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Why European startups prefer Silicon Valley
EU startups moving to US, why Stripe left for Silicon Valley, and more...
SearchVentures
July 24, 2024
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EU startups are turning to Silicon Valley
European startups are relocating their headquarters to the U.S. in order to access a larger market, with SaaS companies forming the largest group at 22%.
Why are European SaaS startups heading across the Atlantic?
This Week’s Trends
European startups are moving to the US
How Stripe reached a $95 billion valuation
Morgan Stanley ventures into Europe and more
Read Time 4 minutes
The Startup Trend
European SaaS startups prefer the U.S.
European SaaS startups are increasingly moving to the U.S. to scale their operations, drawn by a more favourable investment environment. Startups in the U.S. are 40% more likely to secure venture capital funding in their first five years, attracting many of Europe's top startups.
“Too many European savings are being invested abroad rather than in Europe’s most promising start-ups and scale-ups.”
> U.S. startups receive more late-stage funding and benefit from a better IPO market, receiving 61 IPOs over $1 billion in 2021 compared to 25 in the EU.
> According to index ventures, European startups are more likely to relocate their HQ to New York (44%) than San Francisco (28%).
💡During the recent European parliament elections, there were growing calls among the delegates to open up alternative investment sources for startups via pension funds rates, addressing the market fragmentation issues in Europe.
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Startup feature
A Leap from Dublin to San Francisco
Stripe, founded by two Irish brothers Patrick and John Collison, started with a simple mission: to simplify online payments. Founded in 2010, the founders decided to move their headquarters to San Francisco in 2011 allowing it to tap into the larger U.S. market and a more established tech ecosystem.
Now valued at over $65 billion, the payment platform serves millions of businesses in over 120 countries, including major companies like Amazon, Google, and Shopify.
Why the Move To Silicon Valley?
“Silicon Valley is where the brightest minds and deepest pockets converge, making it the ideal place for Stripe to tap into the resources necessary for rapid expansion and innovation.”
Moving to San Francisco positioned Stripe to access top-tier talent and investors. By 2014, only 3 years later, Stripe was valued at $1.75 billion after raising $70 million in a Series C round.
The shift to Silicon Valley was not just about location, it was about accessing talent and investors. Stripe's valuation skyrocketed, particularly after a significant funding round in 2021, where they raised $600 million, valuing the company at $95 billion and making Stripe one of the most valuable private companies globally.
Building their team with U.S. talent
Patrick Collison focused on the importance of hiring the right people early on, even if it meant taking longer to find them. The move to the U.S. allowed them to hire talent focused specifically on developing their product for Silicon Valley.
“We use time horizons as a competitive advantage. If you're operating on a five-year, seven-year time horizon and you have an advantage to your competitors that are operating quarter to quarter”
It took Stripe two years to hire its first seven employees. Although VC funding in Europe remains significantly behind the U.S. in size, the talent pool for Europe has grown substantially.
Current startups gaining traction in Europe may choose to leverage the growing talent pool, while eventually relocating to the U.S. in order to access a larger market of investors and venture capital to scale their operations.
Headline News
This Week In Startups ✍️
Founders
> Sokin, London-based global payments neobank raises $31 million led by Morgan Stanley.
> Gcore, Luxembourg-based Edge AI, cloud, network, and security solutions provider announced it has secured $60 million in Series A funding.
> Plum, London-based personal finance app has raised £13.4 million in funding from institutional investors.
Investors & VCs
> ZAKA, a Czech family office announces its first fund of €15 million aimed at supporting early stage startups across Europe and the US.
> Lead Ventures, Budapest-based firm launches €100 million seed and series A fund for CEE startups.
> BOOOM, a Berlin-based VC closes its first fund at €17 million, aimed at European B2B software startups at pre-seed and seed.
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Cheers,
Odin Lund & Hari Mohandas
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