Germany’s capital leads among 50 cities to start a company in, Zurich counts 76% foreign-born founders, and Vienna has the highest share of women entrepreneurs (34%), a survey says.

Startup Heatmap Europe, a benchmark report on the attractiveness of startup hubs in Europe, has released its SHM2021, on the top 50 most attractive startup cities in Europe.

The annual survey was conducted between April and August 2020. 1,295 founders have been asked to list the cities (75 startup hubs) they find the most attractive to start a company in, based on criteria including investments, job creation, meetup activities, trends, diversity and performance.

Covid vs Brexit

39% of the respondents have picked out Berlin as the most attractive city to start a company in Europe (+5% compared to previous year), followed by London (36% of votes, -1%), Amsterdam and Barcelona (both 17% of respondents).

“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,” Startup Heatmap Europe, the author of the survey explains.

Luxembourg ranks 24 with 2% votes. However in the category “Ease of Doing Business”, the capital city received the highest rating (90%) together with Dublin and Tallinn.

“Founder ratings for ‘Ease of Doing Business’ show that startup friendly regulation pays off for governments and that smaller hubs are well positioned to outperform the incumbents in this category,” the survey notes.

Mattia Lattanzio, CEO of Familyplug, a startup based in Mamer and specialized in communication solutions for patients and families was among the respondents of the survey.

He told Startup Heatmap Europe that “Luxembourg is an ideal place for startups: the administrative environment is friendly, easy to understand and multi-language. Geographically it is the center of Europe and it offers valid resources for international trades. Finally, the fiscal regimen offers a positive business environment and a soft imposition”.

Fintech’s decline

Among the top 10 tech-trends founders foresee for 2021, the survey notes that “AI & Data is dominating the debate”, followed by creative & culture, mobility and fintech.

“Fintech in contrast was sharply declining in attention of communities, dropping from 1st to 4th rank with only 7% share of voice in 2020,” the study continues, adding that new topics are emerging in the European startup scene such as health & biotech, cleantech, sustainability, logistics and agritech.

Among other figures on startuppers, Startup Heatmap Europe notes that only 31% of European Founders Know How to Code.

The cities with the highest shares of engineers and programmers among founders are located in Eastern Europe.

Cluj-Napoca (Romania), a strongly developed nearshoring hub for Europe’s industry, leads the list with an impressive 65% share of tech-skilled founders, followed by Timișoara (55%) and Brno (53%), the home of Avast, in Czechia,” the survey details.

Cluj-Napoca’s hub in Romania leads with the highest share of tech-skilled (photo: Sinziana Susa, Unsplash).

Diversity is lacking

In terms of diversity, the authors observe that Western European startup hubs have the lowest share of female entrepreneurs: “The largest shares among the big hubs are still below 20% with Stockholm leading this group (19%) followed by Berlin and London reaching each only 18%,” they explain.

As a contrast, “some small and mid-sized ecosystems reach a much higher share of female founders. Vienna is the overall champion in this category with 34% women entrepreneurs, followed by Budapest (30%) and Oslo (26%),” they continue.

Furthermore, female founders are widely underrepresented when it comes to VC funding. “Startups with women in the founder team only attracted 8% of total investments in 2020 according to our analysis of data from dealroom.co,” Startup Heatmap Europe says. “Even worse: The trend is negative, having decreased from 10% in 2018 to 8% in 2020”.

Another indicator for the inclusiveness of the startup scene is the share of foreign-born founders. “Top hubs have >65% foreign-born founders,” the authors of the survey say observing an increasing trend over the years. “Also we see a clear indication that tech hubs that are successful, base their success on the immigration of talent from abroad.”

Zurich leads with 76% of foreign-born founders, followed by London (72%), Berlin (67%) and Barcelona (65%). The Swiss city “is very international and also benefits from the proximity to Germany and the low language barrier that favors immigration,” the study concludes.