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Comment by kops | Hacker News Reader

I wonder what european VCs make of the fact that the VCs from US are talking about european startup scene as a virgin land, ready to be conquered.

So far I see only 3 parties in this discussion 1) US startups 2) European startups 3) American VCs.

Would be nice to hear the views of the 4th party conspicuously missing from the discussion.

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European VCs are few and far between. Despite working in the largest market on Earth, the overall level of investment is half what you'll find in the States (if that). Some of that is due to cultural issues, some to economic ones (wealth is much, much more distributed here, making the average investment smaller and the average investor more conservative and wary).

I suspect EuroVCs would be absolutely ecstatic if "them Yanks" were to bring lots of cash to the table while, at the same time, relying on "local knowledge" to direct that cash.

Tax laws in Europe sucks for VCs compared to silicon valley or anywhere in the US. As I understand it, a silicon valley VC can balance wins/losses over many years, perhaps even indefinitely. In most of Europe, the balance can only be made year 1, then the loss is a permanent loss and a win the next year will be taxed fully. This means any sane VC will base her operation in another tax zone. Hence the problem with billions of euros in "tax havens" controlled by European "foundations". (EU is chipping away at that problem now but it will take many more decades to resolve.)

UK has incredible tax regulations for investing in startups. Through SEIS you can write off 105% of losses and pay essentially no tax on profits.

> making the average investment smaller and the average investor more conservative and wary

X Million dollars are worth the same regardless of the owner (US vs EU). On the other hand a smaller average investment size should make the deals so much more lucrative and a turf worth defending.

Edit : on second thoughts it may have more to do with the cultural issues(as you pointed it out) combined with the regulatory boundaries e.g. amazon.de can't deliver half the things to Switzerland.

> On the other hand a smaller average investment size should make the deals so much more lucrative

No. Small investments -> less startups -> less deals -> less profit. Also small investments -> small growth -> small deals -> small profit.

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