Before its electric planes even left the ground, Sweden’s Heart Aerospace completed another flight: the startup announced this week that it was shutting down its home operations and fully moving to the US.
The decision provoked the usual boohooing: why don’t European founders want to stay and build in Europe?
I’m all for supporting European founders in building global winners. But for too long, European investors, policymakers and media have been making one big mistake: confusing political concerns with the business concerns of founders.
By political concerns, I’m talking about considerations related to the flourishing of entire economies. If you are a policymaker who wants to ensure the prosperity of your country, of course, you want to keep innovative companies and jobs at home. Stories like Heart Aerospace’s, which involve a loss of domestic jobs, should probably make you sad.
Founders, on the other hand, don’t care about industrial or economic policy. They want to build the biggest company possible, access the largest customer base, hire great talent and access capital. In most cases, that means scaling from the US.
Politics vs business
This confusion between politics and business has intensified in recent years with geopolitical tensions — the war in Ukraine, uncertainty over US-Europe relations under the Trump administration — and also as European countries struggle to find new levers for growth. Tech looks like a panacea: European defence tech companies will protect our borders! European cloud companies will create jobs! European-built software will fix our productivity problem!
There is an inherent danger in founders and investors being seduced by these political considerations. We can’t forget that Europe is still a collection of competing economies. When Emmanuel Macron says he wants more defence spending, he wants that spending to accrue to French companies. It’s domestic thinking — when startups should be thinking global. Political agendas, as we know, change.
The idea of trying to preserve or retake European tech sovereignty also goes counter to the imperative for startups to aim for huge scale to win. Exposing yourself to competition polishes the winners. Just like Eléonore Crespo, founder of unicorn Pigment, told Sifted a few weeks ago: “Using the best technology to be the most competitive is what will save Europe. It makes no sense to create barriers or to think only on the basis of a European reality.”
Note that Créspo is not calling for the kind of regulatory or IPO reform that dominates the “make European tech great again” debates. Less fragmentation or regulatory changes may make operations easier for founders. But they don’t impact the true global competitiveness of a business. As Nicolas Colin recently wrote, European tech needs “a bold, long-term vision executed through concrete, practical steps that leverage our unique context rather than fighting against it.” We need to truly think about what can give European-born companies a strategic edge. That’s much deeper than stock option reform.
If you’re an investor, you shouldn’t be holding back your companies from accessing customers, talent or capital, wherever they may be based. This said, once a company has succeeded, it’s not unreasonable to encourage founders to share some of their success with founder hopefuls back home to help the cycle continue.
Until then, let’s stop interpreting US moves by European companies as sob stories. We should be cheering them on for the risks they are taking, their dedication to a vision and their boldness.
Read the orginal article: https://sifted.eu/articles/european-startups-move-us/
