Over dinners I shared with fellow founders and investors in San Francisco recently, every conversation seemed to start with the same question: “When are you moving to the US?”
Amid Stockholm’s AI boom, there seems to be an expectation that the next step for Swedish startups is Silicon Valley. Investors, mentors and peers all argue that the market is more lucrative, the biggest VCs are based there and the pull of Big Tech successes makes it the only destination worth pursuing.
And, for many companies, that may be true. But this isn’t the case for every European startup, and we must be wary of succumbing to peer pressure. While we celebrate European founders who ‘make it’ in the US, we overlook the category-defining companies thriving precisely because they decided to double down on the European market.
In defence of EU fragmentation
Europe is notorious for its regulation and market fragmentation, which put off founders. Understandably so: why choose to navigate dozens of languages, cultures and legal frameworks when you could expand to a single country with the same GDP as all of Europe?
Technological progress, like multilingual LLMs, has helped founders navigate a lot of those barriers. But in reality, these bottlenecks can also enable healthy competition and innovation.
Take healthcare. The US market for Electronic Health Records (EHR) is dominated by two players who control about 70% of the sector. The market is spoken for, including when it comes to innovating: both companies have tens of thousands of employees working on developing their AI roadmaps, leaving little space for new entrants.
In Europe, smaller vendors compete in their respective jurisdictions and cannot realistically build the full AI stack themselves. This fragmentation is exactly what gave my company, Tandem Health, a complete AI assistant that securely generates clinical documentation and embeds directly into healthcare systems, the space to compete across European markets. We became their AI partner.
Fragmentation is also what builds stronger and more resilient companies. From a regulation perspective, European compliance is complex and occasionally maddening. But once you've solved it, you've built something competitors won't bother to or be able to replicate. The GDPR, AI Act, Medical Device Regulations and national healthcare regulations are all barriers that work in your favour once you're on the right side of them. The US might be more straightforward to start in, but straightforward is not the same as strategic.
Not too hot, not too cold, just right
At the risk of sounding hawkish, there is a reason why Swedish founders have got it right. Sweden is large enough to attract ambitious founders and produce strong companies, but small enough that startups must think internationally from day one. No founder feels like they’ve made it once they’ve secured the Swedish market, which is why they quickly expand abroad.
The instinct they should resist is to systematically go from Sweden straight to the US. The appeal of Silicon Valley is its uninhibited can-do attitude, a sense that you can take over the world. European tech needs more of that energy, but startups don’t need to travel 8,000kms to discover it. Founders must build globally competitive companies without sending their best tech and talent across the Atlantic.
Europe's competitive edge
The romantic appeal of Silicon Valley rarely comes with a warning about what European tech loses in the process. Up to 64% of European founders now expand to the US as early as the pre-seed or seed stage. The common wisdom has even become that a founder ‘must’ move to the US to have a decent chance of success.
If we continue outsourcing talent to the US, Europe will end up permanently dependent on Silicon Valley to train its own people. Yet conversations about European AI sovereignty only make sense if we have the infrastructure to produce it. Long-term, sovereignty means prioritising building and growing talent here. For the best companies, the funding and customers will follow.
It is not wide-eyed Europatriotism to suggest this. There are also commercial arguments that founders often overlook. In an era of fluctuating trust in American Big Tech, building a product that is genuinely European — locally accountable and compliant — is an asset. In procurement, governments and public services increasingly prefer trusted European vendors. That kind of credibility is hard to manufacture from a San Francisco office.
Unfinished business
While the case for building in Europe is stronger than ever, it still has a long way to go in making itself an attractive environment for founders, particularly those with ambitions to grow fast. I recently spent half a year working with multiple law firms across European countries to set up international stock option programmes, only to find there are no good solutions within the current legislative framework.
Europe has the talent, and it has a market for its companies. But it lacks self-belief — which is why it treats Silicon Valley like it is the finish line.
EU Inc and similar initiatives are necessary, but alone they are not sufficient — not as long as every ambitious founder needs to switch to Pacific Time to be surrounded and backed by people who dream big. European companies can compete globally. But to do so, they need European founders to stick around.
