Over the past few days at the Next Web conference in Amsterdam, I had the opportunity to hang out with about 700 Internet entrepreneurs from all over Europe. The startup scene in Europe reminds me of Silicon Valley four or five years ago—hungry startups building Web companies on the cheap and products that scratch a personal itch.
Swedish startup Twingly, for instance, wants to come up with spam-free blog search by starting with the best 450,000 blogs and letting users share blog posts with each other. ParisBrussels-based Zilok is creating an eBay for renting things such as drills and digital projectors. London’s Fav.or.it makes a feed reader with extra powers—you can leave comments on blogs within the reader, it ranks posts based on how much they are actually read, and it lets you filter posts by tag, rank, or category. In Munich, andUnite has created a service that allows you to collect your search terms and share them with others.
And a handful of companies are even gaining substantial traction. I was surprised to learn that the social network Netlog claims 30 million unique visitors and four billion page views per month (comScore counts 11 million visitors, but five billion page views). Netlog operates in 15 different languages, and 20 countries. Then there is eBuddy, the Meebo of Europe, which boasts 12 million Web users and 1.6 million mobile users of its Web-based instant-messaging service.
Most of the startups I encountered, however, are still operating under the radar—in Romania, Sweden, Holland, Ireland, France. But a cross-border Web 2.0 culture is definitely gaining steam across Europe. Technology itself is helping to break down borders. A VC showed me the landing page on his mobile phone. It wasn’t his e-mail. It was Twitter. Another startup founder told me that Twitter helps him keep a dialogue going with other entrepreneurs and VCs across Europe, and even with contacts in the U.S.
Europe is still a mosaic of employment law, tax regulations, and cultural habits that can influence where it makes the most sense to locate different parts of a business. One Dutch CEO, for instance, told me that it costs you need a minimum of 18,000 Euros in starting capital just to incorporate in the Netherlands. And that is just the government’s fee.
When I asked which region was most likely to emerge as Europe’s Silicon Valley, the answers were all over the map: London, Munich, Berlin, Zurich, Geneva, even Barcelona. The money is in London, cheap office space is in Berlin, the mobile expertise is in Helsinki, the weather’s nice in Barcelona, and the inexpensive engineers are in Estonia (which may not even consider itself part of Europe, but is close enough to manage from Berlin or Amsterdam).
As Europe searches for its Silicon Valley, it may turn up as a state of mind rather than a specific place. The truth is that Europe may not need a single Silicon Valley because business is becoming so distributed. While some Silicon-Valley chauvinists may disagree, the idea of concentrating all the talent and capital in one region seems so last century to many Euro 2.0 entrepreneurs.
(Photo © Pieter Baert).
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I think it pretty much has to be somewhere in Britain since English is pretty much universal for the internet, seeing as how most of the world knows it. If they went with Germany or Italy or France it would be too much of a language barrier for most startup owners to move there.
Doesn’t have to be London though since its pretty expensive, so probably will be some town near London and its airport but not in the city itself.
It’s great to have so many startups in Europe, there should be more ideas around the world!
With the rise of Silicon-like in Europe, it will be good for technology all over the world. Silicon California now has a formidable competitor. Competition will yield better products and services. Welcome to the new world.
It should be in Moscow, Russia, the fastests growing European online nation
They should all move to the US. Europe is where ideas die.
Estonia is an official member of the EU; I’m pretty sure they’ll consider themselves European
YUPPPPPPP
Yasha, please… Moscow is Eurasia (i.e. not Europe), and the best national startup is Gazprom
Good for Europe.
is Asia doing the same thing? Can anyone point something about..?
I guess we (Asian) don’t have to wait all the time for Silicon Valley for every new innovations…
It doesn’t need to be Britain at all. London is prohibitively expensive and the level of tech education there is pretty weak except at the top end. Nordic peoples all speak excellent English and have very functional business-friendly (except income taxes and VAT) societies. The weather’s not great though.
Helsinki is probably out because Nokia soaks up all the talent and it’s all mobile-based here. That said, there are some interesting web 2.0 startups popping up. Rents are pretty high though. Estonians are not that cheap anymore either. A decent programmer will cost almost the same now as in Finland.
There isn’t an obvious place in my opinion so it will probably remain fragmented but it’s not a huge problem. You can’t replicate the Valley - all we should try to do is make sure best practice gets distributed quickly.
Why not Lisbon, in Portugal? The weather is nice all year round, it has good network infrastructure, office space is cheap, as is housing and living costs and most portuguese people under 40s speak basic english.
Looking around me, I think it’s starting to take shape in Birmingham, and nobody seems to have noticed.
It’s not Startup Central by any stretch of the imagination - though there are certainly some brilliant startups here - it’s a slightly different kind of thing. Call it Silicon Valley 2.0, perhaps. The creative sector here — from journalism through to music and graphic design — has been exploring and testing the limits of social media, poking at it to see what it won’t do and finding new ways to put what already exists together.
Rather than a rarified group of coders making things FOR people with the help of VC money (though certainly this is going on at an unprecedented rate) — this is more about people making things for themselves and with each other.
It’s also fascinating to see what kind of evangelism and uptake is going on here. From what seems to be the first traditional newspaper in the world with its newsroom staff all on Twitter to a Birmingham City University Media project to provide music and radio organisations with a research and development team; professional bloggers having to turn down work — and social media activists becoming local heroes and celebrities.
Not being from here (I’m a kiwi) but having lived here for the past few years, I’ve witnessed a radical shift from a small group of nerds doing interesting things in 2005, to an exponential uptake and a rate of innovation that’s kind of staggering. The last month has been a wild ride with giant steps being taken daily.
It’s not the new Silicon Valley in the sense of being a repeat of the concentration of tech startups in the old Silicon Valley - but in terms of the sheer rate of change amongst people who would perhaps not traditionally read TechCrunch but are seizing the creative, cultural and social opportunities that digital technologies are currently affording them - this is one hell of an exciting place to be right now.
Erick,
Not sure what this Dutch CEO told you, but there is no such thing as a 18.000 euro’s government fee in the Netherlands. There is a minimum share capital of 18.000 euro needed though to start a limited liability company. In other words: it’s the minimum initial value of the shares in a new formed company, i.e. you don’t loose it.
You misunderstood the Dutch CEO, There is a minimum capital requirement of 18.000 Euro to incorporate a dutch BV , a Limited corporation , the costs would be around 2000 euro max ….
*rotfl* Andrew, have you ever been to other places than “Britain” - you may not be aware that there are other places in Europe where a) english is the official language or b) the country is small enough to not have everything dubbed in television and movies (like the northern countries or for example netherlands) that the level of english in the public is so high that it is no problem at all to go there.
Even in one of the not so english countries as Germany you can get around very nicely in towns like Berlin without speaking German. It helps of course but you do not necessary need it.
In regard of taxes - Erick I assume you talked to somebody about setting up a certain kind of company with a certain kind of legal protection which cost that much money.
In Germany for example you can start with nearly zero plus some things like insurance etc, but it is not advisable because you would be liable with your personal assets. The route togo is a GmbH or similar, this one requires afair at least 25K. But you can start without.
I do not think that we ever will have a European Silicon Valley - and btw at the prices of London that one is out of the question just for that reason - but will evolve into something new and connected where we do make conscious decisions on how to generate that buzz we need plus meet people to stay energized.
And if all is not of our liking, we can still move to the Valley itself - but with the built in advantage that Europeans, once they have understood that benefit of the distributed world, have way more advantages in making something bigger than just the US market.
Great post of the “problem” in Europe.
I don’t think you can compare Europe in terms on Silicon Valley. The laws are too different from country to country, even within the Union. Hopefully in time this will change.
I doubt we’ll see a European Silicon Valley, but instead a lot of small local “Vallies”.
Lots of various European conferences and launches are on the ways to make start-up Europe smaller and attendance at the American ones.
I’m still crossing my fingers for the Danish break-through
Very nice post Erick.
There is no place in Europe which has the right infrastructure to become the next Silicon Valley.
In Germany for example you still have the problem, that many people see to be ashamed of having success or being talented and that you really have to dig deep for the good ideas/engineers/…
That remark about Estonia means… what? Not a part of Europe?? You should study geography and history more.
London is the winner.
Expensive though as it may be it’s definitely the right place to start a business for 3 very simple reasons:
1) Money is here
2) Talented people sooner or later come to London, even if just for a brief period. This means you’ll be able to hire great talents on the cheap simply by giving them the possibility to relocate.
3) The UK has has cut bureaucracy and employment laws. Incorporating a company is quick, easy and practically free.
“As Europe searches for its Silicon Valley, it may turn up as a state of mind rather than a specific place. ”
Spot on.
By the way, Zilok is not based in Paris like you mention in your post and CrunchBase seems to be wrong too. It’s a Belgian company, incorporated in Brussels.
Great to see my comment about the Dutch 18.000 euro’s helped Erick. Thanks for the questions during dinner about that. As others are pointing out, you need it as starting capital, not as a fee. After that with some lawyer costs added it will cost you around €800-1000.
I think it’s ridiculous none the less. I mean, Most Y-Combinator startups don’t even have 18k. Most politicians seem to agree and want to scratch this threshold, but it’s been delayed on the political agenda until 2009. I guess people would rather vote for some immigration issues instead of entrepreneurial stimulation…
You’re totally right about Europe being more distributed. As a European founder I’m not worried. I’ll just head of to the valley whenever I’ll feel like it and come back fully charged
I don’t think there will ever be a European valley. I think many European start-ups eventually move to the other side of the ocean, because that is where it all happens. And probably the European money does the same. Does the world need two valleys anyway?
Also, the European nationalists would rather have no EU valley at all, than one in a country other than theirs.
There’s a lot to be said for the ‘Golden Triangle’ of London-Oxford-Cambridge. There’s a vast density of very impressive tech (comsci, biotech, nanotech) universities there - Ox, Cam, Imperial College, UCL, etc; at least here in my brief time at Oxford, I’ve seen a big, big emphasis on entrepreneurship, namely:
- the emergence of oxford entrepreneurs as the largest student society, organising sellout events like Idea Idol
- the Gordon Brown-backed “Building a Business Course”, entrepreneurship evening classes delivered for free by the business school, focused particularly at scientists
- the business school putting on events like “Silicon Valley Comes to Oxford”, which was a huge amount of fun
- a few reasonably successful startups coming from its ex-students, for example Auctomatic, Groupspaces, Younoodle, Slide; and a fair few startups unrelated to the uni but here anyway: We7, Fav.or.it
You were right to mention the tax laws. They are all over the place, I would’t work in Germany or Belguim because of them.
I suppose the real question is can there be another silcon valley? Surely we should be looking to create something new in this day and age.
Don’t we already have a virtual silicon valley called the internet now? we can network, we can find talent, we can do PR, we can do marketing and most of all we can release product. The only problem is finding the money.
If you have read Richard Florida’s latest book “What’s you City” you would argue that distribution of money, talents and place is the past. The future will see a much more spiky world where only the combination of the creative class with the money and environment will have success.
Many, many US start-ups have moved to Silicon Valley because the there’s the exposive mixture to give their ideas feets.
Read the book an you will know that Europe needs not much more than 1 or 2 place to be.
where did you get the info that Estonia not part of Europe (or EU)??
Good Post
Estonians sure consider themselves as Europeans, moreover they consider as innovative Europeans. I`m one of them too
There is a good way to lower costs - OUTSOURCE. All you need is to settle your busdev people and some system architects. Then you buy cheap labor in some remote parts of the world. You can do it online - on sites like Rent-a-Coder. Or you can look for a developer in impoverished places like Romania, Belarus or Sri Lanka. People work there almost literally for food (sometimes they can even be inmates sentenced to hard labor and coding for free). This really cuts down your budget - you can build a viable value proposition off just maxing your credit cards.
pff ….. @yuiri ok , I’m just going to say it in Romanian:
‘tu’ți nația mătii de rusnac bășit . păi la tine în țară dacă n-are taica 1 metru pătrat de platformă petrolieră tu ce faci mă? pușcărie , tată , că voi chiar vă omorâți pentru mâncare , Dumnezeii mătii de handicapat!
Could someone moderate yuri’s comment please? it’s outrageous!
Yuri, you’re completely wrong. I don’t know about Sri Lanka or Belarus, but Romania is not as you described it. You can’t get a decent programmer for less than 1500 euros/month. If you want a good one, you need more.
Another issue: what you said there is absolutely stupid. Have you ever tried to do a project with people scattered all over the world? Believe me, it’s not worth it! You need the whole team in the same place, if you try to do a project with 1/2 of programmers in Belarus, 1/2 in Sri Lanka, the project manager in Russia and the designers in the US, for example, then you’re doomed. In terms of project deadlines you’re completely f**ed up. In terms of control you’re completely f**ed up… etc.
Yuri,i do not know if you live in a russian “iurta” in the middle of “taiga” but brain&internet are in Siberia too..as a romanian developer i can assist you (my current income is 61k,of course i expect more from you,including fresh food)
gezus christ…
You fuckin vodka drinker, shut the fuck up and go fuck your mother after another bottle of SKT Petersburg…..
Yuri, let me be plain blunt and tell you that you know shit about Romania and about the prices asked by Romanian coders, programmers, etc..I don’t know who told you that inmates do coding, as part of their sentence, but you were definitely on crack or drunk when you’ve heard that.
Might sound racist, but gotta tell ya: stop drinking that much vodka and please, next time you think about shoveling shit in others’ faces, at least get more information about the topic you’d want to discuss.
Have a nice day!
Listen, Mr. Yuri Ammosov, you’re obviously wrong, and that I can notice just by taking into account the amount of “comments” addressed to you. I’m a Romanian and I’m ravaged by your lack of information in your post here. If you were me or any of the fellow programmers here, you would know that I charge 1.200 EUR for a single Flash website, and I get kind of 3-4 customers/month. I’m not adding the rest of the orders for blogs and eCommerce platforms, graphic work and different Desktop Publishing elements, but I can tell you how much I have on my PayPal account in this very moment: 4.092 USD (~3100 EUR). Log in to your PayPal account and shut the hell up, next time when you touch your keyboard say thanks to million of Romanian, Indian, Belarus and Philippines programmers that made possible for you to use high-quality software.
So, how was the vodka?
Some of the jirks who responded to you, has prooved that you have written some true things. I think some cheap coders have found you at this place
But i’d like to tell you that not everything is cheap means also it has the highest quality. A couple of weeks ago i found a proiect on that well known Rent-A-Coder where the Buyer has described in his project that he does not wish to work anymore with coders from India as all his past projects was given to coder from that country and 100% of the projects has failed at an early stage.
Now he is more willing to pay more money and from now on he can give another chance to those coders but only if they accept to work for 50% less from the maximum budget.
Let’s not spread out the Internet with such things about the coders from Romania, Russia, Ukraine. It is ok, i agree that here the prices are lower, that’s the idea of Rent-A-Coder for example and the reason why so many Buyers are posting there their projects, but also every entrepreneur must understand that with $10 you can’t get good services. NEVER my man, NEVER!
Get the average salary from Romania, get the average salary from Germany. Let’s say we are talking about “2 money” in Romania and “10 money” in Germany. 10+2=12, 12/2=6
Just offer “6 money” to a good romanian coder and you have a good business! You save money and you have the guarantee of a good work force. I’m talking about the really good ones. Don’t look to the really cheap guys.
Thanks for your attention.
Cordialy,
Henrich
http://www.henrich.ro
I agree with Bob, although I would like to see some consolidation around either Cambridge or Oxford as I think the physical community is important. The relationships that are built via parties/events/etc are really valuable.
Both Cam and Ox have good transport access to London (and therefore investment), which to my mind is important as if I were a VC I would want to invest in companies that I could meet with on a fairly regular basis without too much hassle. Also they both have good pools of talent to draw from. My impression is that Oxford has the edge judging from what has come out so far. All they need to do is somehow get rid of the tribal feel they currently have so they can attract more outside talent.
London itself is expensive but more importantly I think that somewhere outside of a huge urban sprawl might inspire more creativity and has more chance of getting a community feel.
Europes Sillicon Valley will surely be in Britain, having it in another country brings important issues such as language barriers. Most Europeans are able to speak English as it is very global.
I think a perfect place for Europes Sillicon Valley would be Manchester, it’s not the largest city and its not the smallest and its rapidly growing!
I’m a founder of a European startup. We’re in Italy, which is one of the harder countries to raise funding in, and has some of the most obtuse labor laws you can imagine.
That said, Italy has top talent, fairly low wages and low employee turnover (partly due to the culture instilled by aforementioned labor laws - 2 sides to every coin I guess).
All that said, I think the distributed business is more accepted here than it is in the US. It’s a necessity. No one country has it all.
Then again… isn’t Web2.0 about breaking down silos?
My thoughts: http://tinyurl.com/5ecwwy
Thanks for setting me straight on the 18,000 Euros. When I heard that, it was over dinner after a long day, a few drinks, and I wasn’t taking notes. I’ve corrected it in the post.
Zilok is a great site! I was wondering when they were going to expand to Germany. So I checked Zilok.de…….
I like the different approach of CI at http://www.zilok.de
lol
1) I think you captured it nicely Erick.
2) The Next Web Conference was a great experience, thanks to you and all the great people who participated. And thanks to Boris, Patrick and TNW crew.
-chrisco
PS: Nice to meet you at Friday night’s dinner/party.
Europe definately needs to keep up the pace with Silicon Valley, but is struggling to get to speed. Nevertheless London is a hot spot, but very expensive to operate. Interesting stuff is happening here in Greece and Cyprus, MySpace is big, HI5 is a top 10 site and local start ups like Wadja are really growing fast.
Weather is good and Cyprius, in particular, has is a great place to incorporate. As a former British Territory, it follows UK commonlaw, 10% flat tax, english speaking population, and part of the EU…oh and it has the best weather in the world (SUN AND SURF)
Just a thought.
Techcrunch..you guys are doing great!!!
Maybe you should consider to correct that sentence about Estonia too, it seems to me pretty offensive.
Lol. What are these labor laws and Taxes ? I am from Pakistan, and there are tons of new start-up companies working. In Pakistan there are no taxes on Information technology companies and there are no special labor laws for this industry. To incorporate a company it costs only $800. And establishing a start-up takes only a day.
Here are some nice steps,
1. Buy an office
2. Employ 100s of talented people
3. Earn Profits !!!!
Wasn’t it simple !
An interisting way to find the right place for an European Silicon Valley might be to publish the Google Analytics Geographic Stats of Techcrunch
Greeting from Cologne, germany
@erick: important post. but “sooo american”. you probably know “european vacation” with chevy chase. so you should know some oft the problems: culture and language, not to mention the heterogeneous legal corporate framework which is currently under reform throughout europe. where did you expect the “european valley”? in brussles?
here is a perspective from berlin, germany: our market is german (100 million) some of our developers are in romania (and would love to come to berlin but cannot afford to despite relatively low rents), some are on estonia (excellent mobile expertise. developers are allowed to and can afford live here but do not want to).
some of our lead investors are only succesful with copying american concepts (greetings to the samwer brothers) and would never touch a risky technological venture. and because many u.s. startups internationalize too late they do no have to either.
for us sillicon valley is more of a concept than a physical place. if i could set it up today i would locate in helskinki (snow in may!). home of europes most important tech company: nokia.
I think , London would be the silicon valley of Europe. Its the right place for innovation.
Cheers.
Senthil
We could debate what is part of Europe and what is not, EU membership notwithstanding.
I have no problem lumping Estonia in with Europe, but learned that some Estonians just like to think of themselves as Estonians. Not part of Europe, certainly not part of Russia, but linked to both economically and historically.
No matter how you try to define Europe, you will always end up offending someone.
will we get the 3 months off? sooooo there if I get the 90 days!
Estonia does not consider itself part of Europe? You Yankees!
Estonia has entered the European Union in 2004…
Erick show me any Estonian who refuse that Estonia is a part of Europe. What else should they be? Asians? Africans? I mean Europe is mostly a continent and as a continent it is quite preciselly defined. At least as preciselly that Estonia is in the deep of Europe.
What’s more surprising is the continuing existence and importance of Silicon Valley, and not the lack of Silicon Valleys elsewhere. Most industries do not have such exclusive locations once they have matured (consider the automotive industry - once somewhat locked to Detroit but no longer), and since the Internet industry is somewhat maturing now, a centralized location is not important.
As with other industries, the skills necessary for Web / Internet companies are now found almost everywhere. There are user groups, meetups, and all sorts of Internet events taking place in every far flung corner of the world.
It could be argued Europe needs a Silicon Valley for the social aspect, rather than the purely business side. I’d argue against this though, since European entrepreneurs socialize in a very different way to Americans (far more cliquey, less open-minded, less… Californian). This is an Internet-based industry.. so let’s keep it online and bring it to wherever we are, rather than go searching for a hallowed valley that doesn’t exist.
What the U.S. investment community should realize that funding European talent is the great undiscovered opportunity.
It is no secret that there is a funding gap in proportion to the ideas available in Europe.
So my guess is that the money, possibly meaning U.S. based venture capital companies that initiate operations in the EU, will decide where the next EU silicon valley develops.
…and yes, Estonians are as European as you can get.
I have to put my vote in for Geneva! Home of Index Ventures and NewsCred! Great to see Europe entering the conversation though…
My vote is for Ireland.
12 1/2 % corporate tax rate.
2nd most open economy for business.
Closest to the valley!!
All the tech giant have bases here:
Google, Yahoo, Microsoft, Apple, Amazon, Dell, Intel…