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Agustin Schapira on March 23, 2010

Martin, I read with interest your post about the hardships that the US imposes on startup companies (legal fees, high health insurance costs, and the defense tax) and, conversely, the advantages that the EU offers.

I think that the situation is in fact much worse than you describe for VERY small companies (one or two people): the cost of health care and education here is so prohibitive that embarking on a new small venture is a tremendously risky proposition, with real chances of ending up in bankruptcy and lack of access to proper health care. In order words, you are pretty much risking your life and your family’s. Countries with public health care and education are not only providing better standards of living for their people; they are in fact also encouraging entrepreneurship and innovation (by mitigating the inherent risks of the small entrepreneur) in a way that the US, who prides itself in its entrepreneurial spirit, cannot even dream of offering.

In this context, it is no surprise that such a large percentage of entrepreneurs in Silicon Valley are in their 20s; they are precisely those for whom, because of their age, living without health insurance is a reasonable calculated risk (and they normally don’t have children and so they are not risking their kids’ futures either). Regretfully, this also prevents older and more mature people from starting new small businesses, and I think that in particular in the tech world, a lot of potential gets lost right there: we overvalue the energies of young entrepreneurs, and are giving up the potential that comes from the maturity and the experience of tech people with more years on the field. The flip side of the coin is that I think that right there lies a very good opportunity for VCs –funding more mature and experienced entrepreneurs, who might require bigger initial investments to cover their living expenses, but who in return can skip a lot of the learning process that young ones have to go through.

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