Startup hubs are buzzing in all the major European capitals, from London and Berlin to Paris and Amsterdam. However, according to new research, Vienna is currently the prime location for entrepreneurs looking to launch a new business.
Historically known for its culture and music, the Austrian capital topped the 2019 Startup Cities Index compiled by UK freelance marketplace PeoplePerHour, which ranked 25 cities according to the factors most likely to impact startups, from the availability of coworking spaces to the strength of the local talent pool.
Its location in the heart of Europe, just a few hours travel away from every major capital on the continent, makes it hugely appealing, as do its low development costs, making it more affordable for fledgling startups to make mistakes early on.
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Vienna has a robust startup infrastructure with plenty of co-working spaces and accelerators providing vital support for entrepreneurs founding startups. The city has had its share of success stories, including mySugr, Runtastic and Shpock, which have inspired other young entrepreneurs to build their fledgling businesses there.
Founded in 2013, tech startup Anyline enables mobile devices to read, interpret and process visual information. CEO and cofounder Lukas Kinigadner says the city’s main appeal is its central European location, which attracts a vast pool of well-educated young professionals from around the continent, in particular from Eastern Europe.
“This geographical advantage, alongside our excellent universities, makes this an ideal location to start and run a business,” he says. “Over the next year, we are aiming to scale up considerably, and more than double our headcount. Being in a cosmopolitan center like Vienna means we can find the talent we need to reach the next level.”
Access t0 subsidies and grants
Business founders have access to subsidies and grants from two agencies, the Austria Wirtschaftsservice (AWS) and the Austrian Research Promotion Agency (FFG), while other funding sources include the Vienna Business Agency and the annual Houska Prize, from the B&C Industry Holding.
Although investors have been hesitant to embrace Vienna’s startup scene, there are several key players in the area of VC funding, such as Speedinvest and a growing network of angel investors. “We were lucky to get some such investors, including Johann Hansmann and Hermann Hauser, who have helped us grow by leaps and bounds,” says Kinigadner.
One of the greatest strengths of Vienna’s startup infrastructure is its community. Like many startups that have become established in the city, Anyline plays an active role in the local developer network, regularly hosting events and inviting postgraduate students into the business to do their research.
Overall, says Kinigadner, Vienna is a beautiful place to live, with its vibrant culture and a variety of events and conventions taking place all year round. “It’s very easy to get comfortable here, and we often find that people who come for a short term opportunity end up a lot longer than they imagined,” he says.
While the costs of running a business in Vienna compare favorably with those of other European capitals, like Berlin, Amsterdam, Paris or London, there are some downsides.
Salary costs in Vienna are mid-range compared to other Western European cities
Petra Dobrocka, cofounder and CCO of e-commerce fulfillment startup byrd, says “Salary costs in Vienna are mid-range compared to other Western European cities, due to relatively fair costs of living for employees. However payroll-related costs, such as social security, are above average and add approximately 33% to salaries.”
One big advantage for Vienna based entrepreneurs is the cost-effective office space which allows even young companies to rent offices that are centrally located. “Our own office is on one of the main shopping streets in the city which gives it a very cool sense of flair,” says Dobrocka.
Culturally, she says, Austrians are not as open to new technologies and services as in other countries in Europe, so exceptionally innovative products can take longer to gain traction in Austria. The bureaucracy and red tape, especially around hiring non-EU employees, can also be time consuming.
Another potential disadvantage is the limited size of the domestic market size. Austria has a population of 8 million. “Many companies use Austria as a test market, but if you want to scale, you will have to expand internationally very quickly,” says Dobrocka.
Nevertheless, she insists that life in Vienna is very cool and laid back, with a good balance of fun and culture. “There are plenty of events and lots of sports activities available in and around the city all year round; the city has something for everyone.”
Second and Third place goes to…?
Second place in the 2019 Index was taken by Tokyo. With the second best healthcare provision in the Index and good coworking spaces, commute times and quality of life, Tokyo also presents a fair prospect for new business startups.
In third place was Madrid, with Brussels and Paris ranked fifth and eight respectively, helping Europe to put on a strong showing for startups overall. Beijing was ranked 25th.
Startups have become increasingly important in recent years. In the U.K. the sector contributes around £200 billion to the economy annually.
“Globally, their impact is immeasurable, yet enormous,” says Xenios Thrasyvoulou, founder and CEO of PeoplePerHour. “It is vital that cities provide an infrastructure capable of nurturing new businesses and ensuring that they flourish.”
The original article can be found on Forbes.com