The U.S. Playbook
Where should European startups land in the U.S?
Frontline Library » The US Playbook » Where to Land
CONTENTS
The Top Locations for European Startups to Expand to in the U.S.
We’ve collated data on over 200 B2B companies that expanded to the US from Europe over the past decade. Here’s where they set up their first office locations.
Top U.S. Cities for European Startups to expand to
Top U.S. Time Zones for European Startups to Expand to
While many European founders will assume US expansion automatically means landing in Silicon Valley, it’s actually New York City that is the single most popular location for startups from across the pond, with 45% of our sample landing there. More broadly, the vast majority of the sample (70%) chose a location running on Eastern Time, with Boston (12%) and Miami (3%) also serving as popular options. Landing on the East Coast means the smallest time zone difference with your HQ, presenting the least amount of friction for international business-building.
We subsequently built pockets of presence across the US (LA, Silicon Valley, Austin, Chicago and DC) and our NYC office became a great regional HQ for remote employees to feel a connection to the company.”
Signal AI
Despite the bigger timezone difference, some B2B companies do still see it as worthwhile to be on the West Coast, with 21% in locations running on Pacific Time. 19% are in the Bay Area, encompassing San Francisco and the surrounding areas of Palo Alto, Sunnyvale and Mountain View, among others– the birthplace of the global tech startup scene and the centre of gravity for venture capital and deeptech innovation.
West Coast businesses are less dispersed than those on the East Coast, with notably few landing in Seattle, which is home to Amazon, Microsoft and Tableau, among others. On the West Coast at least, the Valley remains king, despite its price tag and hyper-competitive talent market.
For companies operating in slightly more niche markets, it will be worthwhile to consider non-obvious locations. For example, in 2023 Frontline portfolio company Manna Aero chose to launch its US team in Texas:
Most importantly, the local regulations are favourable for the sector – the FAA (Federal Aviation Authority) grants waivers allowing “beyond visual line of sight flying” in the area, which are essential for us to operate.”
Manna Aero
Some companies choose not to set up an office at all, and operate a fully distributed team, or choose to operate remotely in the beginning and later switch to an office environment.
This enables founders to find high-quality talent across the country, whilst keeping costs low by foregoing an office. But it will also be harder to build team culture and morale. In our experience, commercial performance is markedly improved when teams are office-based.
Companies that do choose to permanently operate remotely will often provide their employees with a flexible office space option (like a WeWork subscription) and fly the whole team to a central location every six months or so to get everyone on the same page and to build a sense of belonging.
Our advice if you’re considering a remote workforce is to think about whether you will ever want your team to regularly meet in-person. If so, try to hire in a couple of pockets rather than all over the country, and make sure you take your employee’s preferences into consideration if you’re looking to pivot to an office-based or hybrid model of working.
Workvivo
A framework for choosing where to land in the U.S.
The most important factor for choosing where to land is where the strongest ecosystem for your business is – that encompasses your ideal customers, potential partners, talent, and even your competitors.
We find that, in most circumstances, there is a natural epicentre for these four elements. That may not stand true for developer talent, but most European companies going to America will not be looking to hire developers in their first wave of hiring, or even at all in the States, given technical talent is much cheaper in Europe.
You want to be in the centre of gravity for your particular slice of B2B, not in a remote town where your first US customer is based.
A good exercise for shortlisting cities is taking the list of 50 target customers and working out where the bulk of them are headquartered. Next, look at your competitors’ locations, check their websites for who they’re partnered with and find their headquarters too.
Most Popular landing locations in the U.S.
Once you have a city in mind, ask yourself the questions below and see how it stands up under scrutiny – if it doesn’t, consider an alternative landing spot. You can also use this list to help choose between two cities that otherwise seem on equal footing.
1. Is the location well connected domestically and internationally?
You and your team will likely be doing lots of back-and-forth between your offices in the first few years of landing. Beyond the monetary cost of intercontinental travel, it is also a huge time sink, so make sure you minimise that by choosing a city with direct and regular flights to your HQ location. On a more granular level, make sure that your office is no more than an hour’s drive from an airport with good domestic and international links, especially if you are planning to sell enterprise accounts across the country, otherwise you inhibit your sales team when they need to go out of state.
2. How many crossover hours would there be between your HQ and new office?
A time zone difference of five hours (Eastern Time to Greenwich Mean Time) creates a manageable crossover of three hours in a normal working day. A time zone difference of ten hours (Pacific Time to Eastern European Time) will mean that there is no crossover in normal working hours – that makes it incredibly difficult to build a company and foster a strong international culture. As a result, you will likely have to establish a localised operations team very early on in your US expansion because waiting a working day to get approval or assistance from HQ will slow you down aggressively. For all the attractiveness the West Coast may present, you may have to ramp headcount in supporting positions quicker than you had budgeted.
Remember that you should be maximising for your employees who may not be willing to work round the clock like you are.
3. How much does it cost to operate in the city?
What’s the average cost of commercial and residential rent, how much does local talent cost, and what state taxes will you need to pay? Your choice of landing city will have a big impact on your bottom line.
4. Can you realistically imagine yourself, your family, and your employees living in the area for 3+ years?
A preference for living by the ocean isn’t a good reason to eliminate an otherwise enticing inland city, but if there are poor schooling options or a local housing crisis, for example, then you may want to consider another option.
Use a VPN when researching your destination so you can see more localised search results
When to Expand
Hit the Ground Running
