Europe Has the Talent. It Doesn't Have the Urgency.
The 28th regime is coming. Just not fast enough.
I’ve lived in Austin, London, Ljubljana, Belgrade, and now Amsterdam. I’ve built companies, worked at startups, and now deploy AI solutions across dozens of clients as a Forward Deployed Engineer. I’ve seen what makes ecosystems work and what holds them back.
Europe has the talent. We have world-class universities, exceptional engineers, and founders with genuine ambition. What we don’t have is the infrastructure, the culture, or the urgency to turn that talent into globally competitive companies.
And the gap is widening.
The Numbers
European startup valuations are 29-52% lower than their US counterparts across all funding stages. The gap is most pronounced at the earliest stages, where Seed and Series A rounds in Europe trade at roughly half the valuation of equivalent US companies.
This isn’t about quality. It’s about market structure.
The US is a single, homogeneous market of 330 million consumers sharing one language, one currency, and one regulatory framework. A startup in Austin can sell to customers in Boston, Seattle, and Miami without changing a single line of legal text. In Europe, scaling from Amsterdam to Paris to Berlin means navigating three different legal systems, three different tax regimes, and three different sets of employment laws.
The median post-valuation at IPO for European companies listing on domestic exchanges is $46 million. For European companies that list in the US instead, it’s $631 million. That’s a fourteen-fold difference that shapes every investment decision along the way.
The Culture Gap
The structural problems are symptoms of something deeper.
When I lived in Austin, I could choose between dozens of tech events on any given evening. Meetups, pitch nights, founder dinners, hackathons. The entrepreneurship culture was so embedded that conversations at coffee shops regularly turned into introductions to potential investors or co-founders. In Amsterdam, I’m lucky if there’s one relevant tech event per month.
This matters more than it might seem. Ecosystems aren’t just about money. They’re about density of ambition, about the normalisation of risk-taking, about the assumption that building something is a reasonable thing to do with your life.
In the US, saying “I’m starting a company” is met with curiosity and offers to help. In much of Europe, it’s still met with raised eyebrows and questions about your pension plan. Personal bankruptcy in the US is a data point on a founder’s journey. In Europe, it can be a social stigma that follows you for decades.
There’s a story that went viral recently about a founder in San Francisco who brought his laptop to a restaurant to work on his side project between courses. He hit a bug he couldn’t fix. The waitress noticed, looked at his screen, and offered to debug it for him. She was an engineer working a second job.
That story would never happen in Europe. We don’t lack engineers, but the density of ambition simply isn’t there. The probability of your waitress moonlighting as a developer building something on the side approaches zero.
The Quality of Life Trade-off
I should be fair here. Europe offers something the US doesn’t.
I remember my first time in San Jose, having drinks with a friend and his wife. After a few cocktails, he suggested we try the next bar. I got up and started walking. He looked at me like I was insane. We got in the car and drove for five minutes.
In most American cities outside New York, you move with intention. You get in a car, you have a destination, you execute. In Amsterdam, I’m tempted to stop at least twice on my seven-minute bike ride home from work. A terrace here, a canal-side bar there. Cities are designed for pleasure in a way that American suburbs simply aren’t.
This quality of life is real and it matters. European healthcare, parental leave, walkable cities, work-life balance. These aren’t small things. They’re genuine competitive advantages for attracting people who want to build sustainable lives.
But here’s the tension: the US startup ecosystem is built on a cultural acceptance that personal life temporarily takes a backseat when you’re building something. That trade-off is baked into the expectations. In Europe, we’re not willing to make that trade-off to the same degree. That’s a legitimate choice, but we need to be honest about its consequences.
The Policy Gap
Mario Draghi’s 2024 report on European competitiveness was supposed to be a wake-up call. It laid out 383 specific recommendations for closing the innovation gap with the US and China.
More than a year later, only 11% have been fully implemented. Another 20% are partially done. Nearly a quarter haven’t been touched at all.
This is the European disease. We’re excellent at diagnosis, world-class at producing reports, and utterly mediocre at execution.
The good news is that some things are finally moving. In January, Ursula von der Leyen announced EU-INC at Davos, promising a 48-hour digital incorporation framework that would let founders register a company once and operate across all 27 member states. It’s being called the “28th regime” because it would function as a virtual 28th country sitting above the fragmented national systems.
This is exactly what Europe needs. A startup in Amsterdam shouldn’t have to re-incorporate when it expands to Germany. The friction of 27 different legal systems is a self-imposed handicap that no serious competitor would tolerate.
But EU-INC is scheduled for 2027. The legislative proposal is expected later this year. Then comes negotiation between member states. Then implementation.
By 2027, the US will have pulled further ahead. China will have continued its aggressive industrial policy. And European founders will have spent another two years navigating unnecessary complexity while their competitors scaled.
The announcement is welcome. The timeline is not.
What Actually Needs to Change
If Europe is serious about competing, we need action in four areas.
First, the unified market needs to happen now, not in 2027. EU-INC is the right idea, but the implementation timeline reflects the usual European pace: thorough, consultative, and too slow to matter. Every month of delay is another month where founders choose to incorporate in Delaware instead.
Second, tax incentives for early-stage investment need to match what the US and UK offer. The UK’s SEIS scheme gives investors 50% income tax relief on investments up to £200,000 in qualifying startups, plus capital gains exemption if shares are held for three years. The US recently expanded its QSBS exemption, allowing investors to exclude up to $15 million in capital gains from federal taxes on qualifying small business stock. These aren’t minor tweaks. They’re structural advantages that make angel investing dramatically more attractive. Most European countries offer nothing comparable.
Third, education needs to embrace entrepreneurship as a legitimate career path. This is cultural as much as institutional, but universities and secondary schools could do far more to normalise the idea that building something is a reasonable thing to do with your life.
Fourth, we need to accept that European founders will sometimes need to access US capital markets. Rather than trying to prevent this, we should make it easier for European companies to maintain their European identity while tapping into deeper pools of growth capital. The goal shouldn’t be to keep companies from going to the US. It should be to ensure they stay connected to Europe when they do.
The Window Is Closing
I’m optimistic about Europe. The talent is here. The quality of life is a genuine draw. The recent policy momentum, from the Draghi report to EU-INC, suggests that leaders finally understand the stakes.
But optimism isn’t a strategy. The gap between Europe and the US isn’t static. It’s growing. Every year we spend on consultations and impact assessments is another year where the structural advantages compound on the other side of the Atlantic.
The waitress in San Francisco debugging code at a restaurant isn’t just a cute anecdote. It’s a signal of ecosystem density that Europe hasn’t achieved and won’t achieve through incremental reform.
We need to move faster. We need to act, not just announce. And we need to be honest with ourselves that the comfortable European approach to building ecosystems isn’t working.
The talent is here. The ambition is here. The infrastructure and incentives are not.
That’s fixable. But only if we stop admiring the problem and start solving it.