European startups are raising the bar for American founders

"It's the biggest tech market, and succeeding there gives you the best chance to scale everywhere else. That choice wasn't unique to us. More and more European founders are making the same call.What's changed is the timing of the move. Expanding to the U.S. used to happen once companies were well-established in Europe. Now they're showing up earlier and moving faster."

"Spotify did this early. They started in Sweden in 2006 and quickly expanded into the U.S. They opened offices, built partnerships, and kept much of their engineering base in Europe. U.S. investment anchored them in the American market. It gave them credibility with local customers, visibility with partners, and the resources to scale fast. By the time they raised their $1 billion Series F, led by a U.S. VC, they were ready to take on Apple. Today, they lead the streaming market."

"So why is this happening now? On paper, Europe is a huge market. In reality, it's fragmented. Tax, labor, and compliance rules differ from one country to the next. Expanding from France into Germany can be as complex as expanding from Europe into Asia. Late-stage capital is harder to find, which slows growth, and enterprise customers are slower to move on smaller deals."

European founders face fragmented national tax, labor, and compliance rules, limited late-stage capital, and slow enterprise purchasing, which makes scaling across Europe difficult. Many startups choose an early U.S. expansion to access the largest tech market, faster buyers, deeper funding pools, and simplified market dynamics. Index Ventures observed an increase from 33% to 64% in startups expanding to the U.S. at preseed or seed stages compared with 2015–2019. Early U.S. presence delivers credibility with local customers, visibility with partners, and resources to scale, enabling companies to compete globally and accelerate growth.

Read at Fast Company