• Eastern European cities rank outside the top 15 in Nesta and European Digital Forum’s second startup city ranking
• London remains best for startups and scale-ups with Stockholm in close second
• Tool helps policymakers map improvements to attract digital businesses

Despite investing heavily in their digital infrastructure, Eastern European cities still lag behind their Western counterparts in the European Digital City Index - a ranking of the best cities in Europe for startups and scale-ups, launched today.1

The second ranking of 60 cities from UK innovation foundation Nesta and the European Digital Forum (EDF) accounted for 40 separate measures that span ten core themes, including access to finance, entrepreneurial culture and talent supply, with varying weightings for startup and scaleup businesses. Nesta has also published an accompanying policy booklet which details what policymakers should do to encourage digital startups and scale-ups according to the themes measured in the ranking.

Unveiled at the Startup Nations Summit in Cork, the Index reveals that Eastern European cities dominate the top ten for digital infrastructure but score much lower overall in the ranking on account of their lack of knowledge spillovers, poor entrepreneurial culture, small local market size and Western Europe’s better access to capital.

The continental divide means that Eastern Europe ranks outside of the top 15, with Tallinn in 18th position for startups ahead of Budapest (33) and Prague (37). This is in spite of a significant number of digital businesses being based there such as mobile TV projector app Flipps (Sofia), Skype (Tallinn) and cloud-based presentation platform Prezi.com (Budapest).

London again ranked number one for both startups and scale-ups, with a narrow lead over Stockholm, owing to its excellent access to capital, vibrant entrepreneurial culture and skilled workforce.

Visitors to www.digitalcityindex.eu can search the Index and attribute more or less weighting to the factors they consider important to their business needs to establish the best city for them.

Top 10 European Cities for Digital Startups and Scale-ups

Ranking

Startups

Scale-ups

1

London

London

2

Stockholm

Stockholm

3

Amsterdam

Paris

4

Helsinki

Helsinki

5

Paris

Amsterdam

6

Berlin

Copenhagen

7

Copenhagen

Berlin

8

Dublin

Munich

9

Barcelona

Dublin

10

Vienna

Vienna

Chris Haley, head of startup and new technology research at Nesta, comments: "While European cities must keep pace with the likes of China and the US and continue to invest in their digital infrastructure, digital entrepreneurs need much more. It’s also important that cities offer skilled talent, opportunities for experimentation and a positive attitude towards entrepreneurship. As the UK embarks on a ‘hard Brexit’ it remains to be seen how the UK will retain its business allure.”

Jonathan Ortmans, president of the Global Entrepreneurship Network and chair of the Startup Nations Summit, comments: "Digital advances continue to disrupt traditional industries across all sectors throughout Europe – and on all continents. This is transforming our economies and making vast improvements in our lives but it will require leaders from all parts of the entrepreneurial ecosystem – entrepreneurs, investors, policymakers, researchers and more – to be nimble and adapt in order to seize the opportunities in front of them."

Nesta and the EDF published the first European Digital City Index in 2015 when it included 35 capital cities and known innovation hubs. In addition to featuring 25 new cities, the measures in the Index have been updated in 2016 to include the availability of business angels funding and crowdfunding, entrepreneurial education and training, and a culture and recreation popularity scores. Nesta also sourced bespoke data sets from Crowdsurfer, Ookla, Statista and FollowtheHashtag.

The 2016 European Digital City Index is published after the European Union launched a venture capital fund of 400 million euros to help regional startups grow and address a capital shortage in Europe for such firms compared with the United States.

The Startup Nations Summit is a gathering of policymakers, advisors and entrepreneurship experts from more than 75 countries. The annual event will this year be held in Cork, Ireland on November 18-20.

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Footnotes:

1. Broadband Coverage in Europe 2014: Mapping progress towards the coverage objectives of the Digital Agenda

About Nesta: (www.nesta.org.uk) is the UK's innovation foundation. We help people and organisations bring great ideas to life. We do this by providing investments and grants and mobilising research, networks and skills. We are an independent charity and our work is enabled by an endowment from the National Lottery. Nesta is a registered charity in England and Wales 1144091 and Scotland SC042833

About the European Digital Forum: The European Digital (www.europeandigitalforum.eu)  is a think tank dedicated to empowering tech entrepreneurs and growing Europe’s digital economy. It is led by the Lisbon Council, Open Evidence and Nesta, in collaboration with the European Commission’s Startup Europe initiative. It was inspired by the Leaders Club, an independent group of founders in the field of tech entrepreneurship, and first called for in the Startup Manifesto for entrepreneurial excellence. The European Digital Forum has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 645099.

For all media enquiries please contact Laura Scruby in Nesta’s press office: [email protected] / 0207 438 2697