If you’re thinking about whether to relocate and where exactly to relocate in Europe, then this guide will help you make that painstakingly crucial decision. In this article, we’ll look at the general state of tech in Europe through 2018 and 2019 and list the top ten startup hubs that comprise the core of Europe’s startup scene.
The general state of tech in Europe
According to the State of European Tech 2019, there are more than six million developers currently residing and working in Europe, that’s roughly half a million more than in 2018 (compare the numbers to the stats from the United States, for example, where the number of developers in 2018 was only four million).
The overall capital invested in tech in 2019 went way over 34 billion US dollars, among those — 29 billion was invested in the UK, Germany, and France alone. Cumulative VC funds raised from 2015 to 2019 were over 50 billion US dollars.
While investment in tech companies continues to grow, European tech companies are choosing to go bigger and stay private for longer, unlike, say in the US. Across Europe, there are now 174 unicorns, a 10-times increase since less than a decade ago, with 20 countries having at least one unicorn.
While there’s no significant improvement in the share of capital invested in European tech companies with diverse teams, 21% of startup founders have identified themselves as females and the number is likely to grow.
Among the cities or tech hubs that show promise but which are not included in the following list of the top 10 European hubs for the obvious reasons are those located in the Eastern Europe, where the number of tech meetups is steadily growing and as companies diversify their engagement and move away from the biggest hubs like London, Berlin, or Paris. Among those growing Eastern European hubs are Kharkiv, Ukraine, Iasi, Romania, Gliwice, Poland, and Minsk, Belarus.
Overall, despite its challenges, the tech ecosystem in Europe is steadily growing with bands of big investment rounds and an increase in purpose-driven companies (those addressing climate change or sustainable energy).
London
Strongest specialization: FinTech (52.59%)
2018 Investments: 4,200 mn €
Foreign-born founders: 70-80%
London is perhaps the most attractive hub where the local ecosystem contains all of the following qualities on its ground rather than just a single or two separate qualities alone (like other European cities): highly ambitious entrepreneurs, angel investors with excellent or improving track record, an amazing pool of tech talent willing to join the startup scene, venture capital firms with a ton of capital to invest. Although London has produced the most unicorn companies over recent years and has the highest density of startups, it’s also the most expensive place to live. The cost of prime rent in US dollars per square meter in London far surpasses many other European tech hubs and now levels at $1,470.
Berlin, which comes second on our list, is the top city that runs the network exchange among the entrepreneurs from London, where 15% entrepreneurs say they would open up a company in Berlin, and 10% Berliners say vice versa.
As Brexit continues though, London loses its place among the Baltic and Nordic founders as a first choice solution; however, the founders from CEE seem to gravitate toward London more and move out from Berlin or stop considering business there.
Berlin
Strongest specialization: Consumer & Platform (43.39%)
2018 Investments: 2,200 mn €
Foreign-born founders: 50-70%
Berlin is the second-best choice for tech startups and developers willing to join the European tech ecosystem.
At the end of 2019, there were almost 105 thousand developers in the city, the office space rent in US dollars per square meter was $477 (which is almost 70% cheaper than in London), and capital invested in 2019 of $3,932 million.
Now let’s just briefly compare it to one of the Russian cities, namely St Petersburg, where the number of developers is 67 thousand, rent in US dollars per square meter — $475, and the amount of capital invested is only seven million. If that comparison is not enough impressive for you, then we don’t know what is.
Speaking of capital invested per professional developer based on data from 2015 and 2019, Berlin takes the first place among European cities and levels at $104,357, while the European average is just $17,102.
Barcelona
Strongest specialization: eCommerce (25%)
2018 Investments: 873 mn €
Foreign-born founders: 50-70%
Barcelona has become the central interchange between the Southern Hubs which comprise Milan, Madrid, Lisbon. Strong integration of the Portuguese and Spanish tech scenes can be observed between Barcelona and Lisbon. The most distinct interest in Barcelona comes from the Mediterranean founders and investors followed by the Baltics and the UK and Ireland.
The number of developers residing and working in Barcelona was estimated to be 74 thousand, the cost of rent per square meter — $361, and the capital raised — $688 million.
The biggest challenges for the Spanish scene comes from a lack of support for the companies, namely the inability of policymakers to effectively regulate the industry and reduce the bottlenecks that stifle innovation or hold back new companies from growing and new technologies from appearing.
Paris
Strongest specialization: Tech/Hardware & IoT & VR
2018 Investments: 2,400 mn €
Foreign-born founders: 0-30%
Paris has one of the most mature and established tech communities in Europe with the number of tech meetups steadily growing over the years (but still below London and Berlin).
Tech companies have also significantly diversified its talent pool by attracting international talent. The percentage of international tech companies that have reached more than one-billion milestone and/or raised more than $50 million in venture capital and have their offices in France is 43%, while, say, in Sweden — only 25%.
The number of professional developers at the end of 2019 was 295,400, the cost of rent — $966, and the capital invested — $2,982 million dollars.
All numbers aside, let’s just say that Paris is beautiful.
Amsterdam
Strongest specialization: eCommerce
2018 Investments: 372 mn €
Foreign-born founders: 50-70%
Despite being home for only 800,000 residents, Amsterdam is one of the fastest-growing tech hubs in the region.
While Berlin has the best Startup ecosystem, Amsterdam has one of the best business environments. The number of unique funded companies between 2015 and 2019 in Amsterdam was 457, compare that to Barcelona where the number was 437 or Moscow — 302.
The number of developers by the end of 2019 was 235,500, the cost of rent — $500, the capital invested — $423.
Moreover, in June 2019, the Dutch government announced the national program, namely TechLeap.NL, to ensure the pipeline of multimillion-dollar startups keep flowing into the country and in particular, Amsterdam. Other governmental initiatives that concern specifically Amsterdam include StartupAmsterdam and Iamsterdam.
If you’ve only heard of the city in terms of its best-known “coffee shops,” then you’re obviously missing out because Amsterdam is much more than just that; besides, coffee shops might not be the best and most productive environments to work at if you’re a freelancer, or, say, decide to work on the weekends. There are plenty of coworking spaces across the city, which offer an excellent way to connect with the local startup community.
Overall, Amsterdam, also dubbed as Silicon Canals, is a wonderful place to live and grow professionally.
Lisbon
Strongest specialization: Health & BioTech and eCommerce
2018 Investments: 358 mn €
Foreign-born founders: 30-50%
While London is perhaps best for establishing industry connections, Lisbon is best known for bringing good value for money. Over the years, Lisbon has won its reputation as a tech-savvy and a hip place, an alternative outpost to expensive places like London, Dublin, or Paris.
Speaking of transnational or international corporations, it’s not surprising to see the trend that many UK companies or any other European companies prefer to open second offices in Lisbon rather than Bath, Dundee, Birmingham, or another city in the UK.
Lisbon has been steadily climbing the ranks because of its relatively cheaper cost of living (rent for office space in US dollars per square meter was $314 by the end of 2019, compared to London — $1,470) and business-friendly regulation, which is so important for founders.
Interestingly enough, because of the Brexit, some London-based companies might still prefer to go to Dublin rather than Lisbon because of better funding opportunities, fewer bureaucratic challenges, language hurdles, and still — with plenty of opportunities to set their foot into the EU.
Munich
Strongest specialization: Health & BioTech
2018 Investments: 409 mn €
Foreign-born founders: 30-50%
Munich is the place where the traditional mixes with the contemporary. Perhaps most associated with Oktoberfest, Munich is also an established tech startup hub and a prominent research center.
Munich has an excellent infrastructure, vibrant local culture, active entrepreneurial ecosystem genuinely supported and backed up by local policymakers.
Along with Berlin and Vienna, Munich reaches almost 17% of all founders in Europe.
There are countless co-working spaces (some of which even offer incubation-like services for startups or mobile offices with a car trailer and a tent).
The cost of prime rent is relatively affordable compared to other European cities and levels at $525 per square meter at the end of 2019.
Milan
Strongest specialization: eCommerce
2018 Investments: 257 mn €
Foreign-born founders: 0-30%
Milan is considered the spearhead of the Italian tech ecosystem.
Nevertheless, Italy has long been known to suffer from bureaucracy, complex regulations, red tape, among other unpleasant things. Despite the Italian Act of 2012, which substantially simplified the registration process for new companies, introduced a startup visa for founders and tax incentives for investors, Italy as a whole is yet far behind other countries in terms of economic freedom. And while, slow digitization can be observed, Italy still places its bets on traditional industries.
Speaking of Milan, though, the city has all the ingredients to be a hub, which is: VC funds, infrastructure, research centers and universities, private savings, open-mindedness, diversity, quality of life, and so on.
Milan startups seem to gravitate toward FashionTech, eCommerce, TravelTech (unsurprisingly), but also (which is quite surprising) to BioTech&MedTech and SpaceTech.
The cost of office space rent is gradually but steadily rising and was around $645 in 2019.
Tallinn
Strongest specialization: FinTech
2018 Investments: 191 mn €
Foreign-born founders: 30-50%
Tallinn, two hours by ferry or 30 minutes by plane from Helsinki, has recently become another tech spot on the European startup heatmap. The connection and interdependence between the two cities, Tallinn and Helsinki, are not surprising. However, Tallinn is still a leader in terms of attracting tech startup founders between the two capitals; moreover Tallinn has recently climbed to the top of the European startup hubs and attracted more than 7% of founders from 20 different countries.
Tallinn policymakers have seemed to figure it all out for startups: there are incubators, accelerators, and support for international companies opening up branches on Estonian territory.
There’s a 3-month or 6-month startup visa for those who haven’t yet founded their companies on the Estonian territory, and for those who have a company — an opportunity to apply for a temporary residence permit.
Beside relaxed regulation in the startup area, Tallinn is famous for its highly-qualified staff, especially in IT.
Tallinn is also relatively cheaper than most of the European countries.
Stockholm
Strongest specialization: Energy, Enterprise Software
2018 Investments: 284 mn €
Foreign-born founders: n/a
The amount of capital attracted by Sweden was $1,097 million in 2018, but the number basically tripled to $3,354 million in 2019, which is, in and out of itself, pretty impressive. From the period of 2015 to 2019, 776 unique companies were established in Stockholm alone. Sweden overall had eight one-billion-dollar VC-backed up tech companies. There are over 93 thousand professional developers working in Stockholm, and the capital invested per professional developer through 2015 and 2019 was $66,183, the more capital was invested only in Berlin.
The cost of office space is $850 per square meter, and while everything else is not cheap either, Stockholm is still one of the best places for tech startups with its excellent financing options, accelerators, incubators, ever-growing meetups, tech conferences, and events.
Stat sources: Startup heatmap 2019 & State of European Tech 2019