Europe’s Top Tech Cities

London emerged triumphant as the best city to support digital entrepreneurs in the EU on the recently released European Digital City Index (EDCi). The index aims to measure EU capitals and some other major cities against a set of criteria setup by digital entrepreneurs, policy researchers and academics.

The index, released by Nesta and the European Digital Forum ranks the best and worst European ecosystems for startups and scale-ups. The results can vary based on criteria. For example, if access to capital is set as the most desirable factor, Paris comes only second to London. But, when all the factors are given equal importance, Paris is pushed down to 6^th position, below Copenhagen.

Here is a brief overview of the top 5 tech cities in Europe for startups based on the findings of the EDCi. 

1. London

UK’s capital, also lovingly called “Silicon Roundabout” is transforming into Tech City with the government pushing for the city’s access to finance and support.

According to Startup Hubs Europe, there are over 275,000 startups in London, employing some 1.5 million people. The city has some of the world’s leading universities, resulting in a healthy knowledge spillover. London boasts more billion dollar startups or ‘unicorns’ than any other European country, making it a hub for mentors and role models for new entrepreneurs to follow. It is the only city in the UK to make the top 10 list, though, it is important to note that Cambridge and Oxford appear on 11^th and 13^th positions respectively. But despite all its charms, London scores poorly when it comes to the cost of living and office space.

Notable Startups: Shazam, Wonga, Zoopla

London ranked poorly on the cost of living. Source: EDCi 

2. Amsterdam

A popular destination for tourists and entrepreneurs from all across Europe, the city nurtures networks like StartupAmsterdam providing information and support to new startups. According to OECD, the Netherlands has the highest proportion of residential computers in the whole of Europe, which can be interpreted as an additional factor in encouraging the growth of home-based digital businesses.

The city has been responding well to the country’s innovation strategy with projects like the Smart City, an initiative where young entrepreneurs can test and improve products based on real-world feedback.

Notable Startups: BitFury, WeTransfer, Travelbird

Similar to London, Amsterdam ranked low on the cost of living, but scored better in business environment. Source: EDCi

3. Stockholm

Startup Hubs Europe records an estimated 8000 startups in Stockholm, employing around 52,000 people. The Swedish Capital is home to Spotify, CandyCrush and Minecraft. One reason for its rapid expanse in digital arena could be the small size of domestic market. Many entrepreneurs have to consider international digital culture and demands from the beginning while setting up their businesses. The country also boasts overall good English language skills, making it easy to make and market products in the international market.

Notable Startups: Klarna, Spotify

Stockholm scored fairly low on business environment but quite well on entrepreneurial culture and knowledge spillovers. Source: EDCi 

4. Helsinki

 There is a pool of smart talent released by Nokia, moving in the market and creating small profitable companies. With around 90 companies specializing in game development, a healthy gaming industry is steadily growing, currently being led by Rovio.

Notable Startups: Rovio, Jolla, Kiosked, Steam Republic, Blyk

 Helsinki also ranked low on the cost of living but managed to stay in top 5 for entrepreneurial culture and knowledge base. Source: EDCi

5. Copenhagen

Denmark appeared on top of European Commission’s ranking of the EU member states based on their overall digital performance earlier this year. The Digital Economy and Society Index (DESI) uses data mostly from 2013 and 2014 to capture an overall picture of digital Europe. It could be a surprise to many that EDCi has placed the country’s capital lower in the overall ranking. This, the index explains, is due to the country’s unfavorable tax system and high cost of living. Yet there are a rising number of accelerators and incubators in the city and Copenhagen has managed to stay in top 5 because of its business environment, access to capital and non-digital infrastructure.

Notable Startups: Zendesk, Podio, Just-Eat

Copenhagen did poorly on the cost of living but exceptionally well on the ease of doing business. Source: EDCi

The EDCi goes on to list Paris, Berlin, Dublin, Brussels and Munich in the lower half of top 10 using indicators like access to capital, business environment, entrepreneur culture and digital infrastructure. In his blog about the index, Wauters quoted Chris Haley, Head of Startups and New Technology Research at Nesta, who explained the outcome as:

“Entrepreneurship, particularly digital entrepreneurship, is vitally important for innovation and growth but not all cities provide equally fertile ground for these businesses. Our research indicates that location does matter, and illustrates the ways in which top cities create a supportive environment and where lessons can be learnt.”

This also explains how cities like Berlin are ranked lower in the index than cities like Brussels for example.

For a comprehensive view, The European Digital City index (EDCi) can be viewed here.

You can also download the research methodology behind EDCi here.