How to Build a Global Startup Hub 101 (1/2)| European Startup Pulse
Executive Summary
Learn the secrets of how to create an effective startup ecosystem with Thomas’ insights from DEEP Ecosystems. Discover what made Odense, Denmark such a successful start-up hub, and find out more in our blog post. This interview is part one of a series of two videos, where we discuss Munich in part two. There is much more to learn in the presentation we link to in our blog.
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Many of the large startup ecosystems today started out small, they were build bottom-up.
Thomas Kösters, MD DEEP Ecosystems
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Thomas Kösters, MD DEEP Ecosystems
About the Pulse of the European Startup Ecosystem
The European startup scene is changing fast. There are new players, old ones fading away, and even more to come in their place- all vying for a piece of this growing pie! To avoid getting left behind, you need regular updates on what’s going on so that our entrepreneurs can stay one step ahead when building or investing in companies here. That’s why we started the “Pulse of the European Startup Ecosystem” which will provide you with quarterly podcasts chronicling different aspects related to startup activity across European Hubs, supported by the data from the specialized analytics company DEEP Ecosystems.
Ecosystems start small. We are talking about a dozen people at the start.
Thomas Kösters, MD DEEP Ecosystems
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The Video Interview is set to go live on Thursday, April 6th, 2023
Just inviting people on a weekly basis to the same place does not make it a community.
Thomas Kösters, MD DEEP Ecosystems
The Audio Interview
You can subscribe to our podcasts here.
The Boulder Thesis
One of the starting points of DEEP Ecosystems is The Boulder Thesis. It was poropesed by Brad Feld (https://en.wikipedia.org/wiki/Brad_Feld). He formulated it as a basis to explain the success of the local Boulder, CO startup community.
- Entrepreneurs must lead the startup community
- The leaders must have long-term commitment
- The startup community must include of anyone who wants to participate in it
- The startup community must have continual activities that engage in the entire entrepreneurial stack
Example Odense, Denmark
Odense is with around 200.000 people only the 4th largest city in Denmark, but still managed to become a hub for Robotics companies and raised more than 860 mn € since 2015. It is world-class in robotics, raising 2020 alone 50 mn € for companies in this cluster. Companies located there include Universal Robots, Cabinplant, senmatic, MiR, ODICO, Shape Robotics, purple robotics, SCAPE, and many more. It all started out with Universal Robots founded in 2005 and exited in 2015. The three founders decided to invest in robotics startups locally. This cluster is a public-private partnership. Over time they had seven exits and three IPOs, very impressive for such a small town. They currently have 292 companies in robotics or related to it with 3,74 bn € annual revenues.
The Full Presentation
Find the full presentation (you have seen in our YouTube Video) here:
Tune in to our Internet Radio Station here:
Further Readings / Additional Resources
- Interview with UnternehmerTUM (Munich) https://medium.com/startuprad-io/unternehmertum-helps-entrepreneurs-to-start-world-class-companies-gsa22-beabccfc3ebc
- Your most important guide on VC and PE investments in Germany: https://medium.com/startuprad-io/the-only-venture-capital-data-for-germany-you-need-to-know-24aa5ac1e919
- Brad Feld’s blog https://feld.com/
- Odense Denmark: https://en.wikipedia.org/wiki/Odense
Feedback
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The Interviewer
This interview was conducted by Jörn “Joe” Menninger, startup scout, founder, and host of Startuprad.io. Reach out to him:
Keep Up to Date
Here is our publication calendar: https://calendar.google.com/calendar/embed?src=012i27ak525qi3smgjl8v9tbio%40group.calendar.google.com&ctz=Europe%2FBerlin
All Links and Show Notes
Here is our blog post:
Topics Discussed in this Interview
In this interview, we are talking about
#Innovation #startup #startups #startupradio #entrepreneurship #entrepreneur #business #motivation #success #entrepreneurship #mindset #goals #entrepreneurlife #lifestyle #businessowner #believe #positivevibes #branding #innovation #techstartups #germany #startupinvesting #startupnews #startupcompany
Automated Transcript
[0:00] Music.
[0:16] And Live Events.
We are 35 minutes later than we originally want to start but therefore we have a fresh presentation hello and welcome everybody to another episode of the European startup pulse together again with Thomas hey how you doing.
[0:36] Hi Joe I’m doing fine how are you doing.
[0:39] I’m doing great thank you and we may tell our audience that we had a lot of fun preparing all of that admittedly we want to start like almost 40 minutes ago then you have been stuck in a workshop then we had to adjust the presentation but now we are going full energy because today we are talking about what a healthy start up ecosystem startup hop speaking about the size of a city of large city, is good examples and how one can maybe recreate all of that right.
[1:17] Yes that’s super exciting that’s what I do for a living at Deep ecosystems we work with hops all around the world to help them to create healthy ecosystems now because healthy is for us the most important it’s more important than having big unicorns and having the highest amount of venture capital now it’s important that ecosystems are healthy and that it produce Innovation for Society for improving the environment fighting climate change and societal problems so I think that’s equally important than just creating big startups so we’re really looking for regional ecosystems that are healthy and can create innovation in the local space as well not only.
Not only and that’s a the global space in Silicon Valley.
[2:09] That is pretty cool and everybody who didn’t get it yet you can hide one can hire you guys I would assume usually you are hired by a public body meaning the city the state or the federal government.
Countries.
Maybe not that’s the beauty we actually work also with entrepreneurs because we have an accelerator for ecosystems so if you are an entrepreneur and you like to change.
The region you live in into an ecosystem interest thriving ecosystem then you should come to the ecosystems and join our accelerator to build an ecosystem in your region that’s sometimes more fun than moving away and trying your luck in London um so maybe you want to create the ecosystem at home that’s what deep ecosystem helps you with.
Sounds pretty good so let’s Dive Right In how you guys are actually doing this and by the way that is actually the reason you are collecting all of this data years digging through all of this data for more than 100 leaving 200 cities across Europe and that’s way get your now how from.
[3:20] Exactly through the data analysis and of course also personal experience of working with many dozens of ecosystems now and seeing what works and what doesn’t work, sounds good so let’s Dive Right In.
Yes maybe that’s also a good starting point showing a bit of the ecosystems that we have been working in from Chile to Estonia Munich and Portugal I’m so our team at Deep ecosystems really is experienced we even have a head Mentor that created a accelerator program in Iran so we are very.
Well versed in reading and understanding ecosystems we have been part of ecosystems all around the world and we have intimate knowledge about how these ecosystems group.
[4:08] So that combined with our data analysis of over more than 100 ecosystem metrics where we Benchmark different cities and how they grow their ecosystem that gives us a lot of experience and possibilities to help.
Your hubby.
If you’re building an ecosystem Hub to grow and you have with our accelerator in the last 12 months we have raised more than 1 million euros in ecosystem funding for new ecosystem initiatives so those 25 ecosystem projects are Hands-On examples of how that.
Capability of data analysis ecosystem building experience Network Community can come together in an accelerator to boost ecosystems in regions that.
Maybe you have not yet heard of but that are also Innovative so we’re really about that bottom-up Grassroots ecosystem building and I think that’s also what is important because if you look at the big ecosystems in the world and you think they have always been there there was never another, um player on top you’re wrong many of the big ecosystems today they have started small they have been created from the bottom up.
[5:25] I always love to show these three examples because I think they are really telling if you look at station f it was created by a blogger.
Not someone that was writing about startups initially, on a block pretty similar to you actually Joe so you maybe are also the founder of a future ecosystem Hub that will be world-renowned soon so watch out I think.
[5:50] I actually just gotten feedback from Northern Africa the last week somebody sent me a direct message on Twitter and said here are not Africa you inspiration for many people and I was going awesome very nice very nice in fact yeah we had a project recently in Morocco measuring the ecosystem health of.
The startup scene in Morocco and it was quite exciting.
It’s very nice and in terms of Investments but there is a lot of things happening a lot of creative people coming together in coding schools in co-working spaces incubators so there’s something happening it’s exciting.
[6:30] We also see Brad Feld founder of techstars and one of our one of our get indirectly helmet shouldn’t bagger found off on tournament room we did not talk to him directly but we talked to the current CEO of want to name a tomb so to say the person that followed mr. tuna burger.
[6:52] Exactly so I’d I mean this is an exciting story as well if you look at Munich we will look at it a bit later in the session today.
Munich hasn’t been a startup Hub of global rank all the time now in the last 10 years it had a, yeah astronomical rise and Munich has been put on the world map of startups with a lot of unicorns being here more than 1 billion euros in funding every year so it would limit room had a large part to play in this but when it was started helmet was a PhD candidate.
He studied for his Ph.D he went to the US he saw entrepreneurship centers there at Stanford University and when he came back to Munich and said I want to create an entrepreneurship Center at the Technical University of Munich can we get this done, and he was a PhD student an entrepreneur that was pitching and convincing in the end sponsors and partners to chip in so also here this was created.
Without those entrepreneurs nothing would be emerging no you wouldn’t have these ecosystems without the entrepreneurs at the center.
[8:07] Exactly that is something I see and I totally believe that those second generation adult is first generation entrepreneurs are important for the second generation meaning those people for example in Berlin and Munich who already have made an exit there most of the time very active as business angels in not only bringing money.
To the table but also a lot of relevant experience and I do believe that’s very important.
[8:37] Exactly at many of them are not even able to invest because they have made a big exit when they start to create the ecosystem what they are able to do is to put together really a community and create, the scene which allows entrepreneurs to grow so for example here we have bread felt that started out in Boulder Colorado which is a small college town and almost no one remembers that techstars one of the largest accelerators in the world today was created in that small place where.
Everything spoke against.
An accelerator to be born there right so it was definitely not the center of the Innovation world it’s not that this is the college or university town where you had a lot of Nobel Prize winners or anything it was not known for that.
Yet this budding entrepreneur Brad Feld he came there brought together the community created an accelerator with the right mindset and that enabled.
Boulder to actually grow and Innovation ecosystem that to this day is punching way above its weight and it’s producing a lot of startups.
[9:51] How did he do it.
[9:56] Thanks for that question that leads he basically answered that himself because Brad Feld is a very outspoken entrepreneur and he put together his learnings from that experience in the boulder thesis many of you listeners probably have heard of it there’s also the book startup communities that he wrote about this he has set up for points in this thesis where he says they are important first entrepreneurs must lead the startup community it must come from the entrepreneurs not from the corporates not from the government not from the University the entrepreneurs themselves must invest themselves in creating an entrepreneurship ecosystem and they must bet also their career on this now so the leaders must have a long-term commitment they must say if I help to build that ecosystem, the startups will also carry me up and they will also ensure my Financial well-being over time because if we all grow this ecosystem here and startups will become successful there is also the possibility for me too make a living of this so This long-term commitment over 20 30 years by the leaders is very important to Brad Feld.
[11:16] And he was also very he’s pushing for diversity the startup Community must include of anyone who want to participate in it so I think initially this was much about different backgrounds educational backgrounds of business students with Engineers lawyers Etc but of course also this speaks to the diversity of different migrant backgrounds of sexual orientation of what you can think of so really anyone that wants to participate in the startup scene should be welcomed and should contribute because and that’s what’s also really steep are very much convinced about is that these different experiences that come together in the ecosystem they create the mix that allow really unique Innovation to emerge if you always stay in your kind of line, of thinking then nothing new emerges so diversity is really an important ingredient in creating a startup ecosystem.
[12:24] And finally last point is that the startup Community must have continual activities that engage the entire entrepreneurial stack so really you can’t just stop at working with developers you also need to work with.
Business you need to talk about the business issues if you have science that needs to be involved the legal aspects of the Venture Capital aspect.
So you need to really think of what is needed to create a startup ecosystem.
So who else do I need to pull in I kind of just stop it let’s say the student side I also need to bring in, um the elements that are needed for creating a startup company in the later stages so I think that’s that’s what the bowler thesis is all about.
[13:10] When you talk about lawyers of course what comes to mind also tax advisors never forget that aspect I would also maybe Edge try to stay away from current political funding because the political Cycles are the same across most of the world and basically within four or five years you complete funding could dry up as we’ve seen in just a recent case where NGO was working for the UK government and basically just got pulled the plug.
Oh my God take nation that that’s bad yeah and you see the same in Germany now next year the exists funding for University incubators is ending so 120 University incubators are out of funding in 2024 I don’t know if that’s the intention of.
Of creating ecosystems of course I mean government funding should not always be your Lifeline but of course if you if you create something new you have to have a long-term commitment and cannot decide after 10 years now now I close it down so that’s a that’s a problem.
[14:22] I understand yes so there’s a couple of question that we for example always ask, to match with this Boulder thesis when we work with ecosystems so when we talk about startup community um is led by entrepreneurs so for example in your accelerators and incubators are mentors are the entrepreneurs or are they employees at our corporate or the government employees or did they have own entrepreneurial experience very important basic setup right how many of the program organizers that run the ecosystem can live off their work.
Not do they have a salary that makes them do this full time or is it only a hobby now do we try to create our ecosystem in our region as a hobby now if it’s a hobby maybe we are not professional enough and we can’t expect much of.
[15:14] So the question is do we have professional people building the ecosystem.
And also diversity do we have do we have the minorities represented in the community or are we all the same.
And yeah so also Community how many people are coming to our events now it’s important to not just organize events but also be.
Honest with ourselves are they working do we get people here do we have momentum right so it’s important that we.
Check ourselves and from these conversations that we have we have developed a system that I want to show you.
Which we call the minimum viable ecosystem right so how do you create an ecosystem if you have nothing.
[16:00] For our audience who just listens to this go to dr. tops that operate dot IO there is a link to our blog on medium and there you will find with under the same name of this episode how to build a startup Hub you’ll also find the presentation with all the graphics sorry go ahead Thomas yeah thank you and that’s cool because I love that graphic it has this nice little heart inside that is beating and that is making the ecosystem, move forward so I think that’s a we did a good job on that graphic so we have four elements like we have the four chambers in the heart so we are looking at the purpose of the ecosystem like do the common belief that the people we bring together in our ecosystem have I mean that doesn’t have to be.
Like something crazy not at some point I talked to the ecosystem in Morocco actually and what they said is we just don’t want to work in the old boring economy we want to work in the new economy we love to work in a more creative setting and then that is a common belief and that is like that is.
[17:15] No I have phenomena that you see people want to work in the new.
And creative economy not in the old and boring right they want to have purpose so that’s important and important aspect in ecosystem building.
So what is the purpose you have what brings your your stakeholders together maybe this to become rich to build unicorns then.
Probably that’s if you have that common goal.
You can have a great Community know if you all work into that direction if you have different ideas someone wants to save the world from climate change that’s a different story right so you will walk in a different direction so I’m not judging anyone I’m just saying that if you build your ecosystem you should be clear, about your purpose.
Because it’s a big effort and you should know where you’re going exactly and just to be sure that that purpose is for the overall the hub for the overall ecosystem however large you will Define it it’s not the purpose statement of a single startup most of the startups by the way it should fit in there but it’s for the complete ecosystem right.
[18:25] Yeah exactly and I think that ecosystem start small normally Marcel of course some people put the tag ecosystem on everything and say we have an ecosystem that’s worldwide yeah maybe I believe that most of the time an ecosystem that really has these kind of.
Features that make it function starts relatively small so.
We’re talking about a few dozen people rather than hundreds and thousands right so.
[18:58] Otherwise I think it’s also getting a little bit out of hand.
I would have one question when you talked about like all those people of course in the beginning it could be very small but what is the approximate size you talk about in an average ecosystem everybody has a mind the big Silicon Valley with Google with Mater maybe even you can count the Amazon in you definitely can’t pay people in a lot of other startups their sales force that it became big.
Whether you see the normal the average size of an ecosystem.
Yeah so I think geographically the city level is what makes most sense when we talk about Innovation ecosystems we normally look at the city level it might make sense to go a bit smaller if you talk about universities and say okay it’s centered around that University.
But I would always think that let’s say the most actors would.
[20:00] Reference the city level the country level already is a bit too large because I think that the connections between actors are.
I’m losing an intensity and density as well so you don’t see as much close interaction on a country level as on the city level so my feeling is City level is the right.
Approach and I think that the ecosystems consist well of course it can go higher in terms of very big and large ones.
It’s still relatively small so I think hundreds.
Up to thousands in terms of individuals that are active inside the ecosystem is is the right perspective that includes.
All the people working for the startups as well as those people engage like talking accelerators incubators VC’s but also the people who organized the meetups and.
I assume you don’t count in like every support stuff I would call it like lawyers tax advisors and all the other infrastructure that should have been in place before.
[21:12] Yeah I think that not everyone needs to be counted it also doesn’t make sense let’s say two um to count people to measure the size for example if you have a larger startup that has then hundreds of employees they are not normally part of the ecosystem they work at a company and they do their job but they are not necessarily involved in that.
Flow of resources and exchange of.
Um of activities and inside the ecosystem so I think here we are we are rather looking at the entrepreneurs themselves the founders the support organizations the investors.
Yes also the lawyers that work directly with Founders that engage maybe on a special.
On a special relationship with them so I would say these are definitely part of it.
They can be even leaders Mraz as we have here’s another important element leadership traditional players that can activate traditional and non startup actors to support startups that super important because if you don’t have that you will always stuck let’s say in your dreams you need to activate resources that are not available to let’s say the.
[22:39] Young if I may say an early-stage entrepreneur you need to bring in people that have already had success in business that have access to resources to grow companies so for that you need leadership and you need to activate more traditional leaders to come in as well.
Cutting Edge I really like that are you cutting edge do you attract the practice minds and the best resources that is quite a challenge especially for everybody who’s like not on the top 10 top 12 list we talked about every quarter in terms of European startup pops.
[23:18] How can smaller hops really get the pride is Minds I would assume for special purpose here.
Yeah exactly it’s super important and I think that’s what’s most of the time overlooked everyone is just assuming they have something to offer and go out into the world basically promoting their ecosystem and their hub.
As a great place without really thinking of what is it that they offer what they bring to the table.
So Cutting Edge is important because.
[23:53] The average Talent or the average top talent is not so interested in just normal right so you want to go to the place that is really top-notch that really does something.
As unique.
And that can be that they are great in terms of science but it can also be that they have one of the coolest and most open minded communities.
Loving people flocked to Berlin it was not because the Berlin universities were the best.
Right but they came because Berlin offered something that felt good a lifestyle right was cheap and.
It was cheap yes so that in a way is it was cutting edge as well because this lifestyle that Berlin offered was.
Cutting Edge in the world know where else could you find the latest trends be involved in the newest stuff experiment the most so I think that is attractive and if you’re a small place you need to find your Cutting Edge as well not so you need to understand.
We are you have something that can at least in a.
[25:02] In a certain region or in a certain Network or vertical attract International talent and we will see an example though which which is really interesting in that regard which is organs are in Denmark it’s a small town in Denmark that has developed its Cutting Edge in the robotics industry.
And yeah that’s one of the examples of an ecosystem that is really one to learn from.
[25:29] Great leadership we already talked about and Community as diverse as possible Right.
Yes diverse is important because as we said if we don’t bring in different viewpoints nothing new can emerge but also you need to see Community not only as let’s say a meet-up space a place where people come together but you also need to think of what are the rules that you establish for your community what makes your community a community.
Not just by inviting them every week to the same spot.
It’s not a community not what you want to have is a common set of beliefs you want to have a common set of.
Standards and behaviors where you say okay that is what makes us a community now that’s how we interact with classical formulation is Pay It Forward right so that’s a classical startup Manifesto kind of rule set.
And that makes a community of a community believes in Pay It Forward not first give before you ask.
[26:38] That makes a community a community that’s really lift mom if people really do that okay great.
Good shall we go a bit to the examples I already spoke about odense so maybe we can dive into it.
I really like the place I think it’s really inspiring for everybody who doesn’t know who didn’t say is in Denmark Denmark is just North of Germany and it’s one of the Scandinavian countries right.
[27:12] Yes that’s a good question I’m always getting confused what is part of Scandinavia and what is not part of screening area I’m not sure if then Mark Collins is getting very good.
[27:24] For me at Collins as Scandinavia everybody who has a problem with it leave leave leave comments down here in the show notes and basically it’s it’s a pretty big pen Peninsula Denmark and odense is in one of the islands between Denmark and Sweden.
Exactly yeah and yeah Odin’s is a small place but it has a great robotics cluster it’s really world-class in robotics and they have created a lot of.
Exciting startups you see here the statistics since 2015 until 2020 there was almost, 1 billion euros in investments in robotics company.
And that’s really a nice result not so year-over-year they play in the top league in terms of.
Investments into robotic startups and it all started with a company called Universal robots and it was founded by.
[28:26] Well it’s hard to pronounce the last name so that stayed with the first name so there are some Founders is called Espen Austin God Casper last name I can pronounce story or stay and Christian kossoff and they have created robotics company they have IP ODed.
So they brought it to the stock market it was founded in 2005 and it was sold so to say in 2015 10 years later and they with the.
Funds they earned from the exit they didn’t decide to go and buy a yacht and travel the Mediterranean and lie in the Sun but they actually set they wanted to create.
Robotics cluster to help more startups emerge in the region and that cluster.
He’s actually a public-private initiative a partnership and it was first funded by, the entrepreneurs and also supported by the government and since 2015 they have supported the emergence of more and more I’m robotics startups here and over the time there was seven exits and three IPOs in that cluster which is really impressive for for a small town that has managed to create.
Such a thriving startup ecosystem.
[29:55] And actually now what they are doing just as a fun fact they are now thinking to replicate this model in a new field which is medical cannabis so they have identified a new unique value proposition for odense next to robotics they will go into.
Into cannabis self very excited to see what comes out of that.
[30:18] It’s interesting how they are leveraging this from robotics anybody would think yeah they go into some other aspect of deep Tech startups but going into the medical field cannabis.
That’s quite interesting and if they can really pull it off there’s a lot one can learn about it.
[30:39] Exactly and I think it’s about being really honest about unique value propositions wouldn’t say has like this agricultural back land where we already had some kind of his cultivation and.
Could you build this further up so they are really analyzing where they stand and then they are creating.
[31:03] More out of it.
And I think that’s also when we look at okay what can we learn from odense now we ask ourselves if we now start at zero in a different region.
How could we create a mini Odin’s in our place let’s say now and if we look at the four elements that we looked at before purpose ecosystem leaders cutting-edge communities then we find answers in the case study of Odin’s them what the purpose this we want to do everything possible in robotics right so this entrepreneurial spirit this excitement this focus on robotics not that that is poled know who does that in terms of if you talk to ecosystem Builders especially if they come from the government are they really willing to bet everything on one vertical that’s even extremely hard to build a startup in that robotics Investments are super super low all around the world it’s very hard um to build startups in this sector and now betting on that and saying that’s our strong horse that.
[32:10] It is spoiled now but it’s a purpose that attracts of course stakeholders and entrepreneurs to join in.
Exactly and also this this cutting-edge I mean is the substance they built or not they had the most Innovative robotics firm in the in the region now so they had.
So many companies focusing on robotics 292 now with three point seven four billion euros in Revenue so I think they have something to offer so they are really cutting edge they are not lying about it right and I think that’s that’s a strong basis for building that ecosystem exactly.
[32:55] Yes and yeah I think that it is possible now to understand.
More closely how ecosystems emerge when you look at these kind of case studies so maybe another one is the one from my hometown Munich.
[33:11] Before we get into Munich we may peace this a little bit into part 2 so Thomas.
Thank you very much for your contribution on how to build a startup Hub part 1 and we will be as your as we already teased be back with part 2 the example of Munich.
[33:38] Music.
