All About Cities
Introducing CITIE: The Nordic Analysis, Index Ventures co-founder and partner Neil Rimer argues that cities, not countries, are best-placed to spur innovation.
Since founding Index Ventures almost twenty years ago, I have been asked by European policymakers what their countries can do to increase the amount of entrepreneurship and enterprise-creation within their borders. What I have come to realize over time is that, while I wholeheartedly support their objective, they're asking the wrong question. It’s not really up to countries and national governments. Entrepreneurs thrive at city-level -- often in neighbourhood clusters within cities -- and it’s these, rather than countries, that are the relevant entities when it comes to optimizing for innovation and startup activity.
Startups are overwhelmingly driven by young people -- often in their 20s and early 30s. People of that age want to live in an exciting, stimulating city that reflects their own values and aspirations, and inspires them to pursue their dreams. They want a place that is always changing, and constantly offers opportunities to try new things, to learn, to be entertained and delighted.
People in their 20s and early 30s do not want staid. They do not want traditional, or quiet, or pristine or predictable. Live music, radical architecture, bold public works, new restaurants and clubs - these are all part of what make a great city great, assuming the fundamentals are also in place. Well-connected airports, modern public transportation networks, cycling infrastructure, multiple parks and public spaces, ubiquitous Wi-Fi and reliable broadband, not to mention the corner shops, grocery stores and delivery services that allow basic shopping needs to be fulfilled 24/7 – great cities have all of these, and more.
Yet while such cultural and social elements exert a powerful pull-factor for entrepreneurs, they do not explain which cities excel at innovation – and, crucially, why. Traditionally, league tables purporting to show the cities that are the best places in which to locate a startup have paid far too much attention to ‘quality of life’. Indeed, for too long, civic leaders and consultants have been able to hide behind their world-class museums, beautiful lakes or fine restaurants. But the problem with these attributes is that they are impossible to measure in an objective, meaningful way.
Thanks to research led by Nesta, we now have far more robust, durable means for gauging a city’s performance at creating the best conditions for innovation and startups. Billing itself as a resource to help city policymakers “develop initiatives that catalyse innovation and entrepreneurship”, CITIE tested 40 leading cities from around the world against a series of metrics which addressed three key areas: openness to new ideas and businesses; how a city optimizes its infrastructure for high-growth new businesses; and how it weaves innovation into its own activities.
No silver bullet
The reason I find this so exciting is that over the past ten years, Index has paid an inordinate amount of attention to what has been going on in cities like London, Berlin, Paris, Helsinki, Stockholm, Copenhagen, Amsterdam, Barcelona and Tel-Aviv. We have focused on these cities, in particular, because we have witnessed that the pace, scale and level of ambition of the startups we’ve seen in them, was greater than what we’d observed elsewhere. But what we didn’t know was why.
As CITIE notes, while there are a great range of approaches to encouraging entrepreneurship, there is no single silver bullet. However, there are principles that the best-performing city administrations share. Namely, they ensure very different policy areas are joined up, while championing innovation across departments. They are “open by default”. And they operate more like startups than local government. In other words, they’re open to fresh ideas, and they prototype, iterate and design around users.
CITIE’s latest research, which I’m delighted to introduce here, focuses on the great Nordic technology hubs of Stockholm, Helsinki, Copenhagen and Oslo. It explores how these cities perform against one another, as well as against other European and global cities too. While Helsinki is the only one of the four to be rated a Tier 1 or ‘Front Runner’ city, alongside New York City and London (among others), each emerges with unique characteristics, whether it’s the capacity and scale of Copenhagen’s ecosystem, or Oslo’s advocacy efforts around the world or Stockholm’s impressive investment in next generation talent.
Two decades have passed since we started Index, and our founding thesis -- that great entrepreneurs can emerge anywhere, and that it’s our job to go to them and not wait for them to come to us -- still holds true. Today it’s also clear that startup activity in leading hubs has become self-sustaining and such cities are now encouraging others to follow their lead. Yet while our own experience confirms that increasing numbers of policymakers recognize the importance of innovation and entrepreneurship, they still need advice, such as that provided by CITIE’s framework, not only on how to create the conditions for startups to thrive, but also how then to step out of their way.