Why would it be to set up a colony close to the coast or near water

Explanation:

The Europeans competed to increase wealth and power by expanding empires to America, they decided to go to Jamestown, Virginia (home to the ruins of the first permanent English settlement in North America.)

When the settlers arrived Jamestown was located on a narrow peninsula bordered on three sides, which later changed location to an island in the James River.

The reason as to why they chose a location near water, was because the location could be easily defended from attacks by sea, the water along the shore was deep enough for ships to dock, and because they had a good supply of freshwater.

your answer is

to dominate europe

and i know for a fact it can't be the others