The Economist published “If in doubt, innovate” a special report on The Nordic Region (Sweden, Denmark, Finland) as a hotbed for entrepreneurship we can all learn from. The article mentions some of the characteristics that make the Nordic Cluster successful. With a bit of a wiggle, I’ve transformed it to a blue print for Successful Startup Hubs. It’s not that the Nordic countries just started producing startups – it’s that the rest of the world finally takes notice.
“Promoting entrepreneurship is a matter of changing culture as much as providing money”
The blue print for successful startup hubs
- Physical infrastructure and community-led activity – Startup Sauna, a startup community initiative part meetup/part accelerator with government/University funding, offers startups a (1)working space (converted warehouse), (2) coaching for budding entrepreneurs, study trips to Silicon Valley and (3) plenty of networking opportunities (including fun activities, like visiting the countries many Saunas!)
- Multi-disciplinary focus – Startup Sauna combines engineering and design: knitting factories and design workshops are mixed amongst tech entrepreneurs. The combination of multiple practices helps with symbiosis and cross pollination.
- Growth beyond the domestic market – Nordic startups look to Russia and the Baltic states as well as to Boston and San Francisco.
- Big company presence – it may sound counter-intuitive, why would a country that is trying to promote entrepreneurship attract big companies? The answer is: talent. Big companies offer the next generation of startup founders on-the-job training, the pedigree that would later instill more confidence in investor of the startup and a multi-cultural understanding of how international business is conducted. (Side note: that’s why I’d recommend students to take at least internships at large companies, even if they plan to launch a startup)
- Experienced talent, usually ex-big tech company employees – Former Nokia employees have strengthened the cluster’s founder talent
- Role models who made it – Folks like Niklas Zennström, the co-founder of Skype, and Daniel Ek, the co-founder of Spotify, pave the way and encourage students to embark on entrepreneurship.
- Government support, or at least barrier-removing policymaking – The Finns take it a bit too far in my opinion, but there’s an impressive amount of public-sector support for startups – from ‘no strings attached money’ to accelerator programs funded by the government:
“The Finns created an innovation and technology agency, Tekes, with an annual budget of €600m and a staff of 360. They also established a venture-capital fund, Finnvera, to find early-stage companies and help them get established. The centrepiece of their innovation system is a collection of business accelerators, partly funded by the government and partly by private enterprise, that operate in every significant area of business and provide potential high-growth companies with advice and support from experienced businesspeople and angel investors.”
- Sheer numbers/ Density of network – startup need growth and most startups fail. To support these two underlying conditions, the density of network, meaning, the sheer number of developers, designers, mentors, investors, clients, collaborators, bloggers, journalists, etc is necessary to sustain the growth of a successful startup hub.
- A local specialty – Swiss Watches, Belgian Chocolate… following those lines, the Nordics are known for their speciality in video gaming startups. Rovio Entertainment, the maker of Angry Birds and Supercell, the maker of Clash of Clans, are two examples. The cluster attracted video gamers long ago by hosting a festival for gamers since the early 1990s.
- Lots of positive attitude, team playing and Serendipity* – Rovio made about 50 games before creating Angry Birds, and was about to go bankrupt. It takes time and luck to create a massive global hit in the startup world, but by celebrating success and keep trying, some of the small contenders of today can become the Nokias of the future. Don’t underestimate the value of serendipity. The stronger the community, and the higher the density of network, serendipity increases the chances of success by making “magic” happen – deals close, products are invented and fortunes are made – it’s the unknown factor which helps founders improve their own “luck”.
As I was compiling this list I couldn’t help but making the comparison to London where I work as the head of Google’s Campus (good opportunity to point you to this blog’s disclaimer: all opinions expressed here are my own).
In London, Campus and a growing number of co-working spaces provide shared physical infrastructure, mentorship and networking facility for Silicon Roundabout startups. London seems to be creating a specialty in Fintech, Commerce and Fashion, although I personally think that we’re still throwing all kinds of spaghetti on the wall. With regional focus, London is still a bit too focused on the local market or the US alone, as cross border commerce in Europe, with different languages, copyright laws, currencies and cultures makes it challenging to spread quickly in the continent.
The UK startup community enjoys a strong (and growing) government support, with policies aimed at reducing the friction of starting and growing a tech startup in the UK (EIS and SEIS angel investment tax breaks, entrepreneur visa, etc, though there’s still work to do). The role models need some refreshing: we’re still too obsessed with the “Dragons”, Lord Sugar and Richard Branson – all successful entrepreneurs on their own, but not exactly the founders in the trenches who are doing it now. The density of network is improving. Campus alone brought together a record number of startups and mentors under one roof, also housing hundreds of startup events (in November for example, we hosted 109 startup events) and that’s just one example. Being a metropolis and having some of the top universities in the world, has helped London attract global talent, but this is still an area that needs development, especially with relation to technical talent. So what about positive attitude? We need more of that too!
In conclusion, London is a successful startup hub in the making, but one that has a very good chance of success if you ask me. Next time, I’ll apply this blue print on Israel, where I grew up and co-founded a startup, and what I’ve been covering on VC Cafe for seven plus years. I suspect there are a few lessons to learn from the Startup Nation too.
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