactly for those reasons a great market (BMW sells more cars there than outside of China). however, it is hard to scale out of China, as the language kills you. once they embrace english, those web startups will start killing, no doubt.
Well there's your reason. IMO it's important (or at least a factor) to be close to your domain. London or NYC or Los Angeles are your choices if you want to be part of the fashion community.
This article is applying that generally, when it's just a specific market choice.
* Ease of hiring (remote workers increase the pool of available talent)
* Infrastructure (including availability of payment solutions, ease of setting up a business, etc)
* Access to finance (which may not be necessary if bootstrapping, or bank loans are available, which is especially promising in the UK with the Enterprise Finance Guarantee)
Unless you're VC-hungry there aren't really that many barriers to creating and running a successful company in the EU. Perhaps the biggest drawback to Europe is the culture, which is less startup friendly and slightly more risk adverse compared to startup-centric locations in the US.
Beyond that, another major bullet point is:
* Ease of firing (inability to fire creates an inability to hire, you get trapped with terrible employees)
Firing someone isn't as difficult as you'd imagine. There are a few more hoops, but at least in the UK it's not really all that difficult and it's not like you're permanently stuck with a bad employee. Plus, this is why trial periods exist!
That's why I am considering moving to CA after I get my degree. Though I am not sure yet.
We'd have been stuck in garages without the money to really hit the growth curve hard.
I'm a Canadian expat in the US, I cannot imagine starting any sort of capital-intensive venture in Canada just because the investment money does not exist.
If you're building something that doesn't require a lot of funding, by all means do it wherever makes you most happy. If you do need a substantial amount of money though, your options are limited.
For now I'm living in London. I considered Berlin, but I think the English practice here is invaluable. My English was already quite good when I came here, but it's improved LOADS. Also there's much more going on in general (culturally, socially), and there's more and bigger startups here (e.g. compare HN Who's hiring / startup city rankings).
Don't look at silly maps (URL?) that are pure fiction. dict.cc is a popular website, but not a classic startup (apparently no ambitions to commercialize) and 11 years old.
Recent highly successful startups from Vienna are e.g. Runtastic and 123people.