Germans don’t do tech startups – more access to capital might change that

> * the most difficult tax system in the world. even freelancers have to use accountant services, because most people will not be able to pay taxes properly without it.

Nothing strange about it. When I was self-emoloyed in the UK, I also had to use services of an accountant.

> * high taxes - 42% income tax + Solidaritätszuschlag 5.5% = 47.5%; for corporations it's ~30%.

Taxes are high but, for example, Belgium has higher taxes. In the UK I was also hitting 38%. Corporate tax in the UK was back then 20% with 10% tax on dividends, Germany is expensive but not the most expensive.

> * A LOT of buerocracy. I can't even send an email to tax authorities in my area, because they only accept paper letters but nothing else.

Where do you live. No problem with Finanzamt in NRW and RLP communicating over email. Germans do almost everything on paper but things can snd are done over phone and email.

> * highly qualified foreigners have to learn German and it's quite difficult language.

No, they don‘t. It depends who your clients are. I live in NRW and barely speak German. Not proud of it, learning. Just an observation. For sure it‘s easier with the language knowledge.

> * the market in Germany is much smaller comparing to USA. If you want to target EU, then you have to support a lot of different languages, date/time formats, regulations and laws etc.

I am not sure what you mean by that. I just invoice people in different countries. Nothing to do with dates, languages, formats.

> * recently the EU introduced a lot of additional regulations for internet companies (GDPR, new copyright directives that require checking uploaded files, etc...).

Personal preference. I prefer this over another facebook or google.

> * weather is not that appealing as in the valley. > * the difference in salaries between regular developers and rockstars is very low. So there is zero motivation to become one.

Fun fact, a graduate in Atlanta gets ~90k/year. Zero experience, barely left university.

> * low salaries for software engineers. The most of senior software developers will earn 50.000 - 60.000 EURO anually and after paying taxes it's only ~2.600 EURO per month (3.000 USD)

This number seems to be common everywhere in the EU. Different currencies but overall the same value.

> * poor internet connection in a lot of places / poor connection speed - almost any country is better in this regard

Oh yes. This is so common in Germany. When I read how easy it is to get fibre in India, I cringe.

This is one of the classic misunderstandings of European entrepreneurs and investors.

In finance - things with low risk, tend to produce low yield. This is generally well established because there are a lot of 'eyes on the info'. For example, we can calculate how much it costs to extract a new shallow water Oil find. Most of the variables are known.

Though it's not so clear in early-stage, the rule will still apply because the easy hanging fruit generally will be culled when there are intelligent actors.

So - you need to take on risk. Otherwise, you're probably not attacking a big opportunity.

European VC's usually come out of the world of finance - in fact, VC is considered a part of 'Private Equity'. In PE or big funds, they invest in one or many companies, and expect x% return. Some more, some less.

In PE, if a company were to go bankrupt, it would wipe out the portfolio profits. Imagine if Warren Buffet put money in CN Rail and it turfed.Bad.

But in VC - you get 9 fails and 1 home run. The fails are hard to swallow but they are an inherent part of the system.

Culturally, Europeans especially Germans are not good with that kind of failure. It can be seen as a permanent mark on one's competency and status. In Austria, up until recently, a CEO who put his company bankrupt could face criminal charges.

All of this makes sense in a culture of high standards and expectations, coupled with social solidarity of workers (i.e. you but us out of jobs, you pay!).

European LP's are not used to losing their money. European workers are not used to equity, to losing their jobs, to total instability.

European BigCo's often do not recognize value in startups. The culture in Europe is very protocol and status oriented - you're 'value' is a function of the prestige and power of the entity you represent. Ramshackle, scruffy coders showing you 'you can do something amazing' is just less potent an opportunity than it is in the US.

And of course, the exit opportunities are not there.

And then so many other systematic issues like the fact almost nobody will learn to speak German, immigration etc. etc.. - all of this makes it that much harder.

Much of what I am saying is stereotypical of course, but it's real enough.

I think Europe should take their disadvantages and turn them into advantages and use their 'longer scope of vision' to do value creating things.

Europe is good at getting people together and going 'big projects' that have a long term view. Like CERN. And EU treaties.

I can see some very powerful things concerning money - European countries are smaller and more nimble. Sweden does some cool stuff. What if a Swedish Crown corporation enabled a digital currency that could be used globally? Because of the integrity of the institution, and the fact that it's backed possibly by a 'real economy' - it could be a very powerful export. Much in the same way if you make 'jet fighters' you don't just go and sell them you need your countries diplomatic corps to work with you.

EDF in France (Energy) is tied closely to government, and that kind of stuff - i.e. nuclear, generally needs some hefty scale.

But also expect that many of the gains in such situations will be socialized, and maybe not come in the form of crazy billionaire status for founders.

Funnily, I only know one person who uses WhatsApp.

Counterpoint: Xero did exactly this. They're a $5B SaaS company almost entirely off the ANZ SMB market, which is their base to attack Quickbooks and MYOB internationally.