Despite investing heavily in their digital infrastructure, Eastern European cities still lag behind their Western counterparts in the European Digital City Index - a ranking of the best cities in Europe for startups and scale-ups, launched today.
The second ranking of 60 cities from UK innovation foundation Nesta and the European Digital Forum (EDF) accounted for 40 separate measures that span ten core themes, including access to finance, entrepreneurial culture and talent supply, with varying weightings for startup and scaleup businesses. Nesta has also published an accompanying policy booklet which details what policymakers should do to encourage digital startups and scale-ups according to the themes measured in the ranking.
Unveiled at the Startup Nations Summit in Cork, the Index reveals that Eastern European cities dominate the top ten for digital infrastructure but score much lower overall in the ranking on account of their lack of knowledge spillovers, poor entrepreneurial culture, small local market size and Western Europe’s better access to capital.
The continental divide means that Eastern Europe ranks outside of the top 15, with Tallinn in 18th position for startups ahead of Budapest (33) and Prague (37). This is in spite of a significant number of digital businesses being based there such as mobile TV projector app Flipps (Sofia), Skype (Tallinn) and cloud-based presentation platform Prezi.com (Budapest).
London again ranked number one for both startups and scale-ups, with a narrow lead over Stockholm, owing to its excellent access to capital, vibrant entrepreneurial culture and skilled workforce.
"While European cities must keep pace with the likes of China and the US and continue to invest in their digital infrastructure, digital entrepreneurs need much more," said Chris Haley, head of startup and new technology research at Nesta. "It’s also important that cities offer skilled talent, opportunities for experimentation and a positive attitude towards entrepreneurship. As the UK embarks on a ‘hard Brexit’ it remains to be seen how the UK will retain its business allure.”
Visitors to www.digitalcityindex.eu can search the Index and attribute more or less weighting to the factors they consider important to their business needs to establish the best city for them.
Top 10 European Cities for Digital Startups and Scale-ups
"Digital advances continue to disrupt traditional industries across all sectors throughout Europe – and on all continents," said Jonathan Ortmans, president of the Global Entrepreneurship Network and chair of the Startup Nations Summit. "This is transforming our economies and making vast improvements in our lives but it will require leaders from all parts of the entrepreneurial ecosystem – entrepreneurs, investors, policymakers, researchers and more – to be nimble and adapt in order to seize the opportunities in front of them."
Nesta and the EDF published the first European Digital City Index in 2015 when it included 35 capital cities and known innovation hubs. In addition to featuring 25 new cities, the measures in the Index have been updated in 2016 to include the availability of business angels funding and crowdfunding, entrepreneurial education and training, and a culture and recreation popularity scores. Nesta also sourced bespoke data sets from Crowdsurfer, Ookla, Statista and FollowtheHashtag.
The 2016 European Digital City Index is published after the European Union launched a venture capital fund of 400 million euros to help regional startups grow and address a capital shortage in Europe for such firms compared with the United States.
The Startup Nations Summit is a gathering of policymakers, advisors and entrepreneurship experts from more than 75 countries. The annual event will this year be held in Cork, Ireland on November 18-20.