Over the past half-century, Silicon Valley has been the hub for technological innovation. The $3 trillion neighbourhood boasts a wealth of new and exciting startups as well as industry behemoths, such as Apple, Facebook, and Google.
The technology built by these giants has allowed businesses to become increasingly more interconnected, facilitating hybrid and remote work models that may not have been feasible a decade ago. As a result, and rather ironically, technology teams are no longer bound to the birthplace of big tech. Businesses now have the freedom to base themselves anywhere in the world. Take Tesla and Oracle; the two tech titans have both recently moved their headquarters out of Silicon Valley, looking for new, fresh talent further afield.
As more and more companies begin to open themselves up to flexible and remote work and demonstrate an increasing desire to recruit from a larger talent pool, Europe is emerging as one of the fastest-growing tech markets in the world, attracting startups from all over the globe with its rich cultural heritage.
In fact, European startups attracted more than $110 billion over the course of 2021. The continent has already given birth to household names, such as SAP, Spotify, and Booking.com, and with the popularity of the region set to grow exponentially, it’s likely that we’ll be seeing many more emerge in the future.
Here, I have identified three reasons why young companies are electing to station themselves in Europe and why future business leaders and would-be entrepreneurs should take note.
An untapped talent pool
Just as technological advancements have altered the way we work, digitalisation of the workplace has also triggered significant changes in how businesses recruit. No longer limited by geography, companies can now hire talent based outside of their traditional catchment areas; this means a candidate’s ability and experience are far more valued than ever before.
In moving outside of the traditional form of hiring, companies feel more comfortable looking outside of their ‘typical’ employee profiles. This also encourages diversity and inclusion within the workforce, particularly as people are assessed on the work they do, rather than their appearance. Europe is diverse in and of itself, and so startups will be better placed to recruit a heterogeneous workforce, varied in both background and approach, allowing for unique perspectives which are crucial for building new ideas.
Furthermore, businesses are moving to Europe for greater access to a wide range of talent free to work within any part of the continent. EU citizens don’t require visas to work in member countries and, for those coming in from outside the EU, the continent has been quick to facilitate work permits for highly skilled talent, including engineers, product managers and UX designers. The vast majority of tech talent in places like Barcelona, Berlin and Amsterdam, for example, comes from abroad.
Rising European VC investment
One of the main deterrents for startups wanting to set up camp in Europe is that founders have traditionally had to work harder to attract funding than businesses in the US. However, according to Pitchbook data, European VC investment totalled €24 billion in Q3, the second-highest quarterly figure in history, marking a mass change in the way that investors are viewing the market.
Glovo’s €450 million Series F was the largest in Spanish funding history and mirrors the success of many other successful tech investments coming out of Europe. Klarna, for example, a Swedish fintech firm, raised $639 million in its funding round led by SoftBank’s Vision Fund 2, and Trade Republic, a German stock-trading app, raised $900 million in a huge funding round that values the start-up at $5.3 billion.
And yet, as organisations in Europe have become accustomed to limited funding, their business models tend to be leaner and more agile, allowing for a more efficient use of funding. Investors have caught onto this trend, realising that European businesses are better placed to use their money more wisely, meaning that investments will, in theory, continue to increase in the long run.
A learning network for startups
Europe is also home to numerous success stories. Over the last ten years, we have become accustomed to watching European titans grow exponentially, such as Spotify from Sweden, Skype, and Bolt from Estonia, and Booking.com from the Netherlands. These businesses have worked tirelessly to build their success in a more challenging climate than the US and act as an example of how Europe’s harsher environment can benefit startups in the long run.
In Europe, each country has its own unique cultural and legal nuances to consider when building a business. While this can pose a problem — whether it’s operational alterations, localisation issues, or dealing with different payment providers — the advantage lies in helping start-ups become truly customer-centric, putting their users first when defining, developing, and then refining their product.
It’s no surprise then that we have witnessed a mass migration of businesses choosing to base themselves in Europe over other tech hubs such as Silicon Valley. From talent to funding, to support, the continent is the perfect playground for young businesses to achieve great things in the coming years.
Former French President Jacques Chirac once said, “the construction of Europe is an art. It is the art of the possible.” Given the current boom in the European technology industry, Chirac’s words have never been so pertinent.