For many years London has been Europe’s start-up capital, attracting the best and the brightest and spawning success stories, such as kids’ website Moshi Monsters and home delivery service, Deliveroo. Access to finance, a vibrant multi-cultural scene and solid regulatory framework have helped the city to become one of the global favourites for entrepreneurs.
But London’s primacy is under threat from a number of areas. Brexit is part of it, to be sure, but other European capitals have taken considerable strides to be more competitive and show willingness to open their doors to smart talent.
Berlin comes in second in Europe and has had particular success in attracting fintech firms, such as digital bank N26, which raised $300 million this year. Meanwhile Paris and Amsterdam are making the most aggressive push to attract the entrepreneurs who will shape the economy of the future.
At a tech conference in Paris two years ago, President Emanuel Macron vowed to cut red tape to foster innovation and to create a “country of unicorns”, pledging to introduce a new level of multi-year residential permits to attract tech talent. His call coincided with a major initiative by businessman Xavier Niel, who invested €250 million in a vast, disused rail yard in the southeast of Paris. Known as Station F, it claims to be the world’s largest start-up hub.
We’re now in a position to see what effect these words and actions have had. Station F just celebrated its second birthday and now hosts 1,013 start-ups. One third of its companies come from abroad, with the United States the top source market, followed by China.
Station F start-ups include the food and nutrition app Foodvisor which enables its more than 1.5 million users to take a photo of the meal they are about to eat to obtain a full nutritional breakdown, coupled with personalised advice from dieticians. Another is Daco, an AI-based retail analytics start-up that helps retailers anticipate product demand, which has been bought by Veepee, an international e-commerce company.
France’s efforts are paying off, with investments of over €800 million into Paris in the first three months of this year, its strongest quarter to date.
The Dutch capital Amsterdam is also emerging as a strong contender on the start-up scene. The latest Global Startup Ecosystem Report, from Startup Genome, placed Amsterdam as one of the fastest-growing cities. It showed the largest ranking gain in 2019, moving up four spots to 15th place. London was still number one, with Paris up two places to nine and Barcelona entering the top 30 for the first time.
Highly skilled immigrants in Amsterdam can qualify for a generous tax allowance equivalent to 30 per cent of gross salary, international graduates get one year to find work or start a business post-graduation, and there are entrepreneur visas available.
Private initiatives are supported by the StartupAmsterdam program, which was formed in 2015. The city teamed with the private sector to draw up policy initiatives designed to accelerate growth.
Amsterdam is now home to a multitude of start-up ecosystems, including B.Amsterdam, a 40,000 square-metre space that is currently home to more than 350 start-ups. It’s also been a direct beneficiary of the Brexit fallout, with the European Medicines Agency moving its headquarters to the Netherlands in March.
Of other cities, Barcelona in Spain is also buzzing, now home to more than 1,300 start-ups, mostly based on industry, life sciences and mobile software and technologies, attracting investment of €878 million last year. However, Catalonia also carries its own political risk, which may be a restricting factor for its aspirations.
All of these places have learnt lessons from London’s success in laying the groundwork for start-ups and creating the right environment. The UK’s capital would be watching its back and facing these threats regardless of Brexit. As it is, today’s entrepreneurs have a number of attractive packages to consider.