Why The European Startup Scene Is Still Behind The US

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp

Whether living in the US or Europe, stress is put on becoming an entrepreneur. Many see the United States as the land of startup and viable self-employment, but Europe is also experiencing an influx of startups. 

When discussing tech startups, Europe is only evaluated at $240 billion, but the US is leaps ahead at $1.37 trillion. These startup statistics can depict the funding power of the US culture, but there must be other reasons for this large gap, since entrepreneurs are in both places, creating products and services viable for their economies. 

Why is Europe not caught up with the United States with startup power? What are the main influences on this lack of ‘startup power’ in Europe? Here are a few contrasts on the European and US markets and how they directly reflect this startup gap.

Big-Dollar Investors

The capital needed to begin a business, or attempt to grow it, is not easy to come by in Europe. In the US, investors are more likely to take a chance on startups, even with very large investments. funding is what’s limiting the startup power in Europe. 

Most investors in Europe are more cautious when it comes to putting forth their money in company they did not create. It is natural to not see a return on your investment for years in the US, and the big spenders are okay with this, but In Europe the time frame for return is much more important. 

Main Focus on the Bottom Line

Revenue is key to any business, but to only focus on the numbers and making a profit, can be a downfall. The common phrase, “You have to spend money to make money,” comes into play here. There is a point in a startup where profits can be kept or be put back into the company to grow it. The United States approaches that method, even if the startup is not very promising. 

The expectations for a return is ingrained into Europeans, and when investing, they expect their money back in a shorter time-frame. Of course, since successful startups will make more in the European scene, that is directly because of the lack of other startup competition. 

Top University Locations

Out of the top universities in the World, the US has more than half within the country. While Europe does have some top Universities, they are slightly behind the large knowledge-dens created in the states. Many focused intellectuals will travel to the United States for their education, and afterwards are likely to stay and create their business there. This creates a direct lack of innovative entrepreneurs in the European scene. 

With access to new remote employee capabilities, it can be wise to create a team overseas and keep up with technology resources working for other countries. This is a global marketplace and with the expanse of the internet, it is becoming easier to expand a brand beyond the country of its creation. Machine Learning and Cloud computing are on the rise and should be implemented to give the startups a solid chance against others in the tech world. 

European Un-unified Market  

Europe is made of many countries with diverse markets, and standards placed on each individual one. It can be more difficult to have the power of transcending different languages and cultures. On any of the diverse Nat Geo Tours, it is apparent the the cultural divides that still persist across Europe, and while beautiful, it is costing startups. 

It takes time to translate ads, and even the packaging of the product effectively. Because of the differing economical standards, there is also the issue of branding. Many methods will only work for a few European countries, then the rest are left out of the realm of that particular startup’s advertising.

Final Thoughts

With the European startup scale, there is an obvious big difference between it and the United States. While it can be more difficult to have a startup arise, it is also easier to make a profit with its setup. 

This allows for the development of steady, loyal customers, and a smaller environment where brands can grow to household names much quicker than the US. Keeping a solid understanding of the differences between the markets can lead to better branding, even crossing the sea to startups from both countries. 

Author