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Why we need to start looking at Europe as one tech ecosystem

  • By Sergei Kosiachenko
  • January 29, 2021
  • Comment

2020 in a nutshell has been challenging, unpredictable, and isolating for many across the continent, and indeed the world. However, the COVID-19 pandemic did have some silver linings, as it has spurred innovation and cooperation between different countries in the interest of global public health and safety.

Europe’s tech industry would benefit from the same kind of inter-country collaboration. By allowing Europe’s individual tech communities to grow holistically as one integrated ecosystem, the continent’s best and brightest get a chance to shine. The possibilities are endless, paving the way for increased sustainability, better digital literacy and modernization, and greater resilience in the face of shared challenges.

Pitch to international investors

Cities across Europe have the potential to work as growth facilitators and incubators that help connect local talent with access to continental resources and most importantly, more customers and content. One great example has been the relationship between Amsterdam and Porto, which are both part of the Startup City Alliance Europe also known as the SCALE network.

Porto’s Vice-Mayor, Filipe Araújo, believes that inter-country initiatives are a smart way forward for European countries to get ahead in the tech game. Araújo also serves as city council responsible for Environment and Innovation and as chairman board member of Porto Digital Association.

Adapting to the new normal

At the beginning of the pandemic in 2020, Amsterdam and Porto, together with the wider SCALE network, worked closely together to share and analyze best practices and policies around the coronavirus’s economic impact. Araújo notes that cities focused on tech communities, helping to digitize companies while adapting to the new normal.

Porto boosted the city’s ongoing efforts to make remote working more accessible to its own team. “This allowed us to adjust our activity in 48 hours, putting all our collaborators working from home, and keeping the support to citizens by phone and using the online channels,” Araújo says.

On a higher level, the city also studied how people were responding to the pandemic. “We interviewed and sent questionnaires to entrepreneurs to understand the impact, so we could tackle these challenges with our initiatives. We learned, for instance, that access to investment in earlier stages was declining in Europe,” he explains.

Considering a study by ScaleUp Porto it is fundamental to attract early-stage investment to foster the future of the ecosystem. As part of the SCALE network, it conducted analyses on the local tech entrepreneurial community to gather data, create better networks, and a better sense of regional and international benchmarks.

Hangout with VCs

In the wake of 2020’s numerous crises, it’s even more critical to examine market trends for 2021. Continuing and expanding vital networking and matchmaking is also important, and ScaleUp Porto and StartupAmsterdam have joined forces for their Hangout with VCs event.

It took place on January 20, 2021, and was an online matchmaking event where 30 startups from Porto and Amsterdam met with international investors. Hangout with VCs fostered the connection between these two ecosystems, where they can help each other grow by sharing challenges and opportunities across cities, aiming at developing a stronger pan-European entrepreneurship ecosystem.

VC investment has, indeed, declined by 12% since 2019, with some European cities faring worse than others. Amsterdam, for instance, experienced 21% growth in the first three quarters of 2020, while cities like Munich, Barcelona, and Berlin experienced more drastic challenges. With programs like StartupAmsterdam, Amsterdam has managed to bolster both public and private players in the Dutch tech scene. With over 2,700 startups and scaleups in the city since 2000, it’s become a powerful continental hub and economic driver, as well as Europe’s third-highest valued tech ecosystem.

Mitigating barriers

One of its most valuable initiatives is helping startup companies to scale, which can be a make-or-break success factor. Achieving scale in a European context seems straightforward, especially as SCALE helps to promote useful networking events, accelerators, and funding and mentorship programs across the continent. But there are also new challenges with so many different markets and audiences within reach.

In Araújo’s view, scaling in the European market can be a double-edged sword. “Whereas other ecosystems have natural scale, the European market is quite fragmented, lacking global competitiveness,” he explains. “The European ecosystem faces many challenges such as its vast cultural and lingual differences. However, by working together we have the potential to mitigate these barriers.”

Greater digitalization, pooled knowledge, and more interoperable platforms could be even more impactful to Europe as a whole. “EU policies that foster and fund innovation and push for new policies in each country are also an effective way of supporting a faster innovation development and delivery,” he says. “We can use, collect, provide and share data for better decision making, while respecting European values of privacy and inclusion.” ScaleUp Porto, for instance, runs a digital platform that offers insights into the city’s tech landscape, including data on funding rounds, research centers, startups, and an investment matching tool.

Fostering growth across Europe

Araújo believes that the right regulations will help to encourage better, more cohesive growth across borders, preserving citizens’ fundamental rights while still allowing companies to scale. A large part of that responsibility lies with both local and national governments to update and upgrade their processes, upskill their workers, and elevate local communities to the new digital reality. “Governments must work on improving their own digital skills, technology adoption, and procurement, so we are not an obstacle for innovation,” says Araújo.

“We are also responsible for working on education, making sure that companies will find the right talent for their teams,” he adds. “Companies cannot grow without people and skills.”

To that end, ScaleUp Porto is helping to cultivate homegrown talent and signal-boost growing startups and scale-ups. Thanks to its efforts to make the tech ecosystem more transparent, it’s created fertile ground for companies, investors, and stakeholders within the region and the continent. With 430 verified startups in the platform, and over 7,000 jobs created by startups according to the mentioned study, 2021 is looking bright — both for the city and its European partners.

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