Where should I set up my startup? It is the question that always comes up for entrepreneurs in the planning phase, and although location can be critical to the success of a business, in many cases no comprehensive set of factors are considered when making this life changing decision. Consequently, we would like to give you some ideas about how to resolve this issue.

If you missed the first part, click here to read it first!

Business environment factors

Startup Culture Fit and Business-friendly Governance

‘Culture fit’ is a thing, especially when talking about startups.

Different countries have different business cultures, and it is worth looking into and calculating the expected differences between your home country, the countries you’re familiar with, and the ones you are targeting.

The spectrum is wide, ranging from the more easy-going, mostly gentlemen’s agreement-based countries to highly bureaucratic ones, from a ‘meetings-culture’ to quick and efficient decision making, from a high level of cooperational attitude to exploiting dominance on a regular basis, etc.

Needless to say, dealing with a complicated bureaucracy will unnecessarily drain resources you could otherwise use to grow the business  (for more info, see this article, which is an easy to process adaptation of the Worldbank’s statistics). In these countries, business creation is straightforward and speedy, and on-going compliance regulations are minimal. Other countries, however, may have difficult processes and a vast array of regulatory requirements. This is worth looking into before finalizing the decision, as you can save a lot of time, resources and money by choosing a friendly regulatory environment.

Intellectual Property Protection

Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.

IP is protected in law by, for example, patents, copyright and trademarks, which enable people to earn recognition or financial benefit from what they invent or create. By striking the right balance between the interests of innovators and the wider public interest, the IP system aims to foster an environment in which creativity and innovation can flourish.

There is nothing that can kill a successful startup’s progress faster than an IP dispute on the ownership of the core innovation the company is built around. Seeking out a location that provides good and sufficient protection for your company’s intellectual property rights is essential, especially if you lack the financial resources to seek global protection.

Intellectual property rights protections vary greatly around the globe, which means choosing the wrong country for your corporation base can leave you vulnerable to losing control of your IP assets.

To learn more about IP rights and regulations around the world, a recommended source is WIPO’s Intellectual Property Handbook. If you are more interested in a shorter article focusing on IP-related mistakes startups make, look here.

Access to infrastructure

According to the 2018 Annual Scaleup Review (UK), 63% of scaling companies find access to infrastructure to be a barrier to their continued growth.

When choosing a country, you need to consider the type of infrastructure that is available, as well as its capabilities and capacities. Based on the nature of your business, there can be various  important factors for you such as access to technology, to co-working office spaces, to labs and R&D centres, or to efficient logistical solutions. Especially if your business needs special infrastructure, for example, some hard-to-find raw material, this is something you definitely need to prioritise: setting up your business in a country far from these resources and infrastructure might open the gate to disaster.

The B-word (can’t avoid)

Most of our readers are EU citizens, so it is natural that this question is unavoidable: what’s up with Brexit?

Establish a business in any EU country and you will enjoy the benefits of the single market: the freedom of movement of goods, services, capital and persons. The UK is amongst the most startup-friendly countries in the EU – for now. But with Brexit just around the corner, the UK leaving the single market will cause many startups to depart or consider setting up elsewhere. So far, we cannot know the final outcome, however, if you wish to use the advantages of the four freedoms, until the uncertainty passes, the UK might not be your best option.

Human factors

Network

Having and building your network is still a crucial part of business development.

No matter how much we are living in the world of the Internet and online presence, and how modern-day technology has changed the way businesses – especially startups – function, the personal brand and presence is still surprisingly important.

For these reasons, establishing your business in a country where you have already set up your own network and made a name for yourself in the necessary circles can make closing deals and finding investors easier. However, you don’t need to worry if your chosen country is one where you are new: with great networking skills – which can be learnt and improved – you can turn that around quickly and get ahead in a new, unknown country, as well. In these cases, choosing a country where networking opportunities are numerous, such us Germany or Sweden, with countless events organized for precisely this purpose, can be a benefit – but don’t be afraid to walk the path of the unknown and even choose a country that is not overflowing with these events: all you need is you!

Access to talent

Going hand in hand with access to infrastructure, access to talent is equally important.

Finding a location that has a population of sufficient size, education, and skills to meet your business’ human resource needs is important. You may not already have your core team, but as soon as your business starts growing, you will need more people with skills, depending on the unique circumstances of your business. It’s obvious: you want to be able to find and choose from the best in your field for your company at a reasonable cost.

In order to be able to determine whether a country is a match in this sense, you can also take a look at the relationship between the startup/business world and the academic institutions (mainly universities) in the country: they are the direct feeder of talent and research and development (R&D).

A significant option here could be Israel – it’s worth taking a closer look at least, since the country is now seen as the darling of tech innovation and has mastered the art of disruption through harnessing home-grown talent.

In addition, since English has become the international language of business, the chances of a local employee or contractor, investors, partners speaking the level of English necessary for your business is also an important factor.

Last but not least, we have to mention the ultimate question, the one that we most probably have heard the most often, and which makes you easily forget all the other aspects that are extremely important to consider.

Home country or abroad?

It is hard enough to start the business in a familiar country, imagine what it’s like doing it abroad. Having homecourt advantages can make everything easier, and you don’t need to live in the biggest cities and richest countries in the world to be able to use that to your advantage: if there is a market need, and everything else checks out, feel free to choose your own country as the first place of business. You already know the culture, have some connections, there is definitely no language barrier and you will feel more confident.

It is true, however, that if you are coming from a smaller country then the potential market will be smaller too. This means on the one hand, fewer customers, but on the other hand, probably less competition as well. It might be easier to break out in a country with less competition, and once you have some experience, expand to other countries.

However, you do not need to worry if, based on everything, your best option is somewhere abroad.

Don’t be afraid of the unknown, and keep in mind that a bigger challenge at the beginning will pay off big time if you choose the country well.

 

The list of aspects we have covered in our two-part presentation is definitely not exhaustive. We have followed a subjective approach and included the questions and areas with which – we have experienced in our practice – startups struggle the most if they have not thought enough about where to set up shop. Some additional aspects may be sector-specific or even personal.

It is important to know that this decision should not be rushed, and the country that is first on the “best startup countries” lists may not actually be a good match for you: you need to find a personal fit, based on the various factors.

Still have some questions or doubts left? Use any of the options in our “Contact us!” section, we are here to help!