Startup-Climate Reports and What Do They Mean for You

Startup-Climate Reports and What Do They Mean for You

17-Jul-2014 by SophiaKirova

As an entrepreneur, there is probably one question that keeps coming to your mind – what is the best place to base your business? Everyone tries to establish the most fruitful soil for their product and many realise “home” might not be it.

Some regions have certainly gained the fame of being startup Meccas and righteously so. Just think of Sillicon Valley, the industrial powerhouse of the world with the strongest drive to experiment with new technology, Seattle, Los Angeles, New York City, Boston, Tel Aviv, to name the veterans. But, hey, we are living in entrepreneurial-boom times, so the USA list-toppers are constantly being challenged by their runner-ups and the newly emerging hubs.

There is a lot of discussion and research going on on on this topic. In 2012 Startup Genome issued a substantial report, listing the top 20 startup ecosystems. In 2013 Forbes classified the 15 most inventive cities, Wired pinned some 10 hot startup capitals in Europe, and Fortune – some 7 worldwide. This year the London Financial times published their “European Cities and Regions of the Future” report, according to which London, Helsinky, and Eindhoven lead the progress. It’s a lot of data, stats, numbers and jargon, all supposed to help you get the bigger picture. It’s a blast of relevant information to consider but also to take with a pinch of salt.

Thing is, all these index different factors to make the final ranking. For example, Startup Genome used eight criteria – startup output, funding, performance, entrepreneurial mindset, trendsetting, support, talent, and differentiation. Forbes digged only into patent density, whereas Financial Times considered more than 15 investment indicators. Many times such reports lack data on specific regions, the result being that serious competitors such as Asia in general or Russia, with the exception of Moscow, are left out.

Compared to this report from 2012 when only 4 European cities entered top 20 – Moscow, London, Berlin, and Paris, now there is more and more attention being placed on the Netherlands, and in particular Amsterdam and Eindhoven, on Istanbul in Turkey, and the so-called Eastern Europe region where startups such as the Latvian and the Bulgarian Flipps pulled in investments of nearly 2 million.

Before you get lost in all the statistics and charts, we suggest you to always look for these 9 factors:

    1. Legal freedoms – mostly covered in the annual Competitiveness Index report by the World Economic Forum. It’s essential that host country’s regulations allow you to develop your business growth. In the Netherlands for example, there is a startup visa proposal to be passed on soon.
    2. Economic stability – indications are mostly the GDP, on the one hand, and the Direct foreign investment (DFI) in a country, on the other.
    3. Permeability of the ecosystem – this is to say how well you will be received in the business circles that you are interested in, how willing people will be to share their knowledge, insights and good practices, and introduce you to their network. This might count more than the entrepreneurial mindset.
    4. Private investment – in case you do not find it in a report, make sure to do your homework on the available funds, active VC’s, and Angel networks. They will be crucial for your take-off.
    5. Fiscal regime – when all of the above are secured, take taxation into consideration. Countries such as the Netherlands for instance, are considered tax-friendly for startups.
    6. Culture – if the nation is open-minded, outward-looking, multi-culti, and innovative, chances are that if they find your product worthy, the rest of Europe will too.
    7. Resources – consider factors closely related to your business such as labour force, logistics, telecommunications, quality of life and purchase power, test and research facilities. If you are a hardware startup, make sure to check the supply chain possibilities – import rates, harbours, airports, etc.

Startupbootcamp HighTechXL – Weekly ( 17/07/2014 ) EY ( Patrick Gabriels ) from StartupbootcampTV on Vimeo.

8. Lifestyle – you cannot make it there unless you like it! It’s something you will never find in a report but at least you can check things like unemployment, climate, leisure, food, happiness rates and anything that makes you pack your bags and leave.

9.Testimonials – finally, always check what other entrepreneurs who have already succeeded in the particular country are saying.

Insights were kindly provided by our Investment Manager @BroosBakens. Infographics and quotes by EY.

Startupbootcamp HighTechXL – Weekly ( 17/07/2014 ) EY ( Broos Bakens ) from StartupbootcampTV on Vimeo.

We hope to have cleared the horizon a bit. We’d love to hear your comments and suggentions here to expand the discussion. Cheers! @Sophia