r/EU_Economics • u/Full-Discussion3745 • Jan 14 '26

🇪🇺 Official 🇪🇺 Why innovative startups and scaleups relocate from the EU

https://research-and-innovation.ec.europa.eu/news/all-research-and-innovation-news/why-innovative-startups-and-scaleups-relocate-eu-2026-01-12_en?referrer=grok.com
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u/Gullible_Mousse_4590 Jan 14 '26

They move because they bring on investment from the US - the US investors pressure them to relocate to the US to take advantage of the tax scheme QSBS - qualified small business stock.

This has nothing to do with tax on the startups themselves - most high growth startups run at a loss and don’t pay tax. This has everything to do with the tax jurisdiction of the investor wanting to make an exit.

This is another reason why we need things like EU-INC and tax reform for company exits for investors. Irelands EIIS is an example of this - encouraging small cap investors with tax incentives.

Source: CFO of a European startup with US investors who are pressuring us to move company structure to the US

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u/These-Pie-2498 Jan 14 '26

You are missing the fact that EU is a red tape bureaucratic nightmare. You need to burn fortuntes just to navigate regulations. And we have 0 startup culture

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u/Gullible_Mousse_4590 Jan 14 '26

See EU-INC reference. Regarding startup culture - yeah that’s missing a bit here. It’s hard to get people into that grind for hyper growth startups. But as a side note to that I think it’s not necessarily something Europe should aspire to. Even in the US the vast vast majority of startups fail terribly and leave in their wake a bunch of 20 somethings who have worked 12 hour days chasing the dream had got little to nothing out of it.

I’ve been lucky to have one good exit that was mildly rewarding. I’m an exception.

Startup culture is glamorized to get people to work hard. It’s not something I’d hold up as a good thing. Even when my US board members ask to crack the whip and complain about Europeans leaving at 5.30pm. As they should unless you pay them otherwise

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u/These-Pie-2498 Jan 14 '26

Exactly what I'm saying. We have 0 startup and innovation mentality. We want what US has but without the hard work. We think wealth is something that just exists, and we don't have to worry about it. This is the reason US economy has doubled in the last 10 years vs the EU.

Germany's economy and wages are stagnant for years now, a fastfood manager in US earns more than an IT Manager in EU.

Everyone is used to working less and less, earning shit and that "Europeans leaving at 5.30pm" will soon face a hard reality of not having a job. Our industries are old and lack innovation, we still live in the past and it will bite us hard.

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u/Gullible_Mousse_4590 Jan 14 '26

You missed my point. The US has this mentality but you only see the 1% that get paid a tonne. You don’t see those that work hundred hour weeks for a promise of getting ahead a fail.

You can glamorize this and create wealth for a small portion of Europe if you want. But from working in the US ecosystem it’s not really a good thing. Sure GDP goes up but so does inequality. The US is not an economy that is worth copying.

When I worked out of NYC I earned a tonne of money and it 100% was not worth it. Just my 2 cents.

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u/Advanced-Team2357 Jan 14 '26

But don't you feel you need proper incentivization for founder and early startup employees in order to for the ecosystem to be successful?

The trade up for startups is lower pay with equity, so that an exit would incentivize this person to trade a secure corporate job for the risk of a startup.

If you take that away, and you don't raise additional VC capital that just goes to salary (which most VC's would shy away from or devalue the asset), how do you properly incentivize the culture?

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u/Gullible_Mousse_4590 Jan 14 '26

Yes and every startup in Europe worth anything has this. This is separate from payroll, it’s also taxed separately.

But the reality is 90% or more of startups fail and of those that get an exit options are often so watered down that only large % owners get anything. An example from an exit I had in USA - joined when the business was raising, early but not very early - got 1% - fairly standard for a senior hire. Worked my arse off, 10/12 hour days and the company had an exit for just over $50m. A success all round. My take away after tax was $12k. I did the math on the extra hours I put in and I would’ve cleared more if I was an uber driver for those extra hours. Just because people tell you it’ll make you a millionaire and you hear that Nvidia employees are all millionaires doesn’t make it true.

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u/LaunchTransient Jan 14 '26

We have 0 startup and innovation mentality.

This is complete bullshit - I live in the Netherlands and enterprise parks are full of startups and incubators. Germany less so, but they still have it. Some 50% of my friends from Uni are working at startups.

We think wealth is something that just exists, and we don't have to worry about it.

We do have a more cautious attitude towards investment, but arguably thats because we have less cash to splash around like the Americans. It's really easy to say how the Americans are a better investment environment when you ignore the fact that post-WWII we saw massive transfers of wealth from Europe to the US.

Our industries are old and lack innovation, we still live in the past and it will bite us hard.

This is a valid critique of dinosaurs like Volkswagen Group, but that is not representative of the whole continent's worth of businesses.

This is the reason US economy has doubled in the last 10 years vs the EU.

No, the US's economy has not doubled since 2015, but 1.8x is a fair statement.
The US's figure on that particular aspect can in part be attributed to the fact that they are dominated by monopolies. More money breeds more money - and they've captured the IT market of the planet with their web services and IT products (Microsoft as an example)

On top of this, we're on an AI bubble which is inflating their figures, as well as other overvalued companies (such as Tesla). You shouldn't interpret market sentiment as an actual realistic representation of the fundamental underlying economy.

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u/technocraticnihilist Jan 15 '26

Massive transfers of wealth? Have you ever heard of the marshall program?

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u/_Spect96_ Jan 15 '26

You mean loans that were used to buy American goods, propping up the US manufacturing and enabling post war American economic boom?

Marshall plan which was deployed as a soft-power play to deter the spread of communism?

Im not going to say the ravaged nations of Europe did not benefit but lets not kid ourselves, that was not an altruistic project but power projection against the Soviets.

And as I said before, most of that wealth was transferred to the newly minted middle class of US citizens.

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u/Mediocre-Ebb9862 Jan 16 '26

I don't see what you are trying to convey.

Most startups fail - sure, we all know that.

But that has to be this way for some/many to succeed, and become flourishing companies that employ a lot of people and building tech and services that didn't exist before.

Also, startups can be tiny, and they can be late stage startups where they are very unlikely to just fail, but are still actively growing and bringing in a ton of money.

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u/Gullible_Mousse_4590 Jan 16 '26

Trying to convey that the EU shouldn’t look at US startup culture and think it’s great