Dutch Tech Unicorn CEO advises startups to depart from Europe
European startups are increasingly crossing the Atlantic to scale, as concerns about EU tech regulation impeding innovation and growth among founders continue to rise.
According to research by London-based VC Hoxton Ventures, nearly all European startups with over $500 million in revenue have succeeded by winning the US market. This trend is not surprising, given the competitive landscape between the US and China in the global technology race.
Job van der Voort, CEO and founder of Remote, an HR tech company valued at over $3 billion, expressed concerns about the EU's tech regulation. In 2019, van der Voort based his company in San Francisco, and since then, Remote, which helps businesses hire and manage remote teams, has grown rapidly.
The EU's regulatory complexity and fragmentation, particularly around AI and data privacy, are key concerns. Despite efforts like the Innovation Principle and regulatory sandboxes to foster innovation, the EU's overall regulatory framework remains complex, with fragmented market structures across member states that create obstacles for startups and innovation-driven companies seeking to scale.
The EU AI Act, the first comprehensive legal framework on AI, imposes risk-based transparency, accountability, and human oversight requirements. While intended to ensure trustworthy AI and protect fundamental rights, it adds significant compliance obligations that may slow innovation and increase administrative burden, especially for startups with limited resources.
The phased implementation of the AI Act, including distinctions between model providers and implementers, and requirements for risk assessments, data documentation, and auditing, can increase costs and complexity for European AI developers. Some tech companies and founders have urged the European Commission to delay the AI Act to avoid disruptive impacts on innovation timelines.
European founders fear that strict regulations may disadvantage them compared to international players who may face less stringent or differently timed regulatory regimes, potentially limiting Europe's role as a global tech innovation hub.
However, the EU also recognizes these concerns and has introduced measures such as regulatory sandboxes, the Unitary Patent System to reduce bureaucratic hurdles, and voluntary codes of practice aimed at facilitating compliance and fostering a dynamic innovation ecosystem with legal certainty.
In a conference in Paris earlier this month, Mistral CEO Arthur Mensch and DeepMind founder Demis Hassabis called for flexible regulation in Europe to support innovation and competitiveness. Job van der Voort, too, gave a talk at this conference, advocating for the EU to consider its future in relation to innovation and regulation.
Dutch software unicorn Bird announced plans to move most of its operations out of Europe due to overregulation. Van der Voort warned that the EU's regulation is harmful to startups and the economy, and many business leaders share the same view.
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- European startups, such as Job van der Voort's HR tech company Remote, are turning to the US market to scale, as they face complex and fragmented regulation in the EU, particularly around AI and data privacy.
- As concerns about the EU's tech regulation continue to rise among founders, some, like Dutch software unicorn Bird, are planning to move their operations out of Europe, citing overregulation as a hindrance to innovation and growth.
