European startups vs US startups

There comes a key moment in the life of a startup when the money that has been invested in it determines whether it survives or dies. The truth is that not all countries have it as easy as the United States to find funding. Here is why.

#1 Revenue vs Growth

What is more important, revenue or company growth? US startups compete in a huge market and need a high degree of market penetration to gain a competitive advantage. In Europe, however, it is the other way around. Startups have fewer opportunities to raise capital, so from an early stage they focus on generating profits in order to survive, rather than expanding and taking risks.

#2 Unified vs Diversified market

But money is not everything. There are other barriers that slow down the development of European startups: language, culture, laws... In the United States, the market is much more unified. In Europe, however, there are many cultural, language and legal differences. What is successful in Germany is more complicated to implement in Spain because of the different language. What may work in Sweden, needs different legal regulations in France. In short, it is very difficult for a product, a social network or other platforms, to access all countries at the same time. This translates into more effort and time invested in understanding and adapting to different markets, which has meant the end of many startups.

However, this specialization in smaller markets can be an advantage in many cases. Why? Because if a startup focuses on improving its product and processes in its home market, it can benefit the company's growth in other ways. If it becomes the leading player in the local market, it does not have to fear other competitors in its home territory during expansion plans and can focus on the next one and gain the same position.

#3 VC & Late-stage investors

Despite these differences, Europe is not lagging behind. The European startup ecosystem has a strong demand for late-stage investors, but in recent years we have seen a wave of venture capitalists enter the startup ecosystem. Indeed, this is reflected in the $76 billion raised by these growth-stage startups in 2021, compared to $23 billion in 2020. ? helping to drive its development and producing large unicorns, such as Sweden's Klarna, Germany's Zalando and Spain's Cabify and Glovo. This means that Europe already has all the ingredients of a high-potential startup environment capable of nurturing growing startups into global players. ?

Now is the time for VCs to leverage their expertise and make an impact on the European startup community.

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