In Europe, the development model imposed by startup centers is being reinvented
The following contribution is from John Thornhill, who is the innovation editor of the Financial Times and writes a weekly column on the impact of technology. He is also the founder and editorial director of Sifted, the FT-backed site for European startups, and founder of FT Forums, which hosts monthly meetups for senior executives.
John was previously deputy editor and news editor at the Financial Times in London. He has also been Europe editor, Paris bureau chief, Asia editor, Moscow correspondent and columnist for Lex.
The main startup centers reinvent the model for the needs of the European technology sector, with the United Kingdom leading the FT/Statista/Sifted ranking with the most hubs, followed by Germany and Spain
If we mention startup hubs, most people think of Silicon Valley. Think of startup hubs and you probably think of Y Combinator: the historic American accelerator, whose motto is «make something people want,» has attracted budding entrepreneurs from around the world who, like Apple’s Steve Jobs, They dream of putting “a dent in the universe.”
Since 2005, Y Combinator has nurtured and funded 4,000 startups with a combined valuation of $600 billion, including Airbnb, Dropbox, and Stripe.
All regions of the world have looked with envy at this model of business dynamism and have tried to copy the West Coast playbook. No one has achieved it in the same way.
But what has emerged, at least in Europe, is a much more diffuse and diverse technology ecosystem, supported by a dispersed network of incubators and accelerators across the region.
By 2021, some 98 cities in 28 countries in Europe had produced a unicorn: a startup with a valuation of at least $1 billion.
To map these emerging startup hubs, the Financial Times – with its research partner, Statista, and the FT’s sister publication, Sifted – has compiled a ranking of Europe’s leading incubators and accelerators.
The inaugural list, covering 125 centers in 21 countries, is published today. Centers included range from offshoots of established universities to fully commercial corporate incubators and accelerators.
London in the lead
Not surprisingly, perhaps, the UK (with London being Europe’s venture capital hub) is home to the largest number of listed companies (24), followed by Germany (16) and Spain (15). But the research also identifies a growing number of promising centers in central and eastern Europe, especially in the Czech Republic, Poland and Romania.
The three highest ranked centers are UnternehmerTUM in Germany, Hexa in France/Belgium and SETsquared in the UK.
Each center was rated by its own alumni, 2,600 in total
In six categories:
– tutorships.
– training development.
– infrastructure; legal assistance.
– business development.
– networks.
– financing.
Independent experts, including angel investors, venture capitalists, entrepreneurs and academics, also added their assessments. And additional scores were awarded, based on the most successful startups that emerged from each hub.
The UnternehmerTUM, part of the Technical University of Munich, scored particularly highly among alumni in terms of networking. “My entire journey and transformation to becoming an entrepreneur was fostered by UTUM,” one wrote. «UTUM is a machine for making unicorns.»
TUM, which calls itself Business University, boasts that its students have created 11 unicorns, known locally as Munichorns, including software company Celonis, flying car startup Lilium and AI-powered video content generator Synthesia.
Many of Europe’s most promising start-up centers are linked to universities
But academic founders have often criticized universities for overly protecting intellectual property and demanding too high an equity stake in any university spinout, suppressing value for other investors.
European startups have also suffered from a lack of growth capital to enable promising companies to achieve global scale.
Venture capital investment. Funding for European technology companies plummets by almost half
Nathan Benaich, general partner at venture capital group Air Street Capital, says European countries need to develop larger funds of growth capital to build promising businesses and encourage enlightened universities to be «long-term greedy, not short-term greedy.» » when it comes to spin-outs.
“It is fair to say that in Europe, until today, we have one or the other, but rarely both,” says Benaich.
The second-place center, Hexa
It describes itself as a startup studio that creates several companies in parallel and as a team. To do this, Hexa takes a 30 percent equity stake in the startups, an extremely high figure by most centers’ standards, although it covers all of the companies’ costs for the first year.
Hexa focuses, in particular, on the creation of enterprise software, fintech and web 3 companies
He has launched 40 companies with a combined valuation of more than $4.5 billion. “Hexa has provided us with valuable product advice in the SaaS [software as a service] industry, as well as a strong network of business angels for fundraising,” commented one participant.
The third-place centre, SETsquared, is an unusual collaborative business incubator run by six British research universities: Bath, Bristol, Cardiff, Exeter, Southampton and Surrey. Since its launch in 2002, SETsquared has supported over 5,000 entrepreneurs, enabling them to raise £4.4 billion in funding.
One participant cited the benefit of multiple meetings with investors and industry partners, which was critical to the success of the business. “The team is truly committed and supportive,” the alumnus wrote.
These three very different approaches to creating startups highlight the diversity of Europe’s tech ecosystem
«There is probably nothing equivalent to Y Combinator in Europe,» says Benaich. “But Y Combinator was founded in a different time. They provided a product that was unique at the time.
In other words, Europe no longer needs to try to emulate Y Combinator. It is creating its own dynamic startup hub model
The new technological frontier: exploring the technology centers of Eastern Europe
The following contribution is from Alia Shkurdoda who is a market analyst at Grid Dynamics focusing on the CEE technology ecosystem, omnichannel commerce and smart manufacturing.
As talent shortages strain resources in traditional tech strongholds like the United States and Western Europe, many companies are looking to outsource at least some of their software development activities.
Over the years, Eastern Europe has positioned itself as a leading global hub for software engineering and technology talent.
Whether outsourcing product development projects, forming partnerships or accelerating innovation through new startups, the region brings exceptional value and technical knowledge.
Eastern Europe’s technology hubs combine motivated professionals, business-friendly conditions and a proven track record of supporting leading multinational companies.
For any organization seeking growth and digital transformation, working with IT professionals from countries such as Poland, Ukraine, Hungary, Romania and the Baltic states opens new horizons full of skills and potential.
In this article, we explore the largest offshore centers in Eastern Europe and the unique advantages they offer for global companies
We examine which countries offer the most developed and mature technology ecosystems for investment and collaboration, as well as strong engineering talent and opportunities to leverage expertise in cutting-edge technologies.
Eastern European technology hubs: benefits for global companies
From agile startups to multinational corporations, forward-thinking companies around the world are turning to Eastern Europe’s burgeoning technology hubs for innovation and strategic growth.
Despite being overlooked in the past, the cities of Central and Eastern Europe (CEE) have now become rich sources of world-class IT talent, experience and potential for long-term success.
For companies seeking technological capabilities to gain an advantage, collaborating with the region’s thriving innovation ecosystems offers new frontiers for strategic advancement. The benefits of partnering with Eastern European technology companies include:
Talent wealth
The Eastern European region is home to over a million developers. This figure stands in stark contrast to the severe talent shortage, which is acutely felt in traditional technology bastions such as the United States and Western Europe.
In the US alone, there are more than 900,000 unfilled software development jobs, highlighting the persistent trend of demand consistently outstripping available capacity. Meanwhile, Eastern Europe’s tech hubs have cultivated an abundant supply of skilled developers helping international companies close the skills gap.
A black book with the title Software Development in CEE
Software development in Central and Eastern Europe: Closing the technology gap for Western Europe and the US
Why Central and Eastern European countries are a sweet spot for global companies looking for cutting-edge technology at a reasonable price.
Several factors have contributed to CEE’s emergence as an IT benchmark with dense networks of talent ready to take on global projects:
Eastern European countries have a long tradition of excellence in engineering, mathematics and science education. This has resulted in a workforce with strong technical capabilities.
Many multinational companies have opened offices and development centers in Eastern Europe, attracted by the highly skilled workforce and lower development costs. This has created booming IT job markets in the region’s major technology hubs, including Warsaw, Bucharest, Wroclaw, Tallinn and kyiv.
Graduates of Eastern European universities often choose to stay locally rather than emigrate, as jobs and salaries in the technology sector have increased.
Engineering intelligence
Talented software developers are the greatest asset of Eastern European IT centers. Local technology professionals are recognized for their strong technical capabilities and engineering skills.
Eastern European programmers are valued for their expertise in complex languages such as C++ and JavaScript, as well as specific skills such as machine learning and data science.
The region’s engineers are also trained in the latest development stacks and frameworks, such as Ember, Svelte, Laravel, and Spring. With this combination of educational rigor and practical skills, Eastern European developers are globally recognized for being extremely capable of solving complex programming challenges.
Cost-quality balance
Global demand for skilled software engineers continues to rise, resulting in high labor costs, especially for in-demand specializations.
Outsourcing software development helps businesses reduce their expenses, leading to significant cost optimization. While exact savings vary, offshoring to technology hubs in Europe can reduce project expenses by 40% to 70%.
CEE provides an optimal balance between quality and profitability. The region has a strong pool of technology talent available at competitive hourly rates.
25−65.
While this is higher than the salary range in low-cost countries such as the Philippines, Eastern European engineers bring proven experience, strong English skills, and cultural compatibility. The combination of these factors is well worth the reasonable premium.
Scalability
Eastern Europe’s deep talent pool allows technology companies to quickly scale their engineering teams on demand. With easy access to a large pool of experienced developers, companies can expand the capacity of their projects without sacrificing quality.
Outsourcing providers typically have large databases of pre-screened candidates that can be used to build large teams in a matter of weeks. For example, companies can go from 5 developers to 30+ in less than a month if needed for new product launches or specific stages of development activities.
Thanks to government support of the STEM field and the region’s strong technical universities, CEE has a steady pipeline of skilled graduates.
The growing number of technology professionals allows technology companies to quickly meet demand spikes for particular skills or technologies, ensuring fast and efficient project execution while maintaining high quality standards.
Bussines advice
Over the years, Eastern European vendors have built up experience in all major business sectors, developing complex end-to-end solutions for e-commerce, fintech, healthcare and manufacturing. While a decade ago developers in CEE countries simply complemented internal teams, today they become world-class experts who play a vital role in driving business results.
Eastern European suppliers offer invaluable on-the-ground support to address regional challenges, regulations and opportunities.
They know how to optimize software design for their customers and target markets. With world-class technical skills and unparalleled business advisory capabilities, Eastern Europe’s digital leaders are critical partners in achieving success both globally and locally.
Software development market statistics of technological countries: Poland, Ukraine, Romania, Czech Republic, Hungary, Bulgaria, Belarus and Croatia.
Best IT Outsourcing Countries in Eastern Europe
CEE often appears in several rankings of the best software engineers. For example, according to HackerRank, Poland, Hungary, the Czech Republic, Ukraine and Romania secured their place among the top 20 countries in the world in terms of technological skills, surpassing traditional coding giants: India and the United States.
The latest SkillValue ranking placed Moldova, Ukraine, Romania and Poland among the 10 countries with the best developers in the world. It also names Chisinau, kyiv, Bucharest and Iasi as the best cities for technology in Europe.
These Eastern European hotspots have become magnets for technology companies seeking gateways to ecosystems of innovation and expertise in cutting-edge technologies, such as Big Data, cloud computing, robotics and generative artificial intelligence.
In addition to a solid technological background, Eastern European specialists also demonstrate remarkable learning agility
Coursera’s new Global Skills Report shows that CEE users have strong business skills and students in half of countries achieve competitive or cutting-edge proficiency scores, including Slovakia, Ukraine, Poland, and the Czech Republic.
Eastern European talent also shows one of the best results globally in the technology and data science domains. In technology, students with high scores are found
