While it’s certainly possible to build a tech giant solely in Europe, the path to building a global, category-dominating company will, for most European tech startups, require building a strong presence in the US.
As a result, sooner rather than later, European startups will start thinking through their US expansion strategy. One deceptively simple question of that strategy is “where should we build our US headquarter”?
Up until a few years ago, there wasn’t much of a debate: Silicon Valley, despite the distance and time difference with Europe, was the obvious choice. There was essentially nowhere else to go, except perhaps Boston for life sciences.
However, the stellar rise of New York as a tech hub over the last few years has changed things dramatically.
Back in 2014, I put together a presentation that highlighted the merits of New York as a great place for European startups to build their US headquarters: NYC: A Natural Home for European Entrepreneurs.
At the time, however, the trend was just starting.
Fast forward six years to today, and it feels like the “Europe to New York Corridor” has truly emerged.
A couple of days ago, I tweeted this:
Twitter lends itself to statements that sound very definitive, and perhaps provocative, with few nuances. So let me add a few caveats:
- It’s entirely possible to build great startups in Europe only, without being active in the US (Deliveroo, Doctolib, Vinted, etc.), as mentioned above
- London, Berlin and Paris are the clear leaders of European tech. Many other places are incredibly active (Nordics, Netherlands, Spain, Portugal), and several hubs are emerging in Eastern Europe.
- There are several other choices worth considering on the East Coast – various European startups have chosen Boston, Washington DC or Atlanta (see OutSystems, out of Portugal)
- San Francisco remains the clear center of the tech universe
Caveats aside, I believe that New York truly has emerged as a new center of gravity for European startups.
The sheer number and density of European startups moving to New York is very obvious to anyone spending time in the ecosystem. It truly went from a trickle to a full-on flood. There are also countless European entrepreneurs starting US companies out of New York (a la Datadog).
According to La French Tech, there are over 200 French startups currently active in New York – and that’s just one European country!
This is also a particularly high quality group, that includes many fast-growing companies.
Off the top of my head, here a few European unicorns (and more) that have a US HQ in New York, or have re-headquartered entirely in New York:
- Spotify (Sweden, B2C)
- UiPath (Romania, B2B)
- Collibra (Belgium, B2B)
- Dataiku (France, B2B)
- Celonis (Germany, B2B)
- Letgo (Spain, B2C)
- N26 (Germany, B2C)
- Others?
What are the key drivers behind the acceleration of the trend?
What *has not* changed over the 5-6 years:
- The fundamental geographical advantage of the East Coast over the West Coast (seen from a European perspective), namely the time difference and distance, has obviously always been there
- New York has always had a unique density of potential customers, as many Fortune 1000 companies are either headquartered in New York, or have a very large office there – particularly important for B2B companies
- New York has always been culturally closer to Europe.
What *has* changed over the last 5-6 years:
- There’s now plenty of tech talent in New York. You no longer need to “pull from finance”. Many people have worked at one, two or three startups back to back during their careers. This will only accelerate.
- There’s also plenty of capital in New York, from seed to growth. The two most active US investors in European companies (Insight and General Atlantic) are both based in New York.
- New York is now a fully mature ecosystem. Once known for commerce, media and ad tech, has become a great place to build any type of company. It’s telling that, out of the three largest tech successes in New York, two are core enterprise infrastructure companies: Datadog and MongoDB.
- New York has deep connectivity to the West Coast. Google has gigantic offices in New York. Facebook (which just leased 1.5M sq feet at Hudson Yards, here), Amazon (even without HQ2), Salesforce (which has its own tower in NYC as well), Apple, Stripe, etc. – everyone is here, in a major way. All major Silicon Valley VC firms heavily invest in companies based in New York.
The world, also, has changed:
- Europe has considerably stepped up its game. There’s simply a lot more European startups that have global ambitions. This in turn has increased the number of companies looking for a US home, with many of them landing in New York, which has helped create a network effect of sorts.
- San Francisco has experienced its own issues – saturation, costs, regulatory issues – and a growing number of people have been moving to other parts of the US.
- With Brexit, London has become a less obvious choice, if you’re a non-British company thinking about your first international office.
- The world of work has changed. Technologies and processes around distributed offices and remote work have drastically improved over the last few years. Many less people these days question whether you can truly build a successful startup with a foot on each side of the Atlantic: leadership, sales and marketing in the US, and product and technology in Europe. The model just works.
In summary: now that New York is a large and fully mature tech ecosystem, where you can find plenty of talent and capital, why endure the borderline unworkable time difference with San Francisco?
An ever increasing number of European startups have come to this conclusion, turning New York into a new center of gravity for many of the most ambitious companies and entrepreneurs coming out of Europe.