New research finds that most European startups that relocate their headquarters retain substantial operations in their home markets, with those operations continuing to perform strongly
A new study finds that almost all of Europe’s high-potential startups that move abroad, particularly to the United States, continue to maintain significant operations in Europe. These home-country operations also record faster sales and labour productivity growth than those of comparable startups that do not relocate.
The findings challenge the idea of a widespread exodus of innovative businesses from Europe, suggesting that moving a company’s headquarters abroad does not necessarily mean abandoning its home country.
The study was conducted by Professor Massimo Colombo of POLIMI Graduate School of Management, Professor Anita Quas of the University of Milan, Bogdan Tofan of Politecnico di Milano, and the European Commission’s Joint Research Centre (JRC) in Seville. It examines the scale, patterns and impact of startup relocations from Europe, as well as the implications for retaining innovation, talent and high-value activities across the continent.
Only 3.3% of European venture capital-backed startups in the study moved their headquarters abroad. Among high-potential startups without venture capital backing, the migration rate was almost 10 times lower.
Even when startups do relocate, the move is rarely complete. More than 90% maintain substantial operations in their home countries for up to five years after moving, often retaining important business capabilities there. Many also keep key people at home: 40% of CEOs remain in their home country in the year after relocation, while 25% never relocate abroad.
Overall, 15% of newly hired staff are based in the startups’ home countries. This includes 24% of new managerial hires in operations and finance, and 21% of managerial hires in research and development.
The attraction of the US
The United States is the main destination for European startups, with San Francisco, Boston and New York among the leading hubs. Access to venture capital, opportunities to be acquired and favourable legal frameworks are among the main attractions.
Startups that move to the US are more likely to secure further venture capital funding from a greater number of investors. The amounts they raise are around 75% higher, and they are twice as likely to be acquired, compared with similar startups that do not relocate.
Their home-country operations also perform strongly. The study reports that sales growth is 110 percentage points higher than among comparable non-migrating startups, while labour productivity growth is around 34 percentage points higher. Relocation is not associated with a greater likelihood of closing home-country operations or with lower employment levels there.
A varied picture across Europe
The likelihood of relocation also varies across the continent. Startups in larger countries with more established ecosystems, including Germany and France, are less likely to move their headquarters abroad than those in emerging ecosystems such as Romania and Bulgaria.
Manufacturing and deep-tech companies are also less likely to relocate than businesses in digital and life sciences.
“Our findings challenge the perception of a widespread ‘startup exodus’ from Europe,” said Professor Colombo. “Most migrating startups expand internationally while maintaining substantial operations in their home countries. The priority for policymakers should be to make Europe an even better place to start, grow, and scale innovative companies. Improving access to scale-up finance, making the acquisition market more transparent and competitive, simplifying regulation, and strengthening the Single Market will help startups grow globally while keeping high-value activities in Europe.”
The study concludes that the effects of relocation depend not simply on where a company is headquartered, but on where it makes strategic decisions, conducts research and creates skilled jobs. Moving abroad can provide access to international markets and growth capital while allowing startups to retain important activities in Europe.