EU versus USA startups

Two Global Markets

When it comes to startups, location matters. It’s not just about your financial capacity, your willingness to take risks, and what your current workforce is capable of. The United States and the European Union are home to a ton of startups — some of which have grown to become billion-dollar industries. But what are the main characteristics of the US that separate it from the EU in terms of supporting startups?

The European Business Mindset

Simply put, the European Union has a more calm and steadier pace compared to the United States. It does not rush into things. Instead, it values patience and thorough planning. Rather than opting for rapid success, the startups here are encouraged to grow little by little. Thus, the EU startup takes sustainability and scalability into account early on.

To be fair, the United States still leads when it comes to sheer competitiveness and the overall value of startups in a region. But it’s clear that the EU is about to close the gap between them. This continued success can be attributed to a variety of factors, which we’ll tackle below.

The Importance of Locality

One could argue that both the EU and the US have a diverse population. The latter has its states while the former has its member countries. But it cannot be denied that in terms of culture, language, and customs alone, the European Union has a lot more to deal with. It has to deal with each and every member differently. They all have their own specific rules on regulations and business management.

Likewise, the United States enjoys open borders. You can go from Texas to Georgia without having to worry about whether you can get in or not. Most nations in the EU have open inter-state borders as well, but we all know the deal with Brexit. Thus, a startup in the EU must consider where exactly it wants to start the business. This may seem like a disadvantage, but it helps the startup become flexible.

The EU startup must have the resources for translation services. Another option would be to hire someone who speaks the native language. For example, they can hire someone who speaks Danish to conduct customer service operations in Denmark. A certain set of employees can be tasked to handle any local policies and regulations.

A startup that is willing to learn a specific nation’s history and language can adapt well to change. It should aim not to capture the EU market on the get-go but to attract the local market. This gives them an economic stronghold before they expand to other markets within and beyond the EU. Thankfully, nations in the EU are mostly cooperative.

Receiving Startup Funds

In the United States, an entrepreneur won’t have a difficult time looking for investors. It will still take time to convince a sizable portion of them to invest sufficient funds, but there is no scarcity in people with money to burn. Angel investors in the US abound — they always have their sights on the next big thing. They can lose a lot of money but they may also reap profits by a significant margin.

Similarly, there are numerous venture capitalists in the US. Startups just need to clarify their ideas to them. We do not discount the fact that there are also investors in the EU. However, the chances of an investor taking risks are higher in the United States — and this applies both during the first stage and when startups are finally experiencing growth.

Of course, both regions benefit from crowdfunding projects. But these should be more of an alternative rather than the primary form of funding. After all, failing to meet the demand of thousands of people is more daunting than explaining to a single angel investor what happened.

Taking Risks and Minimizing Losses

As expected, people in the United States are more willing to take risks than in the European Union. Everyone in the business world knows that most startups fail — but that won’t necessarily stop investors from trying again. Investors in the US aren’t reckless but they aren’t also afraid of the unknown. If they don’t take the big leap, they might not get the results they wanted in the first place.

In contrast, those in the EU aren’t that open to taking huge risks. If they had to choose between a decent salary and managing a risky startup, most would choose the former. When the time arrives for them to set the startup, however, they still practice extra care. They would typically use their own money or secure funds from people they personally know rather than seeking big-pocketed yet unknown investors.

All in all, you can have your startup anywhere and succeed. However, there are significant differences in terms of how investors and entrepreneurs operate in the EU and in the US. It’s up to you to know where your skills and resources would fit better.