This should actually be common knowledge: People are the most important factor in a company’s business success. This also applies to startups—as confirmed by a large-scale study titled “Heatmap Europe” conducted by the European Startup Initiative (esi) among 700 founders across Europe. According to the study’s findings, the availability of suitable employees is a key factor in deciding to locate in a particular area.
Seventy-one percent of entrepreneurs cited access to talent as the most important criterion for choosing a location, followed by factors such as the entrepreneurial environment (69 percent), costs (51 percent), and access to capital (44 percent). The study thus confirms earlier research, such as a 2015 report by the consulting firm PwC. That report stated that, for 36 percent of startups, personnel was the most important factor for success overall. This was followed by a business idea with growth potential (29 percent) and a clear vision and strategy (22 percent).
It’s not just the founders who appreciate the great importance of their employees; many investors, in turn, recognize the founders’ crucial role in the company. Forward-thinking owners who buy shares from the founders stay out of day-to-day operations and allow the founders to remain in their positions.
Back to the startup study. Many founders do not hesitate to go where the right conditions are for them. This is shown by another finding of the study. Twenty-three percent of the entrepreneurs surveyed founded their startups outside their country of origin. This means that founders’ mobility across national borders is five times higher than the average for EU residents.
The study surveyed which European locations are the most attractive for launching a startup. The result: Berlin, London, and Amsterdam. This aligns with the latest Startup Barometer from the consulting firm EY. Berlin-based startups raised a total of 2.14 billion euros in 2015, while market observers estimate that London-based startups attracted 1.77 billion euros in investment.
In addition, “Heatmap Europe” examined whether there are differences in these cities between media coverage and founders’ perceptions. In fact, some significant differences emerged: While cities such as Lisbon, Tallinn, Warsaw, and Zurich were rated significantly higher by founders than their media presence would suggest, locations such as Birmingham, Manchester, and Milan fared worse in the founders’ assessment than they do in the media.
The survey took place before the Brexit vote in the United Kingdom. The next round of the survey is scheduled for November of this year.
