Spoiler alert – the space is going to get a lot more competitive.
The global world offers the majority of startup enthusiasts an array of opportunities and freedoms – from flexible working schedules tailored to your productivity levels to living a nomadic lifestyle and seeing the world. That shift moved the attention of many Founders away from building teams in a particular geography or a city to target the best talent on planet Earth. Now, instead of focusing on the best talent next door, one is at liberty to consider the best talent globally. That allows many to attract the experienced individuals in their niche to their team and absorb the knowledge previously unavailable to them due to geographic restrictions. On top of the availability of niche talent, many are looking at hiring in a lower cost of living locations which historically carry relatively lower than US-based salaries. To a certain extent in 2022, the world is your oyster.
Although looking at the wider talent pool and potentially lower cost base (when compared to the US this is almost certain), Founders shouldn’t feel overly optimistic at the perceived lack of competition. Other early and growth-stage startups and corporations start to compete for the same talent base niche you are after.
How this will affect the European talent pool
From recent interviews, the European talent in the product and engineering domain (from Senior to C-suite) is getting highly competitive offers from overseas, on average 20-30% higher than offers in the home country. And whereas the offers are not the same as in the US (mainly due to the large difference in the cost of life), the offers as they stand are extremely competitive when compared to the local markets. On top of the competitive base the bonuses, equity structure, as well as perks, and other benefits easily differentiate these proposals from the rest.
The effect of this “move to the East”, in my view, will create 3 main outcomes:
- Rising salaries from local companies as a response to competition. NB: do not forget to move your existing employees to the new “base” before those get snatched by your competitors with better offers.
- Rising competition on senior IC to managerial talent who can work with little supervision on a remote basis and potentially scale the team in their locale. Learn what differentiates you as a company from others, yet do not expect the good culture to serve as a substitute for market level salaries.
- Pressure to adopt the ESOP plans. As not all of European countries have a framework to adopt the ESOP plans, the need for the equity based component of compensation will become more prominent in European founded ventures.
This shift doesn’t end its effect in the European startup landscape, however. Startups from the MENA region, as an example, that were hiring in the EU previously will now also feel the effects of the increased competition as they are after the same talent pool. This is already visible in our startups under the wing of NOMU VC. Those in Australia, previously favoring the UK and Bay area, might see the shifting compensation levels already (as detailed in the Think & Grow report).
Who doesn’t like healthy competition!