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The State of European Tech

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The State of European Tech 2018

Tech & the European Economy

Diversity & Inclusion

Europe's Got Talent

Tech Hubs

Growing Communities

Every City Is a Tech City

Density, Through Interconnected Tech Hubs

Building and Internationalising Away From Home

New Hubs - Where Next?

Research & Development

Regulation

Investors & Investment

Great European Companies

Challenges

Mythbusting

Predictions

About

Appendix

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05.4

Building and Internationalising Away From Home

The overwhelming majority of European founders are happy in Europe. Just 6% would choose to found and build their company in Silicon Valley if given the chance to start over again.

If you were to start over, where would you choose to found and build your company?

Source:

Legend

% of founders

Note:: Founder respondents only

Given that 28% of European founders are building their companies outside of their home countries, it's clear that founders will move if necessary to find the right location to build their company. But this is not necessarily their first choice. The majority of founders choose to build exactly where they are or where they have an established network.

What was the most important consideration for you when choosing where to locate your company when you founded it?

Source:

Legend

% of counders

Note:: Founder respondents only

European teams entering Y Combinator are voting with their feet on where to build their business; YC graduates who have returned to Europe have raised 5x more in the past two years than those who moved their startups to the US (the difference in absolute amounts across years is simply a function of the relative age of the different cohorts).

Funds raised by Y Combinator cohorts, Europe vs US-based ($M)

Source:: Blossom Capital

Legend

HQ in Europe
HQ in US

European founders going through Y Combinator are voting with their feet and choosing to return to Europe.

5x: European founders that have graduated from Y Combinator and returned to Europe have raised 5x more than those that moved their startup to the U.S.

European graduates of YC that elect to build from Europe are attracting investment from the region's leading investors, as well as from top U.S.-based funds.

Selected examples of YC graduates that are building from Europe

Source:: Blossom Capital

Around two-thirds of Europe's scale-ups have established an international office.

Source:

Legend

International office location
No international office location

Note:: Based on a sample 120 European tech companies that have reached $B+ milestone and/or raised more than $50M in venture capital.

The US is the #1 destination for European tech scale-ups that set up an international office.

Top 10 most popular countries for international office locations of European tech scale-ups that have internationalised their office footprint

Source:

Legend

% of internationalised companies with office in country

Note:: Based on a sample 120 European tech companies that have reached $B+ milestone and/or raised more than $50M in venture capital.

Although London ranked as the most cited destination city amongst all respondents, there are clear differences in the top city preferences when analysing the results based on the sub-region of origin of survey participants. On that basis, it's apparent that London is only the number one city for respondents from UK & Ireland and from the Mediterranean region.

Top 5 hubs where founders would start a company tomorrow, by region

Dataset

Source:

Legend

Share of founders (%)

Note:: Founders could allocate 3 votes. Percentages indicate how many founders would like to startup in each respective city.

You need to look beyond the established startup hubs to find the really interesting opportunities.
I only invest in B2B software companies, and those can really come from anywhere. That has also been proven in Europe with category defining companies emerging from beyond the tier-1/2 cities. You need to look beyond the established startup hubs to find the really interesting opportunities.
Teddie Wardi
Insight Venture Partners

Office space is one of the largest line items on the P&L for most tech companies, and picking the right office environment and location is an important decision for founder to get right. For founders that are prepared to move, there is more choice than ever. The wide variation of the cost of office space in different cities is just one factor to consider, though not necessarily a primary one.

Cost of prime rent ($ per square metre per year) for office space by city, 2Q 2018

Source:

Legend

Prime Rent ($ per square metre per year)

There are huge potential cost benefits by placing offices in locations outside the primary hub, though the differences vary by country. In the U.K. and France, founders choosing to build outside of London and Paris stand to benefit from hugely reduced fees on the relative cost of office space. In Germany, on the other hand, the difference in the costs of office space outside Berlin is far less pronounced.

Cost of prime rent ($ per square metre per year) for office space by city in selected countries, 2Q 2018

Dataset

Source:

Legend

Prime Rent ($ per square metre per year)

Europe's leading hubs have many advantages, but they're also far more expensive to build from.

2.7x: Difference in cost per square metre of prime office space in Paris (Île-de-France) compared to in Marseille, the next most expensive French city.