2018 has been a record year for the European startup scene and many of the startup hubs in Europe have participated in the race to the top. Looking at the largest winners, we see Lisbon with an unprecedented increase of >2500% in investments raised compared to 2017, followed by Milan and Barcelona increasing by roughly 550-600%. All three cities have been also raising constantly in founder popularity since we started our survey in 2016. In fact Lisbon has climbed 17 ranks, Milan fought its way back into the top 10 and Barcelona has always shown strong popularity paired with a high potential for further funding. However, the correlations are not perfect: Brussels was not voted as a favorite place to startup by founders, and still increased funds raised by 450%. Stockholm dropped 6 ranks in founder opinion, but increased their funding by roughly 200%.
While the decision to relocate your startup is complex, access to funding is an important push factor for startup founders: 1 in 5 founders who moved, said it was due to lack of funding in their home city. So, if you were looking for a great funding environment, where would you have to go in 2018?
London leading but challengers are rising
The United Kingdom accounts for London leads the city ranking with 5bn € worth of deals in more than 650 rounds. It also has the most exits and one of the lowest investment-to-exit ratios (0.16), which means a lower number of investments lead to an exit. London is followed by Paris and Berlin which confirm their positions in the . and
Interestingly, in this ranking by investments, we see some challenger hubs like Tel Aviv, Stockholm and Hamburg overtake more popular hubs like Barcelona, Munich and Amsterdam. Tel Aviv is for example ranked 18th by founders, despite its excellent 4th position in the funding ranking. In 2017, the Israeli hub had even received 40% more investments than London attesting to its reputation as a powerhouse in terms of capital availability.
Furthermore, Hamburg and Helsinki, both not in the top 10 wishlist for founders, enter the list of most endowed locations in terms of funding. This mismatch between overall popularity and investors’ attention may indicate that other pull factors like access to talent, the startup culture and ecosystem, ease of doing business or value for money may be also important when startup owners evaluate a startup hub.
On the other hand, Lisbon experiences the biggest jump in number of investments received in 2018 and this is quite fascinating as it climbs +20 ranks with respect to media attention in 2016 and +3 ranks with respect to our survey in 2017. In the same vein, Munich and Barcelona, which experience notable increases in investor attention have been accompanied with consistent popularity with founders.
Italy’s top startup city, Milan, rated as Europe’s 25th startup hub in 2016 in 2018 is only second to Lisbon with a whopping +598% in amount of investments compared to 2017. Milan has consistently risen up the ranks in popularity with founders to enter the top 10 destinations for startups and the complementary attention from investors is worth underlining: highest investment-to-exit ratio and significantly more investment rounds.
While it is becoming clearer and clearer, that founders do not follow investment flows in their location decisions, we find that in some cases at least, we see proof that investment levels are adjusting to founder popularity after some years. At the Startup Heatmap Europe we are constantly monitoring this dynamic and help you understand where the European ecosystem is moving.
By Victor Umeh
Investments 2018 (€ bn)
Exits 2018 (€ bn)
Ranking 2018 by popularity
Δ ranking wrt 2017
* n. a. = not available.