16. November 2018
What's Next, Europe?
In the startup world, Europe lags behind the US and Asia. Only 16 percent of unicorns come from Europe and the valuation of the European market is six times smaller than of the US market. One reason is its fragmentation. That is why we are organizing the SWCS event: to connect the business environment. The European Startup Initiative pursues the same goal, and its research points out that our old continent should promote mutual cooperation and foreign partnerships.
The European Startup Initiative collects information from startups across Europe and tracks new trends. They try to find out where the hubspots are, in which cities founders prefer to found companies or where the most money flows. This year's edition of their regular Startup Heat Map Europe study shows the following:
Successful startups are those that are not only active in their own country but mainly abroad.
7 interesting numbers
- 60 percent of European startups have an investor, a legal entity or employees abroad.
- If founders want to get capital abroad, sooner or later they need to move abroad. Only 17 percent of the total investment volume in Europe is invested abroad.
- The founders most often move to Great Britain, Ireland, Benelux and other states in Western Europe.
- One third of founders living abroad maintain strong business ties with their homeland.
- London, Helsinki, Stockholm, Berlin and Paris are the cities where most of the investment capital is concentrated.
- London and Berlin are the most popular cities for business. Over 50 percent of founders come from abroad.
- The largest cooperation takes place between Munich, Berlin, Paris and London.
And where is Prague, are you asking?
In the whole study, there are only two references to the Czech Republic. Prague ranks first in the "Value for Money" ranking and has reached third place in the ranks of talented people. From the point of view of popularity among startups, Prague is ranked 27th - 11 places lower than in 2017.
We were curious to know if it really is like this, and that’s why we asked four of our startups about the advantages and disadvantages of doing business in our metropolis.
What UP21 startups think about doing business in Prague
"The advantages and disadvantages of Prague's business are, to some extent, related to the phase of the development the startup is in. There is a fairly large startup scene in Prague with a lot of people skilled in IT, which you will appreciate mainly in the early beginnings. But if you want to expand abroad, you will soon find the limits of the local market, which will start to seem small. "
"In Prague we easily find talented people with the professional and language skills we need. We also have the opportunity for strong ties in the startup community. I personally compare Prague with other European cities than with the rest of the Czech Republic, and I perceive that the public sector has little support for our business. It has already happened that we got one offer to move abroad. "
"The company is made up of people and it does not matter if you find them in Prague or Ostrava. If you have an ideal team in Ostrava, it is a bad idea to move to Prague - it always depends on people. There is a greater concentration of great talents and interesting people in Prague, but it is not a promising city for all."
"There is a well-functioning startup environment in Prague, enough investors and highly qualified and relatively inexpensive IT power. Prague has become an attractive destination; on the other hand, most foreign customers perceive the Czech Republic as a not quite a solid country politically: somewhere between Western and Eastern Europe, or the Balkans. This is also related to the fact that contracts under Czech law are unacceptable for most foreign partners and that the accounting is not transparent for them. Relatively small B2B businesses are verified by foreign customers for financial credibility who require Czech accounting to be translated into an internationally recognized format. On the contrary, the Czech crown does not play a big role, except for exchange rate risk, because all international transactions are in euros or dollars. "
What does this mean? Business in our country has its advantages and disadvantages. To start your business here may be a great idea, but if you want to expand, sooner or later you will have to move. Or to bring the foreign vibe to the Czech Republic. This is what we are trying to do at UP21 – in April 2019 in Prague, we will host the continental final of Startup World Cup & Summit, the likes of which Europe has not yet seen. Join us!