Here in the States we tend to associate Europe with illustrious history more than technology. But the reality is that Europe is headed into the future as countries and conglomerates funnel billions into startups across the continent.
While the old tech regimes in San Fernando will hold fast, there’s a good reason that savvy investors and developers looking for a new career path have set their sights abroad. The next Silicon Valley is very likely to be outside U.S. borders in a city like Lisbon, Paris, Warsaw or even Tallinn, Estonia.
Europe’s New Investments in Tech Hubs
Investors have turned their attention to Europe, fueling a spurt of capitalization and unprecedented growth. In 2011, the European tech sector took in 2.8 billion investment dollars. Fast-forward five years, and those yearly investments grew nearly fivefold to $13.6 billion.
Capital investments are especially targeting so-called “deep tech” sectors, which include artificial intelligence, machine learning and data analytics. These verticals secured $1.3 billion in funding in 2015 delivered over 82 rounds. Compare that to 2011, when the same sector took in just $289 million delivered over 55 rounds.
Berlin, London and Stockholm were early favorites during these tech investment infusions, but now dozens of other cities and several small countries have stepped up to the plate. Paris, for instance, “is already starting to challenge London and Berlin in terms of the number and volume of venture-capital-financed deals,” according to analysis by the venture capital firm Atomico. Copenhagen, Munich and Zurich are also fast-growing contenders.
The Baltic region is buzzing as a hub for advanced AI-based innovations, while companies from deeper in the mainland of Europe are revolutionizing services through the use of ambitious and creative platforms.
Nordic, Baltic and Benelux (Belgium, Netherlands, Luxembourg) countries in particular have a high density of tech-related economic activity. Tech businesses in these countries, which include IT infrastructure companies and internet-related companies, generate about 8 percent of their GDP. On the other hand, Europe’s “Big Five” countries—the UK, France, Spain, Italy and Germany—only earn 5 percent of their GDP from tech.
In addition, Latvia, Estonia, Poland, Portugal and Romania have all had a number of successful tech startups and exits, especially when accounting for their high percentage of women-run tech businesses.
Canada Tech Hubs Curb Spending, Position for Growth
Looking at the U.S.’s neighbor to the north, cities like Montreal, Ottawa and especially Toronto are positioning themselves as a cheaper alternative to pricey American options. Canada is pulling ahead of the U.S. in terms of tech growth, thanks to a number of landmark startups and relocations. Expat companies are often lured to the Great White North by cheaper operating costs.
“A 500-worker company requiring 75,000 square feet (7,000 square meters) of office space can expect total annual costs, in U.S. dollars, to range from $27.6 million in Montreal to $32.2 million in Ottawa, with Toronto in the middle at $30.2 million,” according to a CBRE Group survey. By comparison, the cheapest U.S. market studied—Rochester, New York—tallied to $36.3 million. And the storied Bay Area? Its tab added up to a whopping $57.4 million.
“When it comes to overall costs, even if you assume upward pressure on office rents, housing and salaries, our major markets still constitute a significant bargain to the U.S.,” explained CBRE Canada’s executive managing director, Paul Morassutti in this Bloomberg article.
Low costs of doing business fueled the growth of 28,900 tech sector jobs in Toronto in 2017, which is more than San Francisco, Seattle and Washington, D.C., combined.
Overall, the growth of investment and new opportunities have shattered the assumption that all the most exciting tech developments happen near the San Francisco Bay Area. Developers and companies alike have now have more opportunities than ever in some of the most unexpected places across the globe.
