How to Choose the Right European Country to Start Your Business
Entrepreneur's New Year’s Guide
As an entrepreneur, I found that one of the most challenging (and exciting) decisions was choosing the right country to start my business. Coming from Russia and doing a huge amount of traveling in my youth, I have developed a unique perspective on how countries around the world differ and developed a true appreciation of the importance of culture when launching a startup.
From my experience, there are common themes that unite all the great startup cities of the world but a huge number of differences, too. They all contain the same type of person -- ambitious, driven, health-conscious -- and each is fighting to attract new business. Given so many variables, it can be overwhelming for international entrepreneurs to decide where to plant your flag. So, based on my experience, here's a run-through of what entrepreneurs should think about before taking the plunge.
Let's start with the obvious.
Europe is a natural starting point. The best time zones, access to capital, great support for small businesses, the economic and cultural benefits of being part of a single market, open routes to emerging markets and the strengthening relationship with the U.S. all make Europe a very attractive destination. It's never been a better time to set up in hubs such as London, Paris, Berlin, Lisbon, Amsterdam, Barcelona and Madrid. As cultural safe havens, it is easy to default to these countries. But, I would caution against playing it safe and following the pack blindly. What else should we be thinking about when starting out?
We can't avoid the B-word.
Brexit is probably the top challenge that face startups in Europe. The U.K. leaving the single market will cause many startups to leave or consider setting up elsewhere, depending of course on what the final agreement looks like with the EU. However, despite the uncertainty, the U.K. continues to remain the favored destination for global capital. According to Dealroom data, U.K. businesses have managed to raise £5.41 billion ($7.7 billion) in investment for startups in 2017.
"Thinking outside the box" -- an overused clich or the perfect phrase?
According to Fast Company, Russia's tech investors with Russian ties are still chasing deals and dreaming big. However, the startup scene has not surprisingly suffered from a lack of investment in recent years, as western sanctions, ruble devaluation and bad PR has forced many entrepreneurs to look elsewhere. Absence, or passive presence of international technology giants such as Google, Apple, Amazon, etc., makes it difficult to sell at a fair value; plus, a weak ruble brings the chances of orchestrating a successful IPO close to zero.
Despite the political wind freezing against Russia in the West, the startup opportunities in the country's major hubs are thawing and have been for a while. Moscow's self-confessed European cousin, St. Petersburg, has cheaper rent prices and strong ties with neighboring Finland, where the VC landscape is much more developed and is itself another location that should be under strong consideration. If it wasn't for the strength of mainstream media discouraging relationships with Russia, I believe more entrepreneurs would be based there. The cost of living is also a key factor for a young startup community, and as the city makes it affordable for startups to take risks, it should attract more diverse talent. My bold prediction is that, in five years' time, Russia will be seen as a more mainstream and attractive location to start a business.
Accessing talent and diversity are vitally important to startups.
Germany, France and Canada are leading the way as notable countries opening their borders for collaboration and growing innovation in tech -- regularly hosting state visits from heads of states such as India and the Middle East. However, there is a long way to go when it comes to accessing and retaining the best talent. Political opposition to free movement of people, triggered by the growing wave of populist nationalism, is a real concern. Unnecessary barriers to migration restrict progress and economic growth. For example, I think Great Britain's rich cultural history of welcoming people from across the world has played a large role in making the country great and why its startup scene continues to thrive.
A key challenge for any startup ecosystem is its relationship to academic institutions as a direct feeder of talent and research and development. With so many innovation programs now in place both in academia and in commerce globally, we should also look closely at Israel, which is now seen as the darling of tech innovation and has mastered the art of disruption through harnessing home-grown talent. As noted by Times of India, Israel has more Nasdaq-listed companies than any country barring U.S. and China; has more venture capital per capita and more startups than any other country in the world; and now partners with countries like India, which a decade ago would have been out of the question.
At TruBe, we have so many personal trainers from all over the world who are not permanent residents in the U.K. It is therefore vital that the ecosystems in which startups thrive remain accessible to talent from all over the world to ensure that big and small employers can continue to grow. Winning the hearts and minds of politicians to understand how fluid migration between countries can create jobs and enrich our communities will be critical to the success of all startups, no matter where they are based.