October 30, 2020

Where Should European Startups Place the US Office?

Back in the early days of my career I ran international marketing for a specialty computing company. For a short while, we faced competition from a tough German startup. 

They weren’t a problem for long. The story goes that the founder went to his bank for a loan to support the company’s rapid growth. (Venture capital wasn’t an option, as it was poorly developed in Europe in those days). The banker told the founder he didn’t need money, he just needed to stop growing so fast.

Times have changed, and today Europe boasts a robust startup culture. Each year, it seems a larger percentage of the most interesting new medical device technologies are coming from Europe. All of those companies, if successful, will eventually open a US office.

The reasons are obvious. The US is the largest global market, so success here is a business imperative. But there’s more to it than that — companies also want to tap American investors and often aspire to go public in the US.

But where to open that US office? All of my European clients wrestle with that question. Usually it becomes a question of East versus West.

The West has its attractions. Many Europeans view California through rose colored glasses, and they frequently find the prospect of joining the Bay Area startup scene seductive.

But then reality intrudes. The costs of setting up in California, both for real estate and talent, can be sobering. In addition, there are countless inconveniences that come with establishing an office in a place that’s a 10-hour flight and 9 time zones away.

That’s why most European (and Israeli) startups establish their US offices on the East Coast. Flights are shorter and plentiful, the time zone difference can be easily managed, and there is abundant talent, particularly in the Boston medical device cluster. In fact, although European startups establish offices up and down the East Coast, most of them end up in Boston.

If your European startup is looking to set up a US office, the East Coast is the practical choice.

All of my European clients wrestle with that question. Usually it becomes a question of East versus West.

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