In the last 10 years, we’ve been switching from the physical to the digital world. Companies have brought commerce, education and many more online. Every day we read news about new startups, new ideas, new products that have potential to change our lives even more.
In this article I would like to talk about what makes cities to be top startup capitals. List top innovation hubs in the world and analyze Barcelona in particular, answering questions like: why entrepreneurs move to Barcelona to open their business, why Barcelona is a growing startups hub and why investors believe in this city and tech companies that are based here.
WHAT MAKES CITIES TO BE TOP STARTUP & INNOVATION HUBS
There are many reasons why people create startups, but why do they choose one city over another when launching their project? Why are some cities more successful than others in attracting the attention of entrepreneurs, investors, fresh talent, mentors and press ? The answer can be found by looking at the incentives and opportunities a city offers and whether the quality of the environment encourages a company to start the innovation. It is really a mix of number of venture builders, venture capitals, tech companies, tech events organized in a city, acceptance level by citizens and government, open minded entrepreneurs, quality of ecosystem, access to capital, burn rate and many many more. But what is important to understand is that strong local economy is a critical point here; studies show that entrepreneurial environments are caused by strong economies to fuel specialized business, not the other way around. Governmental support can be provided only if the economy of the country may afford it and thus support is a common factor of all current innovation hubs, cities. What do I mean by governmental support? Sources of funding, access to government sponsorship, ability to promote your idea by participating in local events, public initiatives, being part of organizations promoting innovation and technology.
Low labor intensity, access to talent, sufficient number of specialists, education facilities, all that also play an important role in entrepreneurial environment.
CHANGING LANDSCAPE OF INNOVATION HUBS
Now, let’s look at the changing landscape of disruptive technologies, innovation hubs and cities perspectives.
As you may know, Silicon Valley was and is the world’s innovation capital because of a technicality. Silicon Valley and the San Francisco Bay Area have been the world leaders in high-tech startups for a long period of time, giving rise to cutting-edge companies like Apple, Intel, Google, Facebook, Twitter and many more.
Apart from Silicon Valley, in the US there are really a lot of cool innovation hubs like: Boston, New York City, Seattle, Nashville, Salt Lake City, Austin, Miami. All these cities year by year prove their importance in the world of startups, technology and innovation. Most of companies that experience boom and become unicorns were raised in these innovation hubs.
But recent years we have also seen the rise of an increasingly potent group of cities not only in the US, but in Europe as well. Cities, that are generating new startups in creative and unique ways. Cities that promote technology, promote smart cities, promote innovation and growth of disruptive technologies.
Let’s have a loot at this list of promising European cities that start to catch up with this innovation movement.
TOP 15: EUROPE’S BIGGEST STARTUP & INNOVATION HUBS
According to EU startups, these are the top innovation hubs in Europe:
This year Barcelona is among the top 5 startup & innovation hubs in Europe in 2016. And later on we will look in details why.
What is important to mention here regarding this list, is that according to the Startup Heatmap Europe, the Nordics benefit from startup migration with 5% more founders coming to the region than leaving.
For example also what is interesting is that Stockholm excels for an excellent pool of talent and for relative ease in obtaining capital. It is more popular with high-tech startups like hardware, IoT, VR, big data, fintech, health and biotech than with internet startups like e-commerce, mobile applications and SaaS solutions.
As for Copenhagen, it stands out for a low burn rate and is successful for its internet startups and Helsinki is particularly appreciated for a thriving ecosystem.
Clearly, there is competition among these cities in the Nordic region and while there is room for specialization, innovation builders should attract more entrepreneurship to their ecosystem.
Also what I should say is even though Baltic cities are not in this list yet, Nordics are facing stiff competition from the neighbouring Baltic countries which have been able to register an impressive number of startups. In reality, Tallinn, a rising star of the Baltics, has almost the same popularity with internet startups and low cash burn rate as Copenhagen.
The Startup Heatmap Europe carefully shows that entrepreneurs are on the move and that competitiveness among innovation hubs is key to attracting foreign talent. Already, the progresses made by the Nordic startup community has benefited whole industries and produced giant positive impact, just think of Skype or Spotify as examples.
Let’s keep an eye on them, maybe next year they will have higher position in this list.
BARCELONA BECOMES ONE OF THE MOST ATTRACTIVE INNOVATION HUBS
Barcelona has many characteristics that are making it increasingly attractive for entrepreneurs and quickly positioning the city into a European startup & innovation city.
Compared to other European innovation hubs like London, Barcelona is affordable, making it a better location for young companies to start their innovative projects. Salaries are lower, but the pool of talent is just the same as in other cities. Rent costs is not even comparable with cities like London or Paris, transport, food, etc is much cheaper in Barcelona while the quality of life is good. Apart from lower living costs, the lifestyle of Barcelona is one of the reasons as well why entrepreneurs want to move here; long day of work and stress here can be balanced with a relaxing time drinking cava or “cerveza” at a local bar. Sunny days, you may think that this has nothing to do with the topic, but guess what? Sun makes people happier, it increases positivity and motivation to do things, while everything is less stressful and more friendly. The city is attracting talented people from around the world and last year it was ranked as the most visited city in Europe after London and Paris.
Barcelona has undergone a transformation in recent years. It has always been known for great thinkers, creative artists and architects, but now it can add “smart city”, “ mobile capital”, “leading startup city”. In fact, Barcelona has now achieved that it is among Europe’s hottest innovation hubs.
Have you ever heart that crises creates opportunities? Well, this is the case of Barcelona.
When a financial crisis created 50 percent of youth unemployment, people in Barcelona were forced to become more innovative, creative and independent, become entrepreneurs. Thanks to this wave of fresh young talent, startups and small businesses took off, creating a surge of coworking spaces and a collaborative spirit that helped the city form a sense of community, vital for the success of innovation hubs.
The growing number of accelerators, business angels, venture capital investments,etc show money, for many, is no longer an issue. Investments in Spanish companies have grown steadily over the past few years, pointing to a relative improvement of the investment ecosystem and a huge amount of money available to invest in startups. Like Carlos Blanco – well-known investor from Barcelona said another day that there are much more money available to invest in startups, than number of startups themselves. So now it’s a matter of good idea, team and business model.
But let’s look at what Barcelona has to create this startup and innovation environment.
TOP 17 REASONS: WHY BARCELONA IS A GROWING & LEADING INNOVATION HUB
1. Local & international talent
Over the past 10 years Spain has caught up in terms of education of entrepreneurship, software engineering and design in particular. We see a lot of great talent coming out of universities and with solid working experience. Also, Barcelona is a really international city and in the same class you may see more than 10 nationalities. The quality of life is high and many people prefer to get lower salaries but leave in a relaxed, happy and sunny ambience.
2. Lower salaries
Even though some startups pay high salaries, average ones in Spain are much lower than the ones in other hubs. For example according to Glassdoor, the average salary of a software developer is about €27,000 vs London €55,000, Berlin €49,000 and Stockholm €48,000.
3. Access to Accelerators
Startupbootcamp Internet of Things & Data is a leading global accelerator focusing on startups that provide solutions that use data to create smarter, customised services for both customers and businesses. Offering up to €15K per startup, through Startupbootcamp you will have the opportunity to receive mentorship from over 100 expert entrepreneurs, investors & partners, up to 6 months of free office space, exposure to over 200 Angel Investors and Venture Capitalists, over €450K worth in partner services and the possibility to pitch at 4YFN.
Wayra is Telefónica’s tech startup accelerator that operate in both Spain and Latin America. With the strong financial basis of Telefónica, they offer incomparable support and mentorship. Their programs usually last between 6 to 12 months, and they can offer up to $50K. They make sure that the office spaces are cool, so that as an early-stage entrepreneur, you already feel you are getting closer to your dream.
Seedrocket gives seed funding to startups that have a strong focus on technology. They provide excellent, active mentorship from industry experts and investors, and make sure that your startup will get adequate seed funding and the support it needs to kick-off the ground. With a strong focus on communication, they encourage startups to help each other, pass on know-how and expertise to fellow accelerator members.
Conector offers a program of up to 6 months for digital tech startups that are at their very initial stages. The program includes extensive training from a group of more than 80 mentors, each a successful online entrepreneur, support for legal services, and the possibility to pitch to private investors and venture capital firms at the end of the program.
There are some other accelerators, but these ones are the most notable in the tech scene in Barcelona.
4. Access to venture capital
In Barcelona there are plenty of Venture Capitals eager to invest in the right start-ups based in Barcelona. Abac Capital, Active Venture Partners, Ariol Capital, Caixa Capital Risc, Flint Capital, Galdana Ventures, Idodi Venture Capital, Intelectium, Inveready, Nauta Capital, Nero Ventures, SI Capital, Sitka Capital, Ysios Capital are just some of them and they are very active investing locally. Also there is a growing interest from the Silicon Valley based VC firms to invest in Barcelona based startups. There are also numerous programmes, where Spanish startups have an opportunity to compete for this opportunity and then open an office in the US.
5. Access to venture builders
Antai and Nuclio are the most famous ones in Barcelona. These venture builders launch successful businesses together with the best teams of professionals. Cornerjob, Wallapop, Glovo, wazypark, shopery, Stampydoo and others are babies of these venture builders. Currently they are located in Pier 01, in Palau de Mar building – one of the prestigious places to be.
6. Memberships & organizations
Barcelona has several organizations that promote Barcelona as an innovation hub, giving Spanish companies opportunities to show themselves and find like-minded people. For example:
- Barcelona tech city – is a digital business cluster that showcases Barcelona to the world. It is opened to all those based in Barcelona working in digital and tech business. They organize monthly meetings, invite to private events, organize workshops and it was them actually who created famous Pier 01 in Palau de Mar. They closely work with Silicon Valley and with top investors in Barcelona and Europe.
- Another interesting organization is Aijec – an independent association that gets together successful companies in Catalunya to share experiences, trends, ideas and business opportunities. They also organize many events and workshops making it possible to network, learn from the best and create strategic partnerships.
- Catalunya apps – another association of digital companies and professionals that wants to become a world leader in the field of apps. This organization helps companies to find all providers to develop, design and promote the mobile app.
- Ship2B is an organisation that accelerates and invests in startups that have a social impact. They have mentors, who help startups to make the right decisions on their growth strategy.
- EO organization – enables entrepreneurs to learn and grow from each other leading to greater business success and an enriched personal life. Sometimes you don’t have anyone in life to share your business challenges, there you may find people who understands you and who can give you an advice based on their personal experience. There you speak the same language, business language.
- Twenty50 – is a global talent hub, the first multidisciplinary social platform based in cooperation, exchange and thought. It was born with the aim of becoming a leading space where people from different backgrounds meet talented peers to create the foundations of our society in 2050.
With this list I can go on and on, but if you are new in the city, I recommend you to start with these ones.
7. Barcelona Activa
It is a business incubator program with a small seed fund, providing advice and supporting startups and entrepreneurs. Barcelona Activa is a notable organisation with the objective of promoting the economic growth of Barcelona.
Part of their offerings to entrepreneurs is a warm and informative welcome session that offers trainings, various programs and business planning tools. They also introduce you to the legal procedures ranging from incorporation to taxing, that are specific to Barcelona and Spain. They have the whole building where you can have an office in your initial stage. The organize events every week and give opportunity to meet other companies renting an office in a building. They also work closely with Silicon Valley and with leading mentors and investors, helping each promising startup to grow.
8. International business city
It’s a truly international city with almost 30% of foreign population. It is one of the leading cities in terms of events organization. Here being a foreigner is just fine, organizations like EO expanded to Barcelona and some events are held in English because many entrepreneurs are just not locals. What is important is that business english here has a good level and almost every startup has an english speaking person, who could represent the company. Barcelona hosts leading innovation figures from all over the world, who actually come here regularly and share with entrepreneurs in Barcelona their predictions about the future, their ideas and their experience.
9. Well connected for travel
There are 3 daily flights to New York alone and direct flights to most major cities and hubs. Within Europe it’s almost always possible to find flights at a good price as every major low cost airline in Europe flies to Barcelona. This is a huge advantage for businesses. Also what is important is that the airport is only 20 min by taxi away from the city center. And railway station is in the center of the city, close to major events places and business centers.
10. Growing number of co-working spaces
More than 200 coworkings in Barcelona and this number continues to grow. Coworking gives amazing opportunities to meet other people, host events and spread the word about you. Also it is very cost efficient and at the same time almost all coworkings have nice interior design, making you happy to come and work.
11. Regular events & networking opportunities
There are now hundreds of tech, design and business events that are held in Barcelona almost every day; huge congresses about Big data, docker, Backend, etc and small meetups about specific technologies and project management tools. This environment of events creates synergies, creates willingness to learn and create. Make it better using latest technologies! every year covering everything from user experience and design to big data and IoT. Barcelona has hundreds of venues where people come from allover the world to meet people they are interested in. Barcelona became a meeting point and that’s great.
12. Mobile World Congress
What is more, Barcelona is known as a mobile capital. It hosts such an important event as MWC. Important people, world’s biggest global brands, media, promising start-ups, investors and many more attend the event every year. Barcelona sets the mobile trends, it spreads the word about innovation and possibilities mobile gives us on personal and professional level.
13. Smart city expo world congress
Leading event about smart city projects. Global influencers and innovators come to Barcelona every year to share knowledge, debate the challenges faced by different cities, encourage out of the box thinking and inspire a worldwide call for action in order to develop smarter and more sustainable cities, using latest technologies.
14. IOT congress
Another big global event held on an annual basis in Barcelona. As you could notice, IOT is growing and growing very fast, now we have almost everything connected to our mobile devices. And Barcelona is a place that gathers everyone together to discuss the evolution of this trend.
15. Leading business schools
ESADE , EADA and IESE rank among the top business schools in Europe. They provide talent, mentorship, entrepreneurs and even interns to the Barcelona start-up scene.
They bring renown professors from all over the world eager to leverage their knowledge and status to make money by supporting startups as consultants, advisory board members and non-executive directors. Students who graduate from these universities are known for their entrepreneurial spirit, great ideas, responsibility, organization and hard-work. Being a graduate from these universities is kind of a quality label, it really is as all students that I know from there are great minds. What’s missing a bit is computer science university, where students wouldn’t only learn theory but start practicing programming there. That’s what actually UPC has started to do in recent years providing well trained graduates with good background.
16. Quality of life
286 days of sunshine per year, beaches, sport, skiing 1.5 hours away, music, food, culture, parks, mountains, forests makes it really enjoy your life however you want. Barcelona is a great place to enjoy life outside of work without spending that much money. In Barcelona there are a lot of places to organize outdoor activities for the team, spend some time together in an informal ambiance and enjoy working with beautiful views. This not only attracts great people from abroad but also keeps your employees happy and motivated.
17. Proven success model
Infojobs, Privalia, Softonic, eDreams, Glovo, Verse, Typeform, Scytl, Kantox and many many others have proven that Barcelona can be a great base for international businesses with massive investments and successful exits. And number of such companies is growing year by year.
My next article will be about leading startups in Barcelona. We will look at cool ideas and promising companies to watch in 2017.
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