It's not "European startup ecosystem", it's basically "European societies". Imagine how well would SV work if being involved in a bankrupt company (co-founder, major investor, C-suite) made banks refuse to talk to you again for 10-20 years. I believe that was the case in France. You wouldn't even be able to open a checking account, never mention any credit again.
I think it is set of different problems Southern Europe and France are almost hostile to entrepreneurship and startups. Nordics, Baltic and Benelux countries mostly nail culture and regulatory frameworks but small markets slows down starting and scaling business. Personally I don't know what is problem with Germany probably something to do with how German is organised around manufacturing.
In my experience the UK has a very simple and friendly system and, I believe, London has grown into an European centre for startups and funding. France makes things overly-complicated and costly for the sake of it, not just for entrepreneurs but for everyone, this is very puzzling (and I was born there!).
Wonder how Ireland will be affected due to their status as an English-speaking country with major business operations already there that's uniquely able to hire effortlessly from both the UK and EU.
AFAIK banks are legally required to open checking accounts on demand of any resident in Germany, no matter their background. But I am not sure, just a rumor.
Not just a rumor. If you speak the right incantations at the counter, invoking the relevant legal reference, a bank in Germay will be obliged to give you a "basic bank account" with no credit facilities of any kind. There's also nothing stopping them from making that bank account the least attractive bank account you've ever heard of by charging insanely high fees and prohibiting you from using the regular ATM network, restricting you to just a few machines in a restricted geographical area.
> If you speak the right incantations at the counter, invoking the relevant legal reference
What are these?
> There's also nothing stopping them from making that bank account the least attractive bank account you've ever heard of
Why would they want to? What do they actually risk?
> restricting you to just a few machines in a restricted geographical area.
Officially area-specific or just through the specific kind of machines accepting specific kind of cards being absent outside of it? I've heard of the unreasonably complicated system of types of cards in Germany: normal debit, "electronic cash" etc.
For the Netherlands. There is the concept of the 'basic bank account'. This is an agreement that safeguards that everyone can have at least 1 bank account. [1]
You can't open an account like this if you already have an account. You can't pick the bank either. You're obliged to go to your last bank for this type of account. The price is fixed at the same level as the normal accounts. You can even have this account if you're homeless and don't have an address. Typical requests are done via support organisations rather than yourself, but it is is possible to do it yourself as well.
At least in the Dutch situation I don't see them introducing deliberately unattractive pricing or conditions once you have the bank account. There is a burden to open one though.
That said, I don't think bankruptcy would usually result in being account-less. More likely, you can't get a credit card, mortgage or other consumer loans, which can be inconvenient. Personal bankruptcy (as opposed to an LLC imploding) also likely means a few years of handing over all your income above minimum wage to the government in exchange for nullifying your outstanding debt. (Note that the Netherlands mostly runs on debit cards, and that most people don't have a credit card).
> > If you speak the right incantations at the counter, invoking the relevant legal reference
> What are these?
"Basiskonto nach § 31 Zahlungskontengesetz" [1], and tell them that you are aware that the regulator BaFin has a specific process in place for complaints about banks who refuse an application for a basic account [2]
> > There's also nothing stopping them from making that bank account the least attractive bank account you've ever heard of
> Why would they want to? What do they actually risk?
My theory is that it has to do with outdated technology in the German banking sector that implies that it's actually impossible for them to make absolutely sure through technology that your account can't end up in overdraft.
> > restricting you to just a few machines in a restricted geographical area.
> Officially area-specific or just through the specific kind of machines accepting specific kind of cards being absent outside of it? I've heard of the unreasonably complicated system of types of cards in Germany: normal debit, "electronic cash" etc.
The reasons are a bit difficult. In Germany there is the "Sparkasse", which is a network of small banks local to municipalities and where the municipalities have large ownership stakes (so it's weirdly-state-owned). They are legally separate but share a backoffice. Last time I did research on this the situation was this: The Sparkasse-network has more than twice as many ATM-machines than all the other banks (like Commerzbank, Deutsche Bank, foreign banks) combined. A normal bank account at one of the branches of Sparkasse will give you access to their whole network. But a basic bank account will only give you access to the ATM machines by that specific branch, which ends up being highly restrictive geographically. If you get a normal bank account from, say, Commerzbank, you can use the entire network of non-Sparkasse-ATMs, i.e. use all Commerzbank-machines countrywide, plus all Deutsche Bank machines, etc. But if you get a basic account, they'll restrict you to just the machines by Commerzbank, which are few and far between, but, at least that would give you some semblance of country-wide coverage. ...long story short, life really sucks with a basic bank account, even if you don't want/need credit.
It's a pretty regular occurrence for the political PR machinery to try to get stories published that basically say that (thanks to some politician's doing) European region X is now going to be the next silicon valley. ...none of that ever actually filters through to the daily realities of a European entrepreneur. ...omg, the war stories I could tell, being an E.U. entrepreneur who was dumb enough for large stretches of time to believe the hype.
Not only is it not just hearsay: In some European countries it's even enshrined in law. For example in Austria, the leader of a company ("gewerberechtlicher Geschäftsführer"), including sole traderships, partnerships, and legal entities, cannot be a person who, within the past X years (can't remember what X is) has been in bankruptcy in any country in the world. The authorities check the relevant Austrian register before giving you a business permit. For a person who has not lived in Austria for that stretch of time, you have to bring proof from the countries you've lived in, that you're not in bankruptcy there either. For some countries, this can be pretty hard to prove, as the relevant registers may simply not exist there. I remember it being a major bureaucratic hurdle when I moved from the U.K. to Austria (being an Austrian native) to start a business there.
Norway even has a special term for someone who has failed in entrepeneurship multiple times -- "bankruptcy jockey".
You won't be banned from starting a business from a single bankruptcy, but if it happens multiple times and/or creditors end up losing significant money over it, you can be barred from starting a business for two years.
I don't think these rules often directly prohibit a promising entrepeneur from starting a business, but it's pretty obvious that the whole culture provides a strong chilling effect.
I understand being banned from <<starting a new business>> after failing repeatedly. A bit extreme, but ok, it makes sense a bit. But he was saying he was banned from <<getting a bank account>> due to that.
It is extremely unlikely that you won't be able to get a simple checking/deposit account at a commercial bank just because you went bankrupt.
I think he is confusing "interdit bancaire" and bankruptcy. If you end up being put in the interdit bancaire file, yeah life pretty much sucks and most bank will refuse to do business with you. But having a company that go bankrupt doesn't mean you will be put in the file. You usually need to do things like stop paying your loan to be put on this file.
I likely am. The idea to try a startup in France was very short lived for me. Every card was stacked against me (many particuarly against me/my ideas, not everything is a reflection on society), so I moved on after just a few conversations.
Considering the insane amount of funds France will literally gift you just for opening a startup there, I find that very surprising. You have to be good at paper pushing and speak the language however. That much is true.
Yeah, my French is not what it should have been and I contracted an allergy to the French bureaucracy. Quite a bit of the whole thing is on me, no denying that.
A good friend is doing it now and it's not like he's swimming in cash though.
Yeah, to do any business in France, your really need to speak French. The French bureaucracy is not that bad (when you compare it to some of its neighbour) but in the same vein, it will be impossible to deal with it if you don't have a good grasp of French.
France cares a lot about French and its honestly an issue many time (and I say this as a French person). Things are changing slowly, but anybody serious about moving / opening a business in France should be serious about learning French. You would be astonished by the number of engineer, investor, and in general any business person, who have an awful level in any other language than French...
I'm fairly sure you have the right to a bank account under French law, but banks have the right to refuse you as a client.
This means that if you get rejected as a client by enough banks you can go to the Banque de France and they will select a bank that is then obligated to provide you with an account.
I don't get why they'd refuse you a checking account, even if you were the founder or one (or several bankrupt) companies. Would they be worried you wouldn't pay their crummy fees? :-)
I don't think this is the case, in France or anywhere.
And I'm certain it's not the reason SV creates more startups. The real reason is that this is where startups were invented, so for historical reasons the concentration of capital and talent is extremely high.
What exactly do you think "startup" means? To me, the word just means a new small business. Such things have been around for centuries, before the USA even existed never mind SV. That's true even if you take startup to mean specifically those taking large outside capital with a goal to grow large quickly (which I don't think is necessary, a bootstrapped startup is still a startup IMO).
Exactly. If you live in a safe and secured society why would you want to do something risky like creating a startup. One of the biggest success for the EU startup scene was just copying what is done in California, avoiding the risk of trying out new ideas.
On the top of that, regulation in the EU is much worse than in the US. This does not help either.
People in European societies still feel need for some thrill. I think the problem is a bit different. Language and cultural barriers are still meaningful. I am a Czech and I know shit about selling to Romanians or Portuguese customers; even if I was able to pay for professional translation of my products AND customer support in 20-25 languages, my cultural ignorance would be still a significant hurdle.
USA and Anglosphere in general is HUGE. China is HUGE. The closest thing to that in the EU is DACH (Germany, Austria, Switzerland), about 100 million rich people speaking the same language.
But precisely Germany is a fairly technologically conservative country with median age close to 46, where people are much less keen on new technology than in, say, Estonia; ironically, the fact that older systems work reliably reduces the drive to adopt new ones.
And smaller markets like Estonian or Danish one will not provide you with as much growth opportunity.
If you're selling a technical solution, why would you even touch cultural differences? I bet you'd be successful if you could afford the extra costs of translation/marketing.
Cultural differences hugely affect the marketing, and in some cases the market; you couldn't sell a tipping management app to somewhere without a tipping culture, for example.
Well that is why Linux is successful around the planet. It really does not touch any soft cultural differences. Geeks and their needs are similar everywhere.
Something like a food delivery corp. on the other hand must know precisely what to expect from which holidays etc. There is a fairly successful Czech startup called Rohlík that expanded to Hungary, Austria and Germany, but every added country is a challenge.
Yep that same scary regulation that is intended to hinder businesses from selling me food with hydrogenated fats, overloaded with sugar or salt, that same regulation that forces auto manufacturers to not create exclusive overpriced repair consortiums for basic parts, and that generally makes life a bit less corporately tyrannical.
Shareholder value is only nice if you're a significant shareholder, and it is disproportionately nice to those shareholders at the cost of others, when lobbying overtakes regulation.
> If you live in a safe and secured society why would you want to do something risky like creating a startup
Safe and secure unlike... California? The founders of US startups are already in very advantageous positions in life. In fact that security helps with taking business risks which is the opposite of what you're claiming.
It seems to me that this article is saying exactly the opposite of what you say.
The article is about how Europeans, that live in that "safe and secured society", are creating more startups than before.
>>"On the top of that, regulation in the EU is much worse than in the US. This does not help either. "
If you check those start-ups you can see that most of them are joining Y-combinator but they stay in Europe. So, also the opposite of what you are implying.
EU regulation generally doesn't have "de minimis" exemptions. If you have something that takes a flat cost of €10k or €100k to comply with, that burdens small businesses much more than large businesses, and a startup is a small business in the beginning.
Theoretically if you want to build an electronic product and sell one (1) unit of it in the EU you need to give it the full works of CE compliance. I don't believe UL/FCC are quite so onerous? And certainly this doesn't apply to random items in unmarked packages from China.
So it seems it's not that clear cut that you need it (and it can be self assessed). But yeah, if it's an electronic device that plugs into the wall or connects to WiFi probably yes - or at least the modules that do that)
The difference isn't having a huge market with a more-or-less homogeneous culture on consumption and language, it is that Europe is a safe and secured society, completely different than fucking California.
Not sure what is your point here, you brush off a lot of the real nuances of the problem to throw an overgeneralising jab onto 27 different cultures...
Depends what you are looking for. If you are in your 20s / 30s you might want to have higher salary and less social safety. Later in your life this changes. Many Europeans (including myself) went to work in California for higher wages and less taxation. Some of us wanted to have family and moved back. Quality of life is subjective above a certain threshold.
