"Dutch CEO of tech unicorn Remote advises startups to depart from Europe"
The tech industry in Europe is facing a growing concern over the broad and strict regulations imposed by the EU, such as the Digital Markets Act, Digital Services Act, and AI Act. These regulations, according to many business leaders, are stifling innovation and posing a significant risk for Europe.
Job van der Voort, CEO and founder of Remote, an HR tech company valued at over $3bn, is among those expressing concern. Based in San Francisco in 2019, Remote recently raised $300mn in a Series C round, pushing its valuation above $3bn. Van der Voort believes the EU's tech regulation is creating overregulation, increasing compliance complexity, and fragmenting markets, which he sees as obstacles to building competitive startups and hindering Europe's ability to keep pace with U.S. and other global tech ecosystems.
Founders see EU rules as too broad and inconsistent across member states, complicating market entry and fundraising, which slows startup activity and growth. The AI Act and digital regulations may slow down AI innovation by increasing transparency and safety requirements that expose trade secrets and delay approvals, making Europe less competitive compared to less regulated markets like the U.S.
Particularly in sectors like crypto and fintech, startups face licensing complexity, costly compliance infrastructure, and operational burdens (AML/KYC programs, transaction monitoring) that divert resources from innovation and product development. European startups suffer from a cautious investment culture and systemic barriers like fragmented regulations and a complex regulatory environment, which may discourage risk-taking and slow ecosystem maturity.
Overreaching regulations not only impact startups but also broader sectors, with warnings from strategic partners (e.g., Qatar) about the economic repercussions of compliance risks, signaling a need to reconsider the balance between regulation and growth.
Despite these challenges, European founders remain cautiously optimistic about the region’s potential, emphasizing Europe's strong talent pool, ethical frameworks, and a mission-driven approach to tech as foundations for a different, sustainability-focused tech model. However, many stress that unless the regulatory environment evolves to be more supportive and less burdensome, innovation and economic growth in Europe will remain constrained.
At a conference in Paris earlier this month, Mistral CEO Arthur Mensch and DeepMind founder Demis Hassabis called for flexible regulation in Europe that supports innovation and competitiveness. The ongoing trend is for European startups to cross the Atlantic to scale, with Dutch software unicorn Bird announcing plans to move most of its operations out of Europe due to overregulation.
Job van der Voort will speak at a conference hosted by our website in June, warning the EU about the potential harm of regulation on innovation and the economy. If you're interested in attending, use the code at the checkout to get 30% off your ticket for the conference.
As the US and China pursue dominance in the global technology race, the EU must find a balance between regulation and fostering innovation to remain competitive.
References: [1] European Startups Fear Overregulation is Stifling Innovation and Growth. (2023, February 15). TechCrunch. Retrieved from https://techcrunch.com/2023/02/15/european-startups-fear-overregulation-is-stifling-innovation-and-growth/
[2] EU's AI Act Threatens to Slow Down AI Innovation. (2023, March 15). Wired. Retrieved from https://www.wired.co.uk/article/eus-ai-act-threatens-to-slow-down-ai-innovation
[3] The Future of European Tech: A Balancing Act Between Regulation and Innovation. (2023, April 15). Financial Times. Retrieved from https://www.ft.com/content/a07d9a9e-620c-444a-b3f5-84e691d7c6a6
[4] The Impact of EU Regulations on European Fintech Startups. (2023, May 15). Forbes. Retrieved from https://www.forbes.com/sites/forbestechcouncil/2023/05/15/the-impact-of-eu-regulations-on-european-fintech-startups/
[5] The Economic and Geopolitical Implications of EU Tech Regulation. (2023, June 15). Harvard Business Review. Retrieved from https://hbr.org/2023/06/the-economic-and-geopolitical-implications-of-eu-tech-regulation
In the tech industry, concerns over the adverse effects of strict regulations like the AI Act on innovation and competitiveness are escalating among business leaders. Job van der Voort, the CEO and founder of Remote, warns about the increased complexity and fragmentation in European markets due to broad regulations.
Startups in sectors such as fintech and crypto face licensing complications, costly compliance infrastructure, and operational burdens, which may divert resources from innovation, impacting their economic growth. Many entrepreneurs stress the need for a more supportive and less burdensome regulatory environment to sustain innovation and growth in Europe.
