What to Keep in Mind as You Expand (A Five-Point Plan for U.S. Scaleup Expansion)

If you’re helping lead a scaleup or advising a company that’s planning a U.S. expansion, there are a few strategic priorities worth keeping in mind from the start. The U.S. remains something of a promised land for many startups, but it’s also a highly competitive and complex market. Expanding too soon can spread your resources thin, while expanding too late risks ceding the U.S. market to a competitor. The following five-point plan isn’t just a list of nice-to-haves — these steps can shape how quickly you gain traction and how far your resources will go in a U.S. expansion.

1. Start with the Business Case

Begin by getting crystal clear on why you are expanding and what you expect to gain. Don’t launch in the U.S. just because “everyone else is” or because you happen to know someone in a particular city. As Index Ventures partner Martin Mignot cautions, founders should be sure they actually need to expand — it’s an expensive, time-consuming move, and there’s no one-size-fits-all answer on timing. In other words, expansion should solve a real business need (e.g. accessing a large customer base or essential funding opportunities), not just feed an ego trip. For example, many European startups expand to the U.S. to chase customers or tap into larger venture funding pools (the U.S. had three times more VC funding than Europe in 2024). But even then, it’s vital to justify that move with data: What portion of your total addressable market is in the U.S.? Do you need a local presence to serve those customers or raise capital? If the answers don’t strongly support expansion, it might be wiser to wait and focus on your home market. On the flip side, if the business case is clear, treat the expansion as a top-priority project with proper resources and planning. One Berlin-based scaleup dedicated a team for a full year to craft a holistic U.S. expansion plan (with over 400 line items on their project roadmap), rather than attempt it as a side project. The more rigorously you define the why and how of your expansion up front, the fewer expensive surprises down the road.

2. Know Your Priorities

Before you start comparing states or cities, define what your company really needs from a location. Perhaps it’s a deep pool of engineering talent, proximity to key customers, a lighter regulatory environment, or access to specific partners or suppliers. By establishing these must-haves early, you can filter out locations that don’t fit and avoid being swayed by secondary perks. Common factors include where your customers or partners are based, what regions specialize in your sector (finance is concentrated in New York, entertainment in Los Angeles, enterprise tech in San Francisco, etc.), and the availability of the skilled talent you need. Time zone differences can be a factor as well – for example, if you’re an international team, an East Coast base offers several more hours of overlap with European offices than the West Coast. Cost is another priority to weigh: what are the typical salaries and office costs in a given city? In short, know your non-negotiables. If cheap office space and lower burn rate are paramount, that might point you toward emerging tech hubs in the Midwest or South. If being near financial regulators and banks is key, New York or Washington, D.C. will rise to the top. The more focused you are on your must-haves, the easier it becomes to ignore the noise and zero in on locations that truly align with your goals.

The “default” choice isn’t always the right one. According to Index Ventures, New York has become the most popular U.S. hub for European startups (44% of them chose NYC in recent years, vs. 28% for San Francisco and 11% for Boston). This shift happened because many founders re-evaluated their priorities – factors like customer base, talent pool, and even time zone convenience made New York a better fit for a first beachhead in the U.S. than Silicon Valley in many cases. The takeaway is clear: let your strategic needs drive the decision, not outdated assumptions.

3. Let Location Strategy Guide You

Once you’ve clarified your needs, work backwards to identify which regions best meet those criteria. In other words, don’t pick a location first and then justify it – define your strategy first and let that guide the location. Your choice of state or city isn’t just a logistical detail; it will profoundly impact your cost structure, hiring pipeline, and even speed to market. Each region has its unique mix of advantages (and drawbacks) that can either accelerate or hinder your plans. For example, historically many international founders reflexively set up in San Francisco, which was seen as the epicenter of tech. But as Martin Mignot observes, “Historically, going to the US meant going to San Francisco for the talent, investors or even customers... COVID-19 really changed that. Now, most European founders are setting up shop in New York, regardless of industry.” This was a strategic shift: during the pandemic, San Francisco “lost its physical network effect”, and the East Coast began to offer better access to markets and talent for many companies. The lesson is to analyze each potential location with a strategic lens. Consider how a region aligns with your priorities: Will setting up there give you a cost advantage (e.g. cheaper talent or real estate)? Will it plug you into a rich industry cluster or supply chain? How might it affect your speed to market (being closer to customers can mean faster feedback and delivery)? Also research local business conditions: labor market dynamics, turnover rates, and brand credibility. (One VC study noted that employee turnover in San Francisco averages 30%, far higher than in many other U.S. cities – a factor that could slow you down if you’re constantly re-hiring.) A smart location strategy might even point you away from the well-known hubs toward up-and-coming locales that offer the right mix of talent and affordability.

4. Don’t Wait to Think About Incentives

Too many teams treat government incentives as an afterthought – something to look into after picking a location or, worse, to ignore entirely. In reality, incentives can be a game-changer for a growing company, and they send a powerful signal that local governments want to support your growth. States and cities across the U.S. compete fiercely to attract businesses, often offering tax credits, R&D grants, workforce training support, and other benefits that can significantly extend your runway. Importantly, these programs aren’t just for Fortune 500 firms; many are designed with startups and scaleups in mind. For example, Michigan recently rolled out a refundable R&D tax credit with an extra $200,000 bonus for companies that collaborate with in-state universities – a boost aimed squarely at innovative young firms. Virginia in 2024 revamped its R&D credit to be refundable, offering up to $45,000 per year for smaller companies to spur homegrown innovation. These are dollars that directly reduce your burn rate. Why leave them on the table?

The truth is, billions of incentive dollars go unclaimed each year, often because companies don’t realize what’s available or initiate the conversation too late. In fact, fewer than 30% of eligible small businesses even claim the federal R&D tax credit, for example. Many startups simply aren’t aware of the array of credits and grants out there, or they find out when it’s too late to qualify. It’s not uncommon for companies to overlook valuable tax incentives due to lack of awareness or manual, outdated research processes. Don’t let that be you. From Day 1 of your expansion planning, factor in incentives as a core part of the business case. Research what state and local programs might pay you to create jobs, invest in R&D, train workers, or build facilities in their jurisdiction. Often, the availability of incentives can tip a close decision between two locations. And beyond the cash value, incentives often come with soft benefits: they signal a friendly business climate and can open doors to local government contacts or public-private partnerships (e.g. workforce development programs with community colleges or fast-tracked permitting processes).

A recent customer of Upsite, a European AI scaleup, approached U.S. expansion very intentionally on the incentives front. By analyzing incentive programs up front, they discovered that choosing New York City – and leveraging programs like New York’s Excelsior Jobs tax credit, the federal R&D credit, and others – could trim up to 40% off their expansion costs. That kind of cost reduction can fund several new hires or extra product development. On the flip side, consider what would have happened if they’d only looked into incentives after picking a location – they might have missed out on those savings entirely. The bottom line is that incentives are more than just “free money.” They’re a sign that a state or city is investing in you, and they can be a valuable source of non-dilutive funding to extend your runway. Treat incentive exploration as a core workstream of expansion, not a bonus task.

5. Use Tools (and Data) That Save You Time

The good news for founders and CFOs is that you don’t have to figure all this out manually. In fact, you shouldn’t. Trying to piece together 50 states’ worth of data, thousands of incentive programs, salary benchmarks, tax rates, and quality-of-life metrics by yourself is a recipe for frustration and missed opportunities. As of 2025, there were more than 2,400 state and local business incentive programs across the U.S. – an overwhelming number to track without help. Instead, leverage modern tools and expert advisors to make a data-driven decision in a fraction of the time. Today, there are AI-driven platforms (as well as consultants who specialize in site selection and incentives) that can crunch these variables and surface the best options for you in hours instead of weeks. For example, Upsite’s expansion “co-pilot” platform aggregates real-time insights on costs, talent pools, and infrastructure for locations nationwide, and matches companies with fitting incentive programs – delivering key expansion insights in a fraction of the time a traditional manual research process would take. 

Using technology and data doesn’t just save time; it also reduces risk. By benchmarking potential locations against each other on the metrics that matter to you, you’re less likely to overlook a great up-and-coming locale or misjudge a critical cost. As a founder, you should also simulate different scenarios – for instance, what if you opened your engineering center in Atlanta vs. Denver? What incentives and talent pipeline would each offer, and how would that affect your 5-year plan? Data-driven tools make this kind of scenario planning accessible without needing a whole internal strategy team. In short, work smarter, not harder: leverage the available data and platforms to inform your expansion, so you can focus on execution. The U.S. market is dynamic and information-rich; those who harness that information will outpace those who rely on gut feeling or overly anecdotal advice.

You don’t need to become a public policy expert or a real estate guru to execute a successful U.S. expansion. But you do need to approach expansion with clear intent and thoughtful execution. By starting with a solid business case, honing in on your priorities, letting strategy (not inertia) drive your location choice, tapping into incentives early, and utilizing modern tools, you can expand with confidence and efficiency. What once might have felt like tedious “red tape” is now often critical to long-term success – in fact, savvy management of location and incentive strategy can be the difference between merely surviving and truly thriving in a new market. The public sector resources and data are out there for the taking. In the end, the key is to marry your startup’s agility with a data-informed plan: move fast, but on the back of real insights. Do that, and you’ll gain the U.S. traction you’re looking for while stretching every dollar and de-risking the journey.