They're going to the US for the VC funds and the capital markets, which is America's great competitive advantage globally. In the few industries I went through (PaaS, Health, Finance) what I got was that the regulatory environment in Europe was welcome for being stable and clear, or existing at all in a few cases. There's been one case where I've seen regulation being an issue and preventing business from being fully conducted in Europe, and that was related to banking (in that instance that company had to be set up in Dubai).

It's not ideal, but the EU has 450 million people. It can probably survive.