Why Regulation Helps European Founders Win Trust

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 a core banking system from scratch. I had never worked in finance or sat across from a regulator. For months, the work felt slow and heavy—full of requirements I didn’t understand and couldn’t shortcut. This, I thought, was the part of building in Europe 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 handling sensitive medical data for dozens of insurers. Health data is about as regulated as it gets, and 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 genuinely hard to build, and even harder to copy: trust. ### The Real Cost of Regulation I want to be honest about the cost—pretending it doesn’t exist helps no one. The 2024 Draghi report on European competitiveness found that over 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. Founders feel it every week. Anyone who tells you regulation is simply a gift has never tried to deliver under it. But here’s what often gets missed: what those same constraints do to a company that takes them seriously. ### Why Trust Becomes Your Moat In most consumer software, the buyer mainly wants to know if 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? Will you still be standing—and compliant—in five years? A hospital, bank, or 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. A faster competitor can’t simply bolt that on later. That was the key lesson for me, and it’s where Europe underrates itself. - Trust becomes a competitive advantage that’s hard to replicate. - Compliance built into the product from day one saves costly rework. - Regulated markets reward discipline over speed. ### The American Startup Trap American startups are often admired for moving first and asking permission later. That works well until the product touches money, health, children, or critical infrastructure. Then the missing trust gets very expensive. Take the genetics company 23andMe. It marketed health reports to consumers for years, and in 2013, the US Food and Drug Administration ordered it to stop selling them until it could prove the tests were valid. The company 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 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, is being phased in over the next few years. The heaviest obligations land on high-risk uses in areas like 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. But I’d 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. ### A Balanced Way Forward None of this means the rules should stay as they are. The Draghi report is right that the burden needs to fall—rules should be simpler, and enforcement should be consistent across the EU. But the core insight remains: building under regulation isn’t just a challenge—it’s an advantage for those who lean into it.