How European Founders Turn Regulation Into a Moat

Jan de Vries · 2026-07-10

When I joined N26 as CTO, my first real job had nothing to do with building an app. I was asked to help get a banking license and build up a core banking system from scratch. I had never worked in finance and had never sat across from a regulator. For months the work felt slow and heavy, full of requirements I did not understand and could not shortcut. This, I thought, was the part of building in Europe that everyone had warned me about. I was wrong about what that experience was teaching me. A few years later I built Vivy, a digital health platform that handled the sensitive medical data of people across dozens of insurers. Health data is about as regulated as data gets, and once again my instinct was to treat the constraints as a tax on speed. Over time I saw them differently. The rules were pushing us to build something that is genuinely hard to build, and even harder to copy: Trust. ### The Real Cost of Compliance I want to be honest about the cost, because pretending it does not exist helps no one. The 2024 Draghi report on European competitiveness found that more than 60% of EU companies see regulation as an obstacle to investment, and 55% of small and medium-sized companies name regulatory and administrative burden as their single biggest challenge. Fragmented rules across 27 member states, slow processes and uneven enforcement are a real drag, and founders feel it every week. Anyone who tells you regulation is simply a gift has never tried to deliver under it. The part that often gets missed is what those same constraints do to a company that takes them seriously. ### Why Trust Beats Speed In most consumer software, the buyer mainly wants to know whether your product is good. In regulated markets like FinTech and HealthTech, the buyer carries a heavier question: can they trust you with their customers' money or their patients' records, and will you still be standing, and compliant, in five years? A hospital, a bank or an insurer is buying that confidence as much as any feature. A startup that has absorbed the rules into how it builds takes that fear off the table, and a faster competitor cannot simply bolt that on later. That was the key lesson for me, and this is where Europe underrates itself. ### A Cautionary Tale from Across the Atlantic American startups are often admired for moving first and asking permission afterwards. That works well until the product touches money, health, children or critical infrastructure, and then the missing trust becomes very expensive. The genetics company 23andMe marketed health reports to consumers for years, and in 2013 the US Food and Drug Administration ordered the company to stop selling them until it could show the tests were valid. It pulled its health product for nearly two years to complete the regulatory work it had tried to skip. European founders who have learned to build inside hard constraints are training for exactly the markets where that discipline is the price of entry, often without realizing it. And the skill is very much transferable. Once you know how to ship a compliant product without losing your sanity, you can do it again in the next regulated category. ### What This Means for AI The same argument is about to repeat itself with AI. The EU AI Act, the first comprehensive law of its kind, has been and continues to be phased in over the next few years, with the heaviest obligations landing on high-risk uses in areas such as hiring, finance and health. I hear founders describe it the way I once described that banking license: a brake, a burden, a reason Europe will fall behind. I understand the frustration, and I would still ask them to look one step further. The companies that learn to build AI that is transparent, well governed and safe will win the regulated sectors where AI is audited and paid for. In AI too, trust is becoming the product. ### The Path Forward None of this means the rules should stay as they are. The Draghi report is right that the burden needs to fall, that the rules should be simpler and that enforcement should be consistent across the EU. But for founders who can navigate this landscape, the reward is a durable competitive advantage that's hard to replicate. Here's what I've learned: - Regulation forces you to build for the long term, not just for a quick exit - The trust you earn in one regulated market opens doors in others - Your compliance expertise becomes a product feature that customers pay a premium for So next time you're staring at a regulatory requirement that feels like a burden, ask yourself: What if this is actually training me for the biggest opportunity of my career?