Scaling a company across Europe is rarely as straightforward as it looks on paper.

The promise of the EU single market has been compelling for years: one regulatory framework, 450 million customers, a seamless path to cross-border growth. In practice, the founders building companies inside that market often experience something very different.

DutchBasecamp, part of ACE, recently published The Realities of Scaling in Europe, a research report drawing on survey data from 155 tech founders and operators and 20 in-depth interviews conducted across the continent. The findings put hard numbers on something we see regularly in our work supporting companies through international expansion.

The core finding: regulation has become an active input into business decisions

This isn't about compliance as a background cost. The research shows regulation is now shaping what companies build, which markets they enter, and whether they stay in Europe at all.

When founders were asked about the operational impact of EU digital regulation on their businesses over the past 12 months, the results were consistent across company size, stage, and sector.

• 52% have decided not to enter a specific EU country due to regulatory or compliance concerns
• 23% spend more than 30% of their total operating budget on EU compliance costs
• 45% paused or cancelled a product feature because of regulatory uncertainty
• 58% delayed a market entry in the past 12 months due to EU regulatory friction
• 24% are weighing a headquarters move outside their home country, primarily because of regulation

Only 21% reported no material impact from EU compliance requirements in the last year. For businesses planning European expansion, these numbers represent a significant operational reality. Each figure is a market not entered, a product not shipped, a growth decision quietly redirected elsewhere.

The Single Market Compliance Problem: One Framework, 27 Interpretations

The most consistent theme across the research isn't that EU rules are too strict. It's that 27 member states apply the same rules in 27 different ways, and that fragmentation is as damaging as any individual regulation.

A French fintech with full European banking licences tried to expand to the Netherlands. EU passporting was supposed to make that simple. It still took close to a year. Documentation already accepted in their home market had to be reassembled for Dutch supervisors. Checks already passed were repeated against local expectations. One company, effectively two authorisation processes.

A Slovenia-based IoT founder described it directly: “it's easier to expand into developing countries and the Middle East than to grow within the EU itself.”

This is the EU compliance environment founders are navigating. And it explains something we see in practice: companies that are genuinely committed to Europe still end up looking outward first, not because they want to leave, but because the path of least resistance points that way.

Compliance Costs Fall Hardest on the Smallest Companies

23% of respondents spend more than 30% of their total operating budget on compliance. For an early-stage company, that's capital taken directly from product, hiring, and growth.

The research highlights something the wider policy debate often misses: fixed compliance costs are regressive. The cost of establishing a quality management system under the AI Act has been estimated externally at €193,000 to €330,000. For a large corporation, that's a rounding error. For a 10-person team, it can be existential.

One Irish founder building AI HR software has deliberately kept their product in the "yellow zone", avoiding features that might push them into the AI Act's high-risk category. The cost of high-risk certification, they estimate, sits between €40,000 and €50,000. At their stage, that's months of runway. So features get narrowed, delayed, or dropped entirely.

This is the hidden cost of size-blind regulation: it doesn't stop innovation, it just ensures the companies least able to absorb the burden carry the most of it.

How Regulations Can Also Be a Competitive Advantage

Not all findings in the research point in the same direction, and a balanced view of EU regulation and compliance matters here.

Half of the founders surveyed proactively target full compliance. For companies operating in regulated sectors or competing internationally against US-based alternatives, European compliance standards can function as a genuine trust signal and commercial differentiator.

A Dutch founder making bodycam systems for police and frontline security teams described GDPR compliance as part of why they win contracts in markets outside the United States.

Customers handling sensitive footage see privacy built into the product as proof of trustworthiness, and when competing against American suppliers, that can decide the deal.

The research is clear on this point: the problem is not the existence of EU standards. It is their cost, unpredictability, and inconsistent application across member states.

What Founders Want

The report concludes with a consistent set of priorities from the founders surveyed. Not deregulation, but simplification.

Specifically, founders are calling for:

• Proportionate rules that distinguish between a 10-person startup and a 1,000-person scale-up
• Faster, authoritative guidance so companies can get clear answers on whether and how rules apply to them
• Mutual recognition that works in practice, not just in law, compliance accepted in one member state carrying real weight in the next
• Rules that keep pace with technology, rather than lagging years behind the products they govern

These are the conditions that would allow willing, compliant companies to spend more of their resources on building and growing, and less on navigating a rulebook that was not designed with early-stage companies in mind.

What this means for companies trying to scale

For businesses planning European expansion, this research reinforces something we see consistently in practice: market entry is only part of the challenge.

Understanding the regulatory environment in each target market, knowing where compliance requirements overlap or conflict, and having the right local operational support in place from the start are increasingly important factors in whether an expansion succeeds.

At ACE, we support companies expanding into and across Europe through soft landing services, compliance guidance, payroll, talent solutions, and cross-border operational support designed to reduce complexity and build the foundations for sustainable growth.

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"The Realities of Scaling in Europe" is published by DutchBasecamp.
Download the full report

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