Is the grass always greener on the other side?

Is the grass always greener on the other side?

Written by Victoron

When we first think about the words “startup hub”, our initial thought is probably the image of the space between San Francisco and Oakland populated by the thousands of startup companies that comprise Silicon Valley. Europe lacks a similar density of startups, however, many European entrepreneurs choose to move away from their cities, countries or regions of origin to establish their businesses in more favorable environments.  In our sample of 320 startup CEOs surveyed, 24% changed cities to startup, 21% founded their company in another country and 88% of these left their broader home region. To download your free copy of the survey report, please click the button below.

Founder mobility is observed especially in the CEE countries[1], with 21% of the founders leaving their region. In our analysis, we wanted to understand if this displacement paid off. In other words: is the grass really greener outside? Are movers happier with their new locations, as compared to those that did not leave? We asked entrepreneurs to rate their current locations in terms of access to talent and quality of labor market, access to capital, ease of doing business and entrepreneurial ecosystem on a scale of 1 to 5. We considered a score higher than 3.5 as a measure of satisfaction and a score lower than 2.5 as a measure of dissatisfaction. Interestingly, we find that movers and non- movers rate conditions very similarly, as we can see from the graphs below.

CEOs that have moved do not seem to be particularly happier than those that had not, except for one factor: 26% of non-movers are dissatisfied with access to capital. This figure is noticeably higher than the 21% of those who left their home region and the 18% of those who moved to another city to startup.  

As we found previously, great disparities in satisfaction exist between the regions we surveyed. Overall, the regions that display the greatest overall approval rate are UK/Ireland and the Western Region[2], with respectively 56% and 55% of the founders indicating satisfaction and only 13% and 10% rates of disapproval. The Mediterranean region[3], depicts the highest rates of global dissatisfaction (25%) and the lowest rates of approval (40%).

With this in mind, we find it worthwhile to take a look at the satisfaction of movers who left the Mediterranean and the CEE region, areas that both suffer from a net outflow of founders. Comparing regional movers and non-movers, we discover that dissatisfaction is relatively high among non-movers in these regions, as 32% declare they are unhappy with access to capital and 23% decry the quality of the ecosystem as well as relative difficulty in doing business and high costs. Costs still represent an issue for those who leave these regions, as 38% of movers complain about this factor.

On the positive side, movers and non-movers from these two regions do have similar values compared to the overall survey results. Only access to capital seems to be less available to what founders would have expected after moving, with only 25% declaring they are happy with this factor in their new location. On the contrary, access to talent is ranked remarkably higher by founders who emigrated from the CEE and Mediterranean regions.

In conclusion, we find that founders who change regions or cities to startup do not necessarily hold more positive evaluations of their startup locations as compared to those who do not. However, when zooming in on the origins of CEOs, we can obtain some explanations on why founders leave certain regions. As movers are not particularly more satisfied than non-movers, we could take into consideration other factors in order to explain the migratory patterns of startups in Europe. Other drivers, for example, could be macroeconomic indicators of the country/region such as unemployment, GDP per capita and economic freedom. 

―By Elisabetta Vitello

[1] CEE in our survey comprises of: Albania, Belarus, Bosnia, Bulgaria, Croatia, Czech, Hungary, Poland, Romania, Serbia, Slovakia, Slovenia, Ukraine.  [2] Western Region: Austria, France, Germany and Switzerland. [3] Mediterranean region: Cyprus, Greece, Italy, Malta, Portugal and Spain.

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