Europe's Startup Paradox: Why the U.S. Wins at Scale

Jan de Vries · 2026-09-14

I don't buy the neat story of a mass exodus of European startups. The numbers just don't back it up. Most companies stay right where they were founded, and when they do move, it's rarely a single dramatic decision. The real question is: what happens when a startup starts to scale? ### A Company Doesn't Relocate in a Day The European Commission's Joint Research Centre estimates that only 3.3–4.3% of European venture-backed companies relocate fully or partially. For companies without venture capital, that figure drops to a mere 0.3–0.5%. So no, it's not a mass departure. But here's the kicker: 97% of the companies that do relocate do it partially. They keep operations back home—a lab, engineers, manufacturing, or part of the team. What moves is the holding company, headquarters, leadership, fundraising, or commercial function. And when that happens, the U.S. is the destination of choice. "Relocation" isn't quite the right word. It's more like the center of gravity shifts gradually—from one function to another, not in one fell swoop. ### The More Successful the Company, the More Expensive the Next Step For scale-ups, the picture gets sharper. According to the 2024 Draghi report (as cited in the European Investment Bank's 2026 analysis), around 10% of European scale-ups relocate abroad, and roughly 85% of them pick the U.S. The report also notes that close to 30% of European unicorns founded between 2008 and 2021 moved their headquarters abroad, mostly to the U.S. These figures cover different groups and periods, but they point to the same mechanism: Europe risks losing a disproportionate share of the value created by companies that grow into large international players. In biotech, the gap is especially glaring. An EIC report found that between 2019 and 2025, 66 of the 67 EU biotech companies that went public chose exchanges outside the EU. That doesn't mean they closed their European offices—it means the market for their IPOs, future liquidity, and next stage of capital was almost always elsewhere. ### After the Laboratory Comes a Different Economy Europe is strong at the early stage. It has universities, research centers, Horizon Europe, the European Innovation Council, and national funding programs. But when a company enters the next stage, its need for money doesn't disappear. What changes is the job that money must do. Early capital funds research and tech development. The next step is scaling manufacturing, navigating regulation, building international sales, securing hospital procurement, and hiring executives who've already brought a product to market. So a company needs more than capital. It needs capital connected to a market, specialist networks, and execution experience. The European Central Bank estimates the total stock of venture capital at around $1 trillion in the U.S., compared with about $160 billion in the EU. This isn't annual investment or dry powder; it's the overall size of each system. The gap matters most at later stages, when the sums are larger and mistakes are more expensive and harder to reverse. A founder isn't just choosing a check. They're choosing the system in which the company is less likely to make a costly mistake. ### The Problem Isn't Consultants—It's the Cost of Navigation European funding programs are surrounded by consultants, grant writers, and intermediaries. A good consultant saves time and explains rules that a founder may be encountering for the first time. Across Horizon Europe, 17% of applicants used external consultants or experts; among EIC Accelerator applicants, that share reached 67%. The cost also varied considerably. The median consultancy fee was €7,500 for a consortium proposal, €2,000 for a single-beneficiary proposal, and €12,000 for an EIC Accelerator application. In dollars, that's roughly $8,100, $2,200, and $13,000 respectively. These fees add up, especially for startups already watching every penny. So what's the takeaway? Europe excels at creating tech, but when it comes to scaling, the U.S. often provides the ecosystem that helps these companies grow. It's not about a mass exodus—it's about where the center of gravity shifts as companies mature.