Why European Enterprise Startups Should (Or Shouldn’t) Move To Silicon Valley

Should European enterprise startups stay in Europe or head to Silicon Valley? That’s a question our enterprise panel with TechCrunch’s Ingrid Lunden, Klarna‘s Niklas Adalberth, Huddle‘s Andy McLoughlin and Zendesk‘s Mikkel Svane at TechCrunch Disrupt Europe in Berlin tackled today. Both Zendesk and Huddle decided to move a large part of their companies to the U.S. while the Swedish payments and e-commerce company Klarna decided to stay in Europe.

For Klarna, of course, being in the payments business means it has to deal with a variety of regulatory issues that make it easier for the team to grow inside the more homogeneous European market. Moving outside of Europe, Adalberth argued, is “tricky.” Payments, he also believes, are local by default and because the company only tries to tackle a few new markets per year, it will likely stick with expanding to more European markets for now and only look into expanding to the U.S. at a later time.

Huddle's Andy McLoughlin

Huddle’s Andy McLoughlin

What Klarna has, though, are U.S. investors and so the team believes that while it may miss out on some of the action in Silicon Valley, it’s still connected to the Valley in many ways.

For Zendesk, moving to the U.S. was apparently on the radar very early on. As Svane told the audience, its business grew very quickly in the U.S. – but not because it specifically targeted the U.S. market but because “the early adopters and tech hungry companies are in the U.S.”

He also admitted that he got bitten by what he called the “TechCrunch bug.” “We heard all about the action taking place in San Francisco and the big rounds and the free T-shirts,” he said. “We had this American dream and wanted to be where the action takes place.”

For Huddle, the reason for moving a large part of its operations to the U.S. was quite different, though. When the company raised its B round, its investors really wanted at least one – if not both – of the founders to move to Silicon Valley. Not every company, McLoughlin noted, needs to be in Silicon Valley. “If you work in fashion, you don’t need to be in Silicon Valley,” he said. But if you are an enterprise company and looking for funding, Silicon Valley is “where the funding is. It’s where the press are and it’s where the guys who will buy you are if you’re looking to get acquired.”

The company decided on keeping a good number of its engineering staff in Europe, however. This “bastard model,” as the panelists called it has its own challenges (not the least because of the time difference between California and Europe), but it’s worth it in the end. Both McLoughlin and Svane agreed that this hybrid model also helps companies to internationalize in the long run.