Berlin named as Europe’s top city for start-ups

In the latest edition of the Startup Heatmap Europe, Berlin has overtaken London as the founders’ choice for the best city to start a company in.

The annual survey, which has been run since 2016 by DEEP Ecosystems, is based on 1,295 founder votes between April and August 2020.

Overall, 39 percent of founders from 29 countries said Berlin is an attractive start-up hub, up five percentage points on last year. London dropped one percentage point to 36 percent and lost the top spot.

“One explanation might be the overwhelmingly positive perception of the German COVID-19 response during the time of the survey, but also the Brexit discussion that has supported uncertainty,” the report says.

Brexit effect

London has regained some ground among founders from the Nordics (+12 percentage points) but in Central and Eastern Europe its popularity fell 12 percentage points. The worst effect is seen among founders based in the UK and Ireland, where London dropped from 55 percent of the vote in 2019 to 36 percent in 2020.

The report states: “This provides a strong argument for a negative perception of the consequences of Brexit among founders who moved to London or the UK – many of them clearly would not do so again. Across all European regions, London remains the top choice only in the Mediterranean countries.”

However, London attracts the most venture capital funding in Europe, with €8 billion (US$9.68 billion) in start-up investments on average per year – twice as much as other cities in Europe.

Contenders

Trailing some way behind Berlin and London, the next most attractive start-up cities are Amsterdam and Barcelona (17 percent) and Munich, Lisbon and Paris (10 percent).

This year’s report finds “remarkable movement” in the most popular start-up hubs for founders, with 15 positions changed in the top 20. These shifts are also put down to COVID-19 and Brexit.

Paris dropped out of the top five for the first time since 2017, while Zurich is back in the top ten, climbing six places since 2019.

Skills and jobs

Founders who picked a city as an attractive place to start their company were also asked to rate the destinations for various categories, including how well the start-up scene is connected to the industry. London, Tel Aviv and Munich received the highest ratings.

In terms of skills availability, the research finds that London, Paris, Amsterdam and Cologne have the most software developers.

Berlin creates the most start-up jobs, according to the report, followed by London, Paris and Munich.

Dublin is ranked top for ease of doing business, followed by Tallinn and Luxembourg.

Image: Felix Pergande | Dreamstime.com