Investment into Europe continues to drive the region forward, creating vibrant startup hubs in Europe for foreign entrepreneurs and investors. Collective initiatives within the EU as well as the continued growth of industries and financial services throughout European cities have made the startup ecosystems some of the most beneficial for emerging businesses.
The Aspen Trust Group reviews the best startup hubs in Europe and the innovative policies strengthening the business benefits for new companies in the region.
A New European Initiative for Healthy Startup Environments
The startup scenes of many European cities offer plenty of networking opportunities and attractive policies to help startups achieve venture establishment and expansion globally.
To further encourage foreign startups to consider Europe for their new business and to aid in their successful foundation, the EU has launched a new inter-nation initiative named the EU Startup Nations Standard.
The goal behind the initiative is to push national governments to quickly adopt pro-startup policies regarding traditionally limiting startup stock and visa options. Widely accepted, the EU Startup Nations Standard ensures that European cities will remain competitive among startup ecosystems and attract leading startup ventures.
Already the shift towards friendly policies has received positive reviews across industries as a way to maintain the rise of startup hubs in Europe and pave the way for stronger economies and societies post-Covid-19.
The Four Top European Locations for Startups
Despite the pandemic, Europe saw an increase in total venture investment in 2020, with European technology start ups reaching $41 billion USD.
Some of the best startup hubs in Europe are established financial business centers as well. Much of this has to do with the direct access European startups have to a market of 500 million people with a high GDP per head.
Further, Europe has the highest number of developers than any other large market with 5.7 million professionals contributing to business development in the region.
These are the best startup hubs in Europe with established financial business centers, access to strategic markets, and a pool of talent for technology and business activity.
#4 Startups in Switzerland
Often ranking well for business climate and labor force quality, Switzerland offers startups favorable market conditions and fewer regulatory policies to achieve venture success quickly. Another additional benefit is access to Switzerland’s highly educated professionals who have received advanced vocational training or tertiary education. However, high costs of living and expensive salaries make Switzerland one of the most expensive for doing business.
#3 Startups in United Kingdom
Venture capital access and a long history as a global financial center make the United Kingdom one of the best startup hubs in Europe. The country has many startup support opportunities, contributing to the ease of doing business. The lower corporate tax rate of 19% also helps startups weather the financial burdens in the first year of business establishment. The largest drawback is the uncertainty around its withdrawal from the EU and the lack of concrete policies moving forward to ensure cross-border business activity remains the same or improves.
#2 Startups in Germany
With a healthy economy and attractive business climate comparable to Switzerland, Germany is among the best startup hubs in Europe. Fewer government regulations relieve the burden of establishing a new venture. Moreover, Germany has a lower corporate tax rate of 15.825% than the United Kingdom but offers more room for the development of small tech startups to compete without lacking access to a professional workforce.
#1 Startups in Cyprus
At the top of the list of top startup hubs in Europe is Cyprus. The location has become such an attractive tech startup jurisdiction that it outnumbered other countries for the percentage of the population in business startups in 2019: Cyprus (12.2%), Switzerland (9.8%), the United Kingdom (9.3%), and Germany (7.6%). The corporate tax rate of 12.5% is the lowest among the top European startup hubs and several destinations in Cyprus are developing into highly advanced tech cities across many industries. Public and private Investment into going digital is attributed to the emergence of Cyprus as one of the ideal startup hubs in Europe.
What Makes Cyprus First for Startup Hubs in Europe
Cyprus is emerging on the global scene as one of the best new startup hubs in Europe as new national strategies aim to boost the technological sphere of the country. Among the incentives for business creation in Cyprus, IT startups are finding these changes secure and efficient contributions to venture success.
Several factors have developed Cyprus as an international business center as well as one of the prime tech startup hubs in Europe.
A Growing Community
There are many networks found throughout the technology and business sectors of Cyprus, both domestically and internationally. However, one of the newest, the TechIsland Organisation, is pushing the boundaries of what Cyprus has to offer as an international startup destination. More than 130 tech companies have united to promote the island as a technological business jurisdiction.
As the Cyprus Research, Innovation & Digital Policy maintains constant new introductions at the governmental level for tech and business startup initiatives, TechIsland members are generating their own vision of a new era for the Cyprus market. Over 8,000 individuals that make up the employees of member tech companies focus on how to make the tech industry of Cyprus the leading force behind sustainable GDP growth and an overall expansion of the job market by 2030.
Several initiatives include:
- Investment infrastructure
- Improved survival rates
- International competitiveness and recognition
- New digital models for other industries
- Expanded critical infrastructure
- Adoption of tech skills and education
- Finetuning legal framework
The TechIsland Organisation along with the interest in foreign national investment projects and governmental supporting policies has opened the door for a unique and thriving marketplace environment for all types of companies. The greater access to modern technological networks gives businesses an advantage over others in the region and demonstrates how Cyprus is leading among startup hubs in Europe.
Favorable Business and Tax Environment
A key component of startup hubs in Europe is the ability to make’ doing business’ profitable and easy for companies of any type. Cyprus has long established itself as a business-friendly economy with fast, straightforward bureaucratic processes for business creation and management. It is also largely competitive in maximizing the tax benefits of companies and individuals while reducing the financial burdens faced most often when conducting cross-border business activities.
Fostering Investments and Startups
Already rapidly growing into a financial hub for foreign investments across many sectors and industries, Cyprus is working to draft even more appropriate legislation and policies through the initiatives of Invest Cyprus to continue its role as a European startup hub. The commitment to building a holistic business environment, especially for technology startups, and making establishment or relocation internationally competitive has been demonstrated in the wide range of growth seen in all areas of the country’s economy.
The initiatives are not just geared towards enticing leading startup companies to choose Cyprus, but also focused on developing the lifestyle aspects that make living and working there attractive for foreign professionals and their families.
A Myriad of Financial Services
Another factor to the success of Cyprus among startup hubs in Europe is the vast collection of professional financial services that can be found in the country. As one of the major sectors of the economy, financial services encompass a diverse range of expertise and capabilities to assist with the business development and wealth management of investors and entrepreneurs. These services, offered by leading professionals such as The Aspen Trust Group, help businesses thrive at all stages of their development and offer everything from relocation assistance to cross-border transaction reviews.
The financial service and technology industries are not the only areas of growth within the business market of Cyprus.
A shortlist of thriving new industries includes the:
- Energy Sector – New governmental initiatives and private businesses are turning the jurisdiction into a rising energy hub. Projects range from natural gas, hydrocarbon, and solar capabilities of the island with a focus on greener energy business models.
- Real Estate Sector – Across the board, construction and redevelopment projects are popping up all around Cyprus to meet the growing demand for business office space, residential infrastructure, and modern tourist hotspots. More than €8 billion have come in from foreign investment sources in addition to both public and private funding to transform the landscape of cities and destinations throughout Cyprus.
- Film Production Sector- Since introducing favorable new film production incentives, Cyprus has set the stage for international film production teams to use the location for projects and grow the sector. With tax credits and allowances as well as scenic locales, Cyprus is an ideal place for film projects at a fraction of the cost of other European destinations.
The market of Cyprus offers technology-based companies and digital entrepreneurs a chance to not only start their business and reach millions of European consumers but also to take advantage of the technological needs of companies, employees, and consumers across a wide range of sectors from one location. Over 7,000 IT professionals with third-country passports have found a home in Cyprus and emerging advancements in the larger scope of Cyprus’s business market contribute to its success as a startup hub in Europe.
Internationally Recognized Talent Pool
While tech startups usually begin operations with a small workforce, success in business development leads to the need to rapidly grow the number of employees and investors. Cyprus not only has a highly educated workforce but also international professionals that understand unique global markets. Cyprus is located in the center of some of the world’s largest markets, connecting Europe, Asia, Africa, and the Middle East. Venture establishment and relocation to Cyprus guarantee a talent pool that can help businesses reach into new markets and develop in connection directly with ideal global markets.
In the EU, Cyprus has one of the youngest and most educated workforces in relation to its population. According to Invest Cyprus, 58% of individuals between the ages of 30 and 34 have tertiary education qualifications. The rate for individuals aged 25 to 74 is 41%, much higher than the average EU percentage of 30%. Further, in 2020, IMD World Talent ranked Cyprus 17th for access to talent that is both highly educated and multilingual. In terms of becoming one of the top startup hubs in Europe, approximately 53% of the active population works within sectors related to science and technology.
Foreigner-Friendly Business Model
Beyond the business-friendly advantages of Cyprus as a startup hub in Europe, the jurisdiction has made it welcoming for foreigners interested in relocating to a rewarding new location. From attractive tax incentives to IP protections, Cyprus has also introduced new headquartering initiatives for third-country nationals, making it easier than ever to establish a company in the EU. As a part of the initiative, businesses related to high-end technology and innovation can employ foreign nationals, providing employment permits for the foreign nationals along with residential permits for family members. Under the Business Facilitation Unit, spouses of foreign nationals may be granted employment permits as well.
Conclusion: Startup hubs in Europe
Startup hubs in Europe not only provide talent and wealth growth opportunities for business owners, entrepreneurs, and investors but also modern solutions for startups to break through the global challenges posed when starting a business.
One of the leading startup hubs in Europe is Cyprus with an attractive tax regime, efficient bureaucratic processes, and an instrumental financial services sector for startup success. Technology startups can especially take advantage of the pro-business environment of Cyprus and join an inter-industry network of professional businesses to weather the difficulties of beginning their business journeys.
The Aspen Trust Group helps new business and investment ventures find the most ideal startup hubs in Europe specific to their business vision and then implement key aspects, such as business establishment, wealth growth strategies, and international expansion solutions.
Based in Cyprus, our professionals have expert experience across Europe and other major global jurisdictions as well as the resources to protect your business ideas under the Cyprus IP Box Regime. Consult with our team and get started turning your new venture into a lasting legacy.