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London ranked best startup ecosystem in Europe

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A new report out from the Startup Genome and Telefonica Digital ranks London as the seventh best startup ecosystem in the world. As you can see from the table above Silicon Valley comes out top and Tel Aviv is the only city outside the US that comes ahead of London.

There are always questions over methodology with reports like this, but the research takes data from 50,000 startups and seems pretty robust, although it would be good to know how the different components were weighted to produce the overall ranking (apologies if I’ve missed this, I did look). The ‘Startup output index’ is weighted for population size and maturity of startups in the region which I guess explains why some small cities rank highly on the list.

If you take out the smaller startup ecosystems then London would rank third behind Silicon Valley and New York, but my main interest is in what we need to do to improve. This research tells us that performance, talent, and staying up to date with trends are the areas to focus on. This rings true to me – better results from startups and their investors will bring more money into the ecosystem and help us raise the game generally, talent is the big enabler of performance and leading the world by setting trends is the raison d’etre for startups.

The good news is that I think we are improving in at least two of these key areas. Performance stats will look a whole lot better if/when companies like Mind Candy and Wonga go public, the quality and experience of the entrepreneurs we see increases all the time.

Diving into the detail of the report surfaces two other issues. We have a funding gap in London relative to the Valley and our entrepreneurs are less ambitious as evidenced by the size of their goals and the extent to which they consult on the side rather than commit fully to their startups. I think these are two sides of the same coin – if more cash was available for investment entrepreneurs would aim for bigger outcomes and wouldn’t have the same need to supplement their income.

For further reading check out this article on CityAM.

  • http://twitter.com/lambdatwigg Andy Twigg

    Hi Nic, interesting but I think misses a crucial dimension – the type of startup. “Systems/science” startups are very different from “web/design” startups (sorry to use such a broad brush but it’s illustrative only). I would argue that London is getting better for the latter, but is not that great for the former. Andy

  • http://www.theequitykicker.com brisbourne

    Yes, that’s probably right, although science project startups are getting harder the world over.
    Getting good at something is the first step. Then we can grow from there.

  • http://twitter.com/submitmytax SubmitMyTax

    Having worked at the cafe inside Google campus in the last four weeks, I can definitely feel that the startup buzz is growing in London. Almost everyone is working on some kind of startups there. I think there are still issues with the shortage of developers and designers. My another observation is that most of the entrepreneurs in London are tend to be aged from mid-20s onward and already have a number of working experience in the corporate world. I think this could explain why our entrepreneurs are less ambitious and unable to fully commit to their statups until there is a visible business model. Once you have worked in a corporate world and struggled through your daily life trying to make ends meet then the goal that you set will be more realistic compares to someone who is fresh out of college (as we know how hard it is to survive in a marketplace).

  • http://www.theequitykicker.com brisbourne

    Good to hear re the buzz, and experience often does temper ambition. However, the survey found entrepreneurs here are more or less the same age as in the Valley.

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  • http://www.facebook.com/people/Sharky-Rechinas/100003609817993 Sharky Rechinas

    You have to many banks in the city and the weather is not that nice
    Also the city is not fun enough for geeks to want to live in
    It is good that things are improving :-) . Nothing lasts forever including Silicon Valley so we need some options. Who knows with the climate change and banks going bankrupt maybe things will get better.

  • http://www.facebook.com/people/Sharky-Rechinas/100003609817993 Sharky Rechinas

    Statistics :-). Berlin should be higher. I thinked they missed on some very serious fundamental – culture. You can’t pass a law and suddenly you become entrepreneurial.
    Also Barcelona has the highest potential long term – they have no banks,nice weather, well located and have strong links with high growth regions. Plus ANgels might want to live there. They miss Angel money to kickstart the ecosystem. In South America I suspect most “entreprenuerial” endeavors are just Outsourcing – mostly multinationals. Same Bangalore etc. Startups are cool hope to have mroe of them in Europe :-).

  • http://www.theequitykicker.com brisbourne

    I’ll take the point on the weather, and maybe banks, but not the fun! Oh no.

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