Top European Countries to Open a Startup in
by Cristi Gheorghe
As Silicon Valley is by far the leader when it comes to the startup world and Asia is also fast rising, the European market has managed to have a great influence when it comes to delivering successful startups if you think of companies like Skype, Shazam, Spotify or Zalando.
What is a startup in the end?
A startup is a company that is just beginning to develop and wants to bring to the market an innovative idea that is not available anywhere else and the founders feel that the users will benefit out of it.
Usually, startups are small companies that need to be financed by founders as they are in the process of developing their product and often don't have any sources of income.
It is also common for a startup to raise funding via crowdfunding websites, based on the popularity of the idea that they want to bring to life though their development efforts.
What should I look for when choosing the location of my startup?
Most startup founders will try to go local when opening their company as they will be able to personally oversee the progress of the project and they also have a better grip on the big picture (available resources, legislation, tax laws and possible startup incentives, available market that can be reached).
But if you want to go big or you believe you have an idea with huge potential, you should take a moment and make a list of the needs your startup will have, and based on this you should check out the benefits of starting your business in a location that is a startup incubator. This can make the difference in building a good startup or a GREAT startup.
When it comes to choosing the location of your startup, here are some key points you should take into consideration:
- Startup Success background - opening your startup in a location where previous companies have been successful might give you an upper hand as the market will be receptive to your startup and you can also bounce ideas with your peers that have experience running them
- Available Resources - the key to executing on your startup idea is to have the available means to complete it; if it's brain power or goods that fuel your product, go for a location that can give you the best available resources
- Infrastructure - remember that if you want to monetize your idea, you will need to do it in a location that has the right infrastructure; we are talking about roads, telecom or internet infrastructure - whatever will impact your startup idea
- Legal and fiscal incentives - in the last decade, many European countries have embraced the startup world by offering tax deductions, legal benefits and any other incentives that help attract startup founders in their area
Which European countries are the best startup incubators?
When it comes to European countries that offer the best opportunities for startups and the chance to attract venture capitalists that would be willing to invest into a new idea, here are the countries that have the best background in helping startups rise.
1. Great Britain
By far London is the biggest player in the European startup world and Manchester is also one of the top cities where startups set their offices.
If you decide to begin your startup in London, here you will find the best opportunities for raising funds and you will also have the benefit of addressing a highly educated audience when it comes to startups and innovative ideas. More than 30% of the European Venture Capitalists are based in the UK and £2.99bn have been raised in venture capital over the UK in 2017 only for tech startups. As a side note, Germany managed to raise under a quarter of this.
You will also be able to set up your company in one of the many shared working spaces and benefit from some of the accelerator programs that are available. Many incentives are available in the tax sector and when it comes to getting a work visa the criteria is quite relaxed.
As it is to be expected, there are also some drawbacks: the production cost is quite high as well as the work force cost; you will have to use GPB for trading as it is the local currency and the Brexit aftermath brings a bit of uncertainty in the mix.
When you say Sweden you think IKEA, but on the startup map this country is one major player waiting to make their next move.
Sweden might not lead on the funding side, but it certainly is the startup point of some major former startup unicorns like Truecaller or Spotify, and is starting to test the FinTech industry with some interesting startups.
Another leading country when it comes to startup funding is Germany, that in 2017 managed to raise almost over 500 million Eur for funding tech startups. This combined with the easy procedures of obtaining an international work visa in Germany, are the main reasons that make it a great StartUp destination.
Berlin is the leading city when we talk about startups in Germany, and its infrastructure and cultural diversity are a big plus for startup founders. Also Berlin breaks the language barrier by having a highly educated english speaking population.
Barcelona and Madrid are also important stops on the startup map. With Barcelona being one of the "Smartest cities" in the world and having many successful startups in the e-commerce, mobile and tech sectors, it is believed that in the near future a large increase in invested capital will be made.
Spain has also the advantage of a great educational system that provides high profile employees and also the affordable and enjoyable lifestyle of its inhabitants.
5. The Netherlands
The Netherlands are catching the eye of the VC's by providing interesting programs for startups, technical direction and expertise from peers and early-stage funding from the state.
Recently, France has inserted itself into the startup world by both having a successful startup project in BlaBlaCar and having some interesting government incentives that target small companies and startups in the tech sector.
Also, Paris is the host of the largest startup campus (Station F) and some large startup hubs.
With a solid background in IT, Romania appeared on the startup Radar in recent years by having multiple accelerators and incubators for both local and international startup companies.
The startup focus is also backed up by some government incentives and support systems that include tax deductions, fundings and guidance programs for young professionals.
Although Bucharest is the leading city in the Romanian startup scene, other cities like Cluj-Napoca, Sibiu, Iași and Timișoara offer opportunities to young entrepreneurs. Smart City, CyberSecurity, Fintech and Online Payments are some of the better developed sectors.
Estonia has become a startup paradise and has the highest rate of startups per capita and they don't lead only by numbers but by the success of their startups too. Skype, TransferWise and Taxify are only a few of the well known startups that have their base in Estonia.
The Estonian success story in the startup world is based on a combination of ease of doing business, highly digitised environment, startup oriented community, entrepreneur-friendly tax policies and government laws centered on attracting foreign investors.
Austria's capital Wien has a very well developed support system for startups in the IT, life science and media industries.
Successful startup founders in this country have started programs to share their expertise and help young entrepreneurs open their own companies.
The Finnish people are highly receptive to startups and this is one of the reasons Finland is a country that focuses on this type of businesses by even tracking the monthly progress of the top 100 Finnish Startups.
Grants and loans are awarded by the Finnish government to help emerging startups, founders also have access to startup centered events like Fairs, Summits and Conferences.