Europe is quickly transforming itself into a startup hub for local and international firms after trailing the tech hubs of Asia and the United States. According to Atomico, a venture firm, in 2017, Europe startups received an investment worth $19 billion. About 90% of the most innovative markets in the world are now found in Europe.
Contributing factors to Europe’s growth as a startup hub
A startup normally needs financial support, mostly from venture capitalists. Europe’s venture capital industry is still relatively young but it’s rapidly maturing.
Startups also get help from government programs to ease startup funding. The Union established an online support system where entrepreneurs can quickly find available resources. The program is available at Startup Europe’s One Stop Shop.
The European Union (EU) is challenged by the fact that it is composed of 28 individual countries even if it aims to be the largest single market in the world. This means that each state has its own language that needs to be overcome as well as its own investment regulations.
The EU is trying to address the issue with investment regulations by establishing the Capital Market Union (CMU). The organization’s task is to ease the flow of capital among investors in the Union. Another detrimental factor is the higher tax levied on investment. To circumvent this issue, the Union is taking steps to provide tax incentives to angel investors and venture capitalists.
Other international companies are taking notice, including Facebook and Google. Likewise, local entrepreneurs are providing plenty of coworking spaces.
It is not yet time for Europe’s growth as a startup hub to slow down. Its diversity and the number of excellent cities with deep reserves of talented individuals and people willing to provide innovative products and services make the future very bright for small and medium-sized business across Europe.
Several member states have already started their startup visa program, including France, Estonia and Portugal. The startup visa facilitates the hiring of non-EU professionals to work at startup companies. Europe is now the destination of choice because of the uncertainty and issues plaguing the United States’ H1-B visa program.
Top tech hubs across Europe
One of the most viable industries today is technology, which is not surprising considering the number of applications technological developments can provide to a wide variety of industry sectors. London reigns as the hot spot for entrepreneurs right now. However, many cities across Europe are nurturing several private companies that are growing at a fast rate, due in the support of their government, venture capitalists, other investors, and other recently funded companies.
1. Kraków
Technology outsourcing has been a lucrative sector in the city and the startups today benefit from the sector’s history. Kraków is a development hub for many firms including the outsourcing firm Capgemini of France, Epam Systems, UBS and IBM. The supply of tech talents in Kraków is deep and the relationship between existing companies and entrepreneurs is firmly established. Recently, Qualtrics, a software giant from Provo, Utah has set up shop in the city. The city provides low rent for office spaces and the local government offers entrepreneurs sizeable financial support.
Startups can readily access different entrepreneurship networks as well as the resources available from the Kraków Technology Park. It is a venture fund and incubator program that was established about 20 years ago.
2. Lisbon
Dozens of startups are sprouting in Lisbon, the capital of Portugal. About 26 of these fast-growing companies belong to Europe’s annual list as compiled by Inc.com. One is an IT services company called Decskill which earned US$4.79 million in 2016. Another fast-growing startup is an e-commerce company called Portspar Retail, whose revenue for 2016 reached US$24.6 million.
Lisbon is very conducive to startups as space rental is very low. Entrepreneurial tourists are also getting interested in the city. During the last Web Summit Conference, over 60,000 technologists, entrepreneurs and investors attended the affair. Some of the notable speakers were Steve Huffman, co-founder of Reddit, John Krafcik, the CEO of Waymo and former vice president of the United States, Al Gore.
3. Vilnius
The Lithuanian city of Vilnius has a long history as an outsourcing hub although its reputation as a startup hub is still not that stimulating, compared to other European cities in this list. But this does not mean that it is not performing. It has a large pool of talents ranging from engineers to data scientists who graduated from the top universities in the country. In fact, many privately owned companies are setting up shop in the city.
Some of these fast-growing companies are aircraft maintenance company Jet MS and a freight transport company called UAB Htr1. Both companies are included in the European list of Inc.com. The city enjoys some of Europe’s fastest Internet speeds. The cost of living in the city is very low, making it very attractive to entrepreneurs and investors. Among the vacation destinations in Europe, Vilnius offers the lowest rates.
4. Barcelona
The startup ecosystem in Barcelona is very energetic, which is one of the reasons why it is becoming a favorite destination of international entrepreneurs. The city makes it very easy for startups to set up their business. In most cases, you only need 24 hours to start a company. Its domestic companies are making waves as well. Notable are Deliberry.com, a grocery delivery company and GetYourHero, an on-demand cleaning firm.
Entrepreneurs believe that Barcelona will be a top choice for many startups after Brexit. Barcelona’s startup companies benefit from public financial support, which encourages people with entrepreneurial spirit to establish their own firms.
5. Edinburgh
Edinburgh is attracting not only talent but entrepreneurs and investors from all over the United Kingdom. It ranks third in having the largest number of unicorn companies. The long-term investment in the research infrastructure in the city by the universities contributes to the growth of startups in Edinburgh. Another evidence of the faster growth of businesses in the city is the boom in leased office spaces last year, which is more than the combined leased office spaces in the past two years. Some of the companies earning millions today include packing service company Vegware and software company Ecometrica.
Technology hubs in the United Kingdom are adapting to the new reality of Brexit. You should see our report on the pros and cons of Brexit when working with UK companies.
6. Moscow
Moscow is fast becoming a startup hub for Russian companies despite the sanctions from the EU and the United States, as well as the erratic political scenario in the country. It’s interesting to know that 171 companies in the Inc. 5000 Europe list are from Moscow.
The city is not suffering from a lack of talent. Graduates from top universities such as the National Research University of Electronic Technology, Moscow Engineering Physics Institute and Moscow State University provide a deep pool of engineers.
Companies in Moscow can easily access the top accelerator programs as well as other resources that provide all kinds of support.
7. Tallinn
Tallinn, Estonia’s capital, has evolved into a dynamic tech and innovation hub, leaving a mark on the global startup scene. Foreign entrepreneurs choose to register companies in Estonia thanks to its favorable tax environment, with no corporate income tax on retained and reinvested profits. Companies such as Eesti Consulting bring valuable business insights, making it easier for entrepreneurs to thrive in Estonia.
With affordable office spaces, robust government support, and a steady influx of skilled tech talent, Tallinn has attracted notable organizations such as Skype (now part of Microsoft), Wise, Playtech, and Pipedrive. The city’s startup ecosystem thrives on collaboration between established corporations and emerging entrepreneurs, with access to networks like the Tallinn Science Park Tehnopol, a renowned incubator program founded over two decades ago.
9. Novi Sad
Novi Sad, Serbia, has emerged as a thriving hub for tech startups, fostering an environment conducive to innovation and entrepreneurship. The city boasts a rich talent pool with a strong emphasis on STEM education, producing skilled professionals in fields such as software development, engineering, and information technology. The cost of living in Novi Sad is relatively lower compared to other European tech hubs, making it an attractive destination for aspiring entrepreneurs seeking to stretch their startup capital.
One notable factor contributing to Novi Sad’s appeal is the ease of company formation in Serbia. The country’s business-friendly regulations and supportive government policies have streamlined the process, allowing startups to establish themselves quickly and efficiently. Among the successful tech companies that have flourished in Novi Sad is Vega IT, a leading software development company. Additionally, Quantum Tech, a rising star in the field of quantum computing, has found a conducive environment for growth in Novi Sad. These success stories highlight the city’s potential as an emerging hotspot for tech innovation and company development in Serbia.
Startups that show promise
Aside from the cities that hold a lot of promise, several tech startups across Europe are gaining prominence as well. StartUs Magazine, which provides news for European startups, lists some of the startup companies that are expected to make it big this year.
1. Spendesk
Spendesk is a Paris-based company that started in 2016. It offers a solution for companies to generate smart prepaid expense cards to simplify the management of team expenses. It’s a SaaS application that is integrated into a customizable approval and bookkeeping system of a company. With Spendesk, there is no need for cash advances, issuance of company credit cards and the filing of expense reports. The payment tracking is done in real time.
2. Capital.com
The company is based in Cyprus. It offers a mobile trading application that allows users to invest using various financial tools with the help of artificial intelligence. The app also provides users with lessons in finance and investment, quizzes, videos and other tutorials to help users make smart investment choices. The Cyprus Securities and Exchange Commission regulates the app for security purposes.
3. Circle
This company’s team is composed of enterprising people from London and Dublin. Their platform offers mobile P2P payments with support for euros as well as an innovative way to receive and make payments across borders without additional cost. The system is available online, with an app for Android and iOS operating systems.
4. Heek
This Paris-based company helps people create their own website by chatting with the intelligent chatbots of Heek. People can ask questions through text in the same manner that Heek’s smart bots ask questions through a conversational interface. The bots ask the user about themselves, the type of company they have, their products and their target audience and more. They are then shown various templates that they can be readily customized. It also suggests elements that your site might need as well as offers suggestions on items that could be added to the site you’re building.
5. Coinify
Based in Copenhagen, this startup offers a service for consumers and merchants with a blockchain payment method that works with individuals, physical shops, online merchants and international payment providers.
6. Feed
Feed another French startup that packages healthy, balanced and complete foods in small packs for easy consumption. The complete meals are available in nutritional bars and bottled drink forms. The company’s products, which are available online, are GMO-free, lactose-free and gluten-free vegan recipes. The company says their products are not meant to take the place of traditional food but are alternative options for people who are too busy to cook or eat a proper meal. Their intention is to provide a nutritionally balanced meal so people do not get hungry.
These European startups and international tech hubs are helping expand Europe’s economy and raise awareness on the availability and viability of startup companies to come and establish their own companies in lucrative and promising locations across geographical borders.
Resources: Fintech and Localization go together when expanding to international markets. Visit our free guide on Going Global in the Fintech Industry.
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