Dutch Tech Unicorn CEO Advises Startups to Depart Europe
In a recent development, Job van der Voort, CEO and founder of Remote, an HR tech company valued at over $3bn, has expressed concerns about the EU's entrenched bureaucracy impeding innovation and growth. His sentiments are shared by many business leaders who believe that the EU's tech regulation is stifling innovation and poses a significant risk for Europe.
The concerns stem from the impact of tech regulation on innovation and growth in the EU. European founders fear that complex, fragmented, or overly burdensome regulatory frameworks may stifle startup development, increase costs, and hinder scaling opportunities. The ongoing challenges with harmonizing rules across 27 member states create legal uncertainty and may undermine the EU’s ambitions to support deep-tech innovation and scale-ups effectively.
One of the key reasons for these concerns is regulatory fragmentation. Despite efforts to create uniform EU-wide startup regulations, companies still face the prospect of dealing with 27 different national regimes instead of a single one, complicating compliance and expansion across the EU market.
Another concern is the bureaucratic burden and costs. Founders worry that complex regulations related to insolvency, labor, tax law, and digital compliance increase operational costs and slow down innovation cycles. Simplification efforts are underway but not fully realized, causing apprehension about how new laws might affect startups.
The impact on innovation testing is another area of concern. While the EU is promoting regulatory "sandboxes" and "innovation stress tests" to help experimental business models, founders remain cautious about how restrictive or inflexible new legislation might hamper the ability to test and scale novel technologies.
Competition with Big Tech and data ecosystems is another challenge. The dominant position of Big Tech firms utilizing powerful ecosystems and large-scale data access poses a competitive threat. EU regulations aimed at rebalancing competition could unintentionally create compliance challenges or slow growth for startups trying to build their own platforms.
Capital and investment dynamics also pose a challenge. Although EU programs are enhancing financing for startups and scale-ups, founders express concern about sustaining growth amid uneven regulatory environments and differing national rules that might deter investors or limit the pooling of capital across borders.
Van der Voort warns that regulation standing in the way of innovation is harmful for the economy. He predicts that more companies will be forced to move out of Europe due to overregulation, with the biggest impact being at the early stage. He advises startups to leave Europe if they want to succeed.
Remote, founded by van der Voort and Marcelo Lebre in 2019, is based in San Francisco. The company helps businesses hire and manage remote teams. In 2022, Remote raised $300mn in a Series C round, pushing its valuation above $3bn.
The US and China are pursuing dominance in the global technology race. Meanwhile, European startups are crossing the Atlantic to scale, according to research by London-based VC Hoxton Ventures. Dutch software unicorn Bird announced plans to move most of its operations out of Europe due to "overregulation."
At a conference in Paris earlier this month, Mistral CEO Arthur Mensch and DeepMind founder Demis Hassabis called for regulation in Europe that is "flexible enough" to support innovation and competitiveness. Van der Voort will speak at our website Conference in June. The EU needs to consider its own fate over the next decades, according to van der Voort.
In conclusion, European tech founders seek regulatory frameworks that protect innovation and growth while avoiding fragmentation, excessive bureaucracy, and uncertainty that could dampen their ability to scale efficiently within the EU. The EU needs to address these concerns to remain competitive in the global technology race.
In the tech industry, European founders fear that complex, fragmented, or overly burdensome regulatory frameworks may stifle startup development and hinder scaling opportunities, leading to increased costs and legal uncertainty (sentence 1). Additionally, the ongoing challenges with harmonizing rules across 27 member states create concerns about the EU's ability to effectively support deep-tech innovation and scale-ups, as Regulatory fragmentation complicates compliance and expansion (sentence 2).
