Earlier this year Startup Britain published an annual report showing that 136, 939 new business had been recorded in the capital in 2013. The majority of these were centred around London’s Tech City nicknamed ‘Silicon Roundabout.’
Coupled with an accelerating GDP and falling unemployment, these figures are likely to have greatly pleased the British government who have laid an emphasis on fostering tech startups since they came to power in 2010.
Last year, in an attempt to boost business optimism and attract foreign entrepreneurs, the Government published a series of posters depicting Richard Branson in front of a billowing Union Jack over the words: ‘The Easiest Place to set up a Business in Europe.’
Beyond these posters the government have introduced schemes to help fledgling businesses such as startup loans and the Growth Accelerator programme.
American Dream
However despite the growth of London’s ‘Tech City’ and the Manchester equivalent ‘Media City’, the UK tech scene remains small fry next to that of the US. Though often derided, the American Dream is vindicated again and again by success stories such as Google, Facebook, and Twitter; businesses that began in dorm rooms and garages and grew to dominate the industry. Aaron Sorkin’s The Social Network charting the rise of Facebook is essentially a modern version of old pioneer stories.
Europe as a whole lags behind the States in fostering successful startups and the divergence between the two is commonly put down to two central causes.
- Firstly, there is a lot more capital readily available to the young and ambitious in the States. Whereas in 2012 venture capitalist investment totaled $5.7 billion in Europe, it peaked at $29.7 billion in the US.
- Secondly, in the States there is actually a greater tendency towards business in the first place. Those finishing college in the States are much more likely to consider setting up their own business than young Europeans who tend to dip in and out of Higher Education throughout their twenties.
Neelie Kroes however, the European commissioner for the Digital Agenda, believes that the difference between the two continents isn’t actually that great. In a speech last autumn she said:
‘Often people in Europe are too negative. Sometimes people think innovation is just for Silicon Valley. The fact is, here in Europe, we have many great success stories – but we are not telling them. There are so many talented people working to make their ideas a reality. So many innovations and innovators.’
There is an argument to be made for Kroes’s stance and, although in a different way to the States, Europe does encourage startups. The open border policy of the EU means that it is easy for a lot of bright young things with different backgrounds to come together in cheap cities and work towards business success. Cities like Berlin are particularly popular, offering both the diversity and action of a capital city without the prices found in London and Paris.
Indeed Germany as a whole pushes ahead of other European countries in their attempts to catch up with Silicon Valley. The e-commerce fashion and lifestyle company Zalando is one of Berlin’s greatest success stories. Zalando was founded in 2008 initially only selling shoes. Six years later the company is operational throughout the EU, and saw a turnover last year of 501 million euros. An IPO is expected later this year.
When one considers other European triumphs such as Skype, Spotify and Angry Birds, Kroes’s optimism appears to be rooted in reality. Despite the continent still suffering under economical and constitutional headaches, while the borders remain open to the smart and ambitious, perhaps it is not Silicon Valley that we should be watching, but Silicon Allee.