Country

Where should you establish your venture?

If your big idea is focused on a single country, the decision is easy. However, if your venture will focus on a larger, international market from day one, the question becomes more complex. Additionally, if you're looking to build a tech business that requires external financing, you'll naturally look at one of the established startup hubs.

The question of where to find tech talent used to be a big one, but the pandemic has changed the rules of the game. You can now easily build and grow a business without having everyone under one roof. The more important questions are about the costs and complexity of incorporating your company, meeting legal requirements, and the flexibility of the tax system (or lack thereof). If a country has not adapted its tax regulations to the realities of emerging tech companies (such as stock options and associated taxes), it should be removed from your list.

If you plan to bring everyone together in one location, the talent pool and work culture are important considerations. Ask yourself how expensive it will be for your company to attract and retain talent. The more established the tech hub is, the more competitive the labor market will be. The goal is to find a location that strikes a balance between the availability of talent and a less competitive labor market. This will help you achieve higher loyalty from your first and most important employees.

I chose Berlin as flyiin's home for several valid reasons. Firstly, it was (and still is) an incredibly inspiring and attractive city for many young talents. Secondly, it is a truly cosmopolitan city (imagine that only one out of our twelve employees had a German passport). Thirdly, it is located close to many countries with great engineering pools, which was important to me as I planned to eventually build an engineering center in Central Europe. Lastly, back then Berlin was still an affordable city (back then), which was a major factor since I was expecting not to earn any salary for a couple of years (which ended up being four years)… And the local French school was free of charge.

However, I didn't anticipate the high cost of setting up a business due to the minimal capital share requirement, notary and legal fees, and associated paperwork. Even more distressing was the lack of flexibility in Germany's tax system—particularly in the event of a company flip to another tax location. This inflexibility left us backed into a corner in 2017, as you'll read in a next chapter.

Building our engineering team in Berlin proved challenging. Attracting and retaining skilled engineers was costly due to the city's competitive tech scene. The high salary expectations, benefits, and perks were often out of reach for an early-stage company like flyiin, which had limited funding and a significant product development roadmap. I'd often be stunned by the salary expectations put forward by some candidates—I would almost fall of my chair.

Key Takeway #9

Don't be fooled by your perceptions of a particular tech hub. It's important to do your homework and evaluate the extent to which the country facilitates entrepreneurship. Understand the cost of building and, more importantly, retaining a team there.