The Sudden Invasion of European Startups to Silicon Valley is Real

More Europeans are uprooting themselves from their founding countries to re-establish themselves — where else? — in Silicon Valley. The Valley’s indefatigable spirit of innovation is the one common factor that are luring many lean-and-mean European startups to leave their countries and pick the tech capital of the world as their home base, according to a recent report published by Mind the Bridge.

If you’re a Global Mobility Manager, this means it’s important to have those speed dial connections with relocators, corporate housing accommodations organizations, embassies, and schools, among others in Northern California.

One needs to get recruitment strategies in place because this new group of startups will soon be needing your help in getting the best talent — and perhaps, asking you to help network with the shareholders that can get them to succeed.

Add to that is the reality that the parties that these startups need to tap in order to survive and flourish — financiers/investors and markets — are in the region that has given birth and now houses tech titans like Google and Apple

Mind the Bridge, a Silicon-Valley-based European innovation advisory firm, released the report entitled “European Innovation Outposts in Silicon Valley” only last November. The report made a study of about 44 startups from Europe, a majority of them coming from France, Germany, and the United Kingdom in that order. Most of them operate in industries like automotive, fintech, and telecom.

In the Mind the Bridge findings, Financial Times interviewed leaders and business owners who made the jump. According to one “serial entrepreneur” who has been doing business in the Valley since he moved from his native Finland more than 15 years ago, it is easier for European entrepreneurs to access the customers who would be interested enough to spend for the products and services that they are promoting; these Silicon-Valley-based customers, weaned on the spirit of innovation prevalent in the place, are more willing to “experiment” with new disruptive platforms and techniques than regular clients.

European startups also get introductions to venture capitalists and other investors who, should they like their offerings, can give them that much needed shot in the financial arm in order for them to scale up significantly. Companies that looked for growth capital in the United States, and Silicon Valley in particular, were able to raise 30 percent more than their intended capital, compared to their colleagues who preferred to source it in their respective European nations.

As early as last year, Richtopia reporter Bill Titterington forecasted this trend, basing it on two developments. First is the growth of the internet economy which is estimated to grow annually by eight percent over the next five years. The giants that practically own huge chunks of this online real estate can be found in Northern California; aside from the aforementioned Google and Apple, Amazon, Twitter, Facebook, and Paypal are also the leaders of the pack that continue to drive discoveries in the tech frontier for others to follow. Any startup – regardless of their country of origin – would want to be close to the center of the action to get a bird’s eye view on best practices and learn from the finest minds in the industry.

Another development that Titterington names is that apparently the European tech industry has stagnated. Half of the British startups fail and do not make their money back. Those that do manage to grow choose not to stay in their founding cities but relocate to the US. About 14 percent of European startups that raised growth capital from $1 million to $100 million have moved their HQ while maintaining lean and mean operations in their home countries. The number goes up to as high as 25 percent for European startups that increased their investments way beyond $100 million.

One thing that Global Mobility Managers can take from all this is that the European block is increasing its footing in the Silicon Valley front. Time to check what those companies needs in terms of talent; arrange for networking sessions with local service providers; and perhaps take a language course in German and French.