A new report challenges Europe’s startup-drain narrative, showing that most relocating ventures maintain substantial operations in their home countries.
Many EU startups are moving their headquarters to the United States and are lost to the European innovation ecosystem forever, or so the story goes. A recently published report commissioned by the Joint Research Centre challenges this ‘startup drain’ narrative. Carried out by researchers from Politecnico di Milano and the University of Milan, the study investigates the scale, drivers and consequences of the international relocation of European startups.
The authors examined startups founded in 25 European countries between 2000 and 2021 and tracked relocations until 2025, with a particular focus on differences between venture capital (VC)-backed and non-VC-backed companies.
Perhaps the most surprising finding is that international relocation remains relatively rare. Among the roughly 40’000 startups examined, only around 3.3% of VC-backed companies relocated abroad. For non-VC-backed ventures, the figure drops to just 0.3%. When relocations do occur, the United States is by far the preferred destination, attracting nearly three quarters of relocated VC-backed ventures.
Crucially, the authors show that moving headquarters rarely means leaving Europe behind. More than 97% of relocations are only partial, meaning that the original European entity remains active after the move. Rather than a clean departure, relocation often resembles a redistribution of activities across different locations. For example, relocating startups continue to hire in their countries of origin, which account for around 15% of post-relocation recruitment.
The picture becomes more nuanced when looking at what happens after a move to the United States. Relocating ventures raise follow-on VC funding more quickly, access larger investment rounds and are more likely to achieve successful exits. Startups relocating to the US also show stronger sales growth and higher labour productivity in their European operations. The report does not find comparable gains for startups relocating within Europe.
Yet relocation patterns are shaped not only by the appeal of the destination, but also by the conditions startups encounter at home. Although heavily correlated, companies originating from highly innovative regions are more likely to relocate internationally, while startups located in regions with a strong supply of venture capital are less likely to leave. Access to larger markets and growth capital therefore appears to play a key role in relocation decisions.
This combination of home-market conditions makes Switzerland an interesting, but difficult, case to place within the report’s findings. Switzerland is not included as a country of origin and therefore cannot be compared directly with the countries analysed. On the one hand, its relatively small domestic market encourages startups to internationalise early. On the other hand, Switzerland has a highly internationalised economy and a comparatively strong VC ecosystem, which may mitigate some of the pressures identified in the report. Recent Dealroom data, for example, placed Switzerland fourth in Europe for VC investment volume in 2025, behind the much larger markets of the United Kingdom, Germany and France. Whether and how these contrasting characteristics shape the relocation of Swiss startups remains an open question.
The Swiss case thus reflects a wider European challenge: even strong innovation ecosystems do not always offer companies everything they need to scale. This tension is not new. Policymakers across Europe have increasingly focused on why ambitious companies seek growth opportunities outside their home markets (see SwissCore article). The EU Startup and Scaleup Strategy is the latest expression of this debate, aiming to improve access to finance, reduce market fragmentation and create better conditions for companies to scale within Europe.