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The writer is co-founder and executive chair of Firstminute Capital, Founders Forum and Founders Factory.
The future is written by entrepreneurs. Europe needs more to choose as a place to grow and scale in a world that changes alliances and economic agenda.
However, recent investment experiences highlighted significant weaknesses in achieving this. A fragmented, burdensome regulatory environment that stifles innovation and growth as well as our startups across the European economy.
We were excited to invest a bit in an ambitious Austrian climate technology startup until we found ourselves lost in a bureaucratic maze with more twists and turns than goat hiking trails.
Video calls with a notary to confirm all signatures (and there were plenty). Absurd call with multiple expensive lawyers who had to read long investment documents loudly, despite us already reviewing the documents ourselves.
This is all because of a small funding round. It was completely disproportionate. If we were investing in the UK or the US, it took a few minutes – signing digitally, wired the money and finished. But in Austria? Legal acrobatics for weeks. After enduring this insanity, our lawyer provided one small crumb of comfort. “If you think Austria is bad, Germany is bad.”
This is not just a nuisance, it is an existential issue for the European scale-up ecosystem. For our startups to compete globally, they need to be truly pan-Europeans. For now, it’s simply not.
From obtaining a travel license to navigate the Byzantine HR system (a area where navigation is particularly difficult in France), stock options laws, and company formation rules, all countries add layers of friction.
I ran into these obstacles firsthand while helping to build LastMinute.com. Handling local regulations was a very expensive headache, so the only way to quickly expand was to buy businesses in multiple regions.
Meanwhile, in the US, startups can expand relatively easily from New York to California, procuring capitals under one major legal framework and hiring talent seamlessly. Perhaps it’s no surprise that US startups will raise more than twice as much funding as their European counterparts. If more European companies can operate seamlessly across the continent, more European companies will win more wins and win a bigger funding round.
But the good news is that thousands of EU entrepreneurs and investors gather behind the call of a pan-European legal framework for startups that standardize their management processes, from corporate formation to investment structure. The proposal, called “EU Inc,” is supported by the founders of top technology companies such as Stripe, Supercell and Wise. This is not a new issue. In 2016, we saw the need for a European startup passport and gathered many major EU founders behind this idea.
Then Brexit came. But now there may be both a will and a way to make it happen. And the economic cases are clear.
What is particularly interesting about this proposed framework is to sit as the “28th regime” outside the existing EU system. This is a parallel, voluntary legal framework that any country, including the UK, can theoretically choose.
It’s an opportunity for UK startups to enter the market and function more easily across the EU without resuming Brexit debate. The same goes for the opposite. This is a low-risk, high-reward movement that promotes economic cooperation while maintaining UK independence. Maybe it’s worth it even in the spot on the agenda for the EU-UK Summit in May.
For better or worse, some entrepreneurs are now talking about mega. Abusing Trump’s language may not be the best strategy, but emotion is a spot.
Europe needs to be a more attractive place to build your business. It starts by reducing founder friction, unlocking capital and making it easier to expand. Economic ties lead to social ties. And in an age of increasing division, we should work towards greater economic and entrepreneurial unification rather than adding more barriers.
Rohan Silva, founder of Second Home and the Libreria Bookshop, contributed to this work
