Europe has become one of the world’s strongest startup ecosystems. Every year, thousands of founders launch innovative companies backed by world-class talent, research and growing investment.

But while starting a business has never been easier, scaling a startup in Europe remains one of the biggest challenges founders face.

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The European Union was designed to function as a Single Market, making it easier for businesses to grow across borders. Yet many founders discover that expanding from one European country to another still involves different interpretations of regulations, varying compliance requirements and country-specific administrative processes.

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At DutchBasecamp, we spend most of our time helping startups and scale-ups expand internationally. One theme that keeps coming up in conversations with founders, is that it’s often easier to think globally than to scale across Europe itself.

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We wanted to understand whether these experiences reflected individual frustrations or a broader structural challenge.

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Our latest research, The Realities of Scaling in Europe, combines survey responses from 155 founders and startup leaders across Europe with in-depth interviews to explore how regulation shapes innovation, international growth and investment decisions.

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The findings reveal that regulation is no longer just a compliance issue. It increasingly shapes where startups expand, what they build and how quickly they grow.

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Europe doesn’t lack entrepreneurial ambition, technical talent or innovative ideas

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While the EU aims to create one harmonised market, founders often encounter different interpretations of regulations, varying administrative processes and inconsistent compliance requirements in each Member State.

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For startups with limited time and resources, these differences quickly become expensive.

Instead of focusing solely on customers, product development and hiring, founders spend valuable time navigating legal requirements and administrative processes that vary from country to country.

Growth slows, not because demand is lacking, but because complexity consumes resources.

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What 155 founders told us

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Our research uncovered a clear pattern: regulatory complexity is influencing strategic business decisions much earlier than many people realise.

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Among the founders we surveyed:

• 52% decided not to enter at least one EU market because of regulatory or compliance concerns.
• 58% delayed entering a new market due to regulatory friction.
• 45% paused or cancelled product features because of regulatory uncertainty.
• 23% spend more than 30% of their annual operating budget on compliance.
• Nearly one in four founders are considering, or have already completed a headquarters relocation because of regulatory hurdles.

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Taken together, these findings suggest that regulation is influencing far more than compliance. Before companies relocate, founders are already changing their growth strategies, delaying expansion, postponing innovation and prioritising other markets.

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Three challenges founders consistently highlighted

1. Uncertainty is slowing innovation

Founders weren’t asking for less regulation. They were asking for more clarity.

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Several interviewees described spending months trying to understand how new rules applied to their businesses, only to receive different interpretations from different legal advisors.

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As one founder told us:

“We asked three different lawyers and received three different answers.”

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For startups, uncertainty quickly becomes a business risk. When founders aren’t sure whether a product or feature complies with regulation, delaying the launch often feels like the safest decision.

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2. Compliance hits startups harder than large companies

Compliance affects every business, but not equally. Large organisations have dedicated legal and compliance teams. Startups don’t.

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Every euro spent on external legal advice is a euro that isn’t invested in engineering, product development or customer acquisition. One founder even told us they spent more on GDPR lawyers than on marketing during their earliest stage of growth.

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Founders aren’t arguing against regulation. They’re asking for rules that are proportionate to the size and resources of startups.

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3. The Single Market still feels fragmented

Although European legislation creates common frameworks, founders continue to experience Europe as a collection of separate markets. Different documentation requirements, administrative processes and interpretations of the same regulations mean expansion often involves repeating work from one country to the next.

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Several founders even told us that expanding outside Europe sometimes felt more straightforward than expanding within the EU itself.

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What founders want

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Across the survey and interviews, founders consistently called for:

• Regulation that is proportionate to startup size.
• Faster and clearer regulatory guidance.
• Less overlap between digital regulations.
• More consistent implementation across Europe.
• Rules that evolve alongside technological innovation.

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The message is clear: founders are calling for simplification, not deregulation.

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Why this matters

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Europe already produces world-class startups. The challenge is helping them scale. Every delayed market entry, cancelled product feature or expansion into another region represents an opportunity that Europe risks losing.

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Our research shows that founders value Europe’s high standards around privacy, security and responsible innovation. What they need is a regulatory environment that makes those standards easier to navigate and more consistent across borders.

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Helping startups scale isn’t just good for founders, it’s essential for Europe’s long-term competitiveness.

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Download the full report

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The Realities of Scaling in Europe explores these findings in greater depth through survey data, founder interviews and practical recommendations for policymakers, investors and ecosystem builders.

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If you’re building, investing in or supporting startups in Europe, we invite you to read the full report and join the conversation about creating a stronger environment for innovation and international growth.

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Download the report from this page and discover what 155 European founders told us about the realities of scaling a startup in Europe, and what needs to change to help Europe’s next generation of scale-ups succeed.