Tech talent is the oil of the startup world

Tech talent is the oil of the startup world

Tech talent for startups is something like a good striker for a soccer team –hard to find, but necessary to survive. When choosing a startup location, proximity to available technical talent is one of the most important considerations for founders when it comes to evaluating the location for their startup. In the recent Startup Heatmap Europe survey 2018, nearly 25% of founders stated “talent availability” as the most important factor for their location choice, just after overall evaluations of a city’s startup ecosystem and culture. Talent availability was followed by funding availability, industry connections, value for money and business regulation.

When founders were asked to rate the importance of tech talent in evaluating a startup hub from 1-5, only 2% assign less than 3 points. A majority of founders (86.42%) rate it very (4) or extremely (5) important. No other factor reaches such a high level. This finding follows founder evaluations in our previous reports.  In 2017 , 77% of founders rated talent availability as the most important factor, out of all available options.

When examining push factors, those which caused founders to leave their home locations—talent availability is infrequently mentioned. Only 11% of founders that moved to start their companies say the lack of talent available locally was the reason to leave. This rates among the lowest “push factors”, alongside poor value for money. In comparison, lack of funding availability (18%) and the overall startup ecosystem and culture (23%) are the most frequently cited motivating factors to leave.

How to attract Tech Talent?

Now turning to the preferences of tech talent themselves, who we also surveyed for the first time in the Startup Heatmap Europe 2018: Quality of life – like probably for every employee – is the leading factor for location choice with 52% rating it very or extremely important. Interestingly, only 20% consider the rate of success of local startups to be decisive. In comparison, a higher percentage, 29% evaluate the resources of the local high-tech community as integral factors.

When technical professionals are asked their reasons for joining a startup, most frequently cite a learning opportunity (69%) and a personal challenge (61%). A further 37% are drawn in by the startup lifestyle, which scores surprisingly high when compared to the financial payoff, or the possibility of equity options (15%).

Based on sample of 100 self-identified tech talents from the 2018 survey.
This data is available for download

But how mobile is tech talent?

The mobility of technical talent across Europe is difficult to measure. However, one study done by the Center for European Policy Studies, analysed >295,000 Linkedin profiles of IT professionals in Europe, which showed 3 out of 100 IT professionals in Europe change country every year. This is 10x more than the average EU citizen.

In the 2018 Startup Heatmap Survey, we were able to ask >176 startup team members and those interested in joining a startup about their origins and current locations. We found that 14% of them lived outside of their home countries. While this is a decisively lower percentage of movers as compared to founders, who left their country at a rate of 28%, it still shows that European tech talent is a transnational population.

The top 10 startup hubs for Tech Talent

 When we asked these 176 participants their top tech hubs, we found some interesting results, with 39% of our sample identifying Berlin as the most favourite location. However, it is important to mention that these findings are not representative for regions or industries, but simply as reflected from the 176 participants of our survey.

CityTotal Count% of tech talent

Many cities in Europe are fighting hard for technical talent. Companies across the continent are in search for experienced employees with scarce and highly in demand skills, usually using a higher paycheck to motivate these individuals to join their team.  However, money is not all for this generation: many are looking for meaning and challenge in their work. Frequently, we find startups may be better places to serve these needs better then big corporations, where one may find themselves as a cog in the gearbox. 

By Jonas Muster, a master student in business administration from Germany with a focus on innovation and entrepreneurship. After a term abroad in Canada, he is currently writing his final thesis on the different options for cooperation between established companies and startups. 

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