European startup tour, episode 2: Brussels

Station F team is going on a tour across European countries to visit and analyze startup ecosystems. Stay tuned for next episodes!

So here is a second and (still) personal look on our closest neighbors and this the turn of the capital of the “flat country”, also the capital of comics, the home of a strange little peeing man … but also tech!

Brussels is Belgium’s capital city, and de facto capital of Europe. European Union, remember, anyone? Yeah, it is still a thing today… that relies on some “outdated” values (at least for one guy overseas) from the 20th century: multilateralism & open borders. The city is then at the core of an area with a total population of 443M (without the UK, time to say goodbye old friends) and the 2nd largest GDP worldwide.

Regarding Tech indicators, the EU ranks #3 in terms of unicorns and #1 for professional developers (4.7M developers in Europe vs 4.1M in the U.S according to a study by Atomico). So, through Europe, Brussels and tech are closely tied, with ecosystems that are completely different whether you’re a startup or a tech giant.

Brussels, a lobbying battlefield for tech giants

As the home of the EU main institutions, Brussels is the subject of all fantasies and desire from the whole economic sphere, making Brussels the city with the second highest density of lobbyists in the world after Washington DC. Bridges between the European institutions and the private sector are a common thing: for instance, the former head of the European Commission José Manuel Barroso was hired as an advisor by Goldman Sachs.

The tech world has moved in the same direction: GAFA and their NATU relatives have been boosting their lobbying presence. In the same way the Silicon Valley has seduced the former Obama administration (now converted into execs at Airbnb, Amazon, Apple or GoFunding, reports the New York Times), tech giants are now recruiting European bureaucrats. Uber has for instance appointed EC VP Neelie Kroos to its public policy board.

What are lobbyists lobbying about? It seems tech giants find the EU being “ both a blessing and a curse”: on the one hand, its 500 million consumers-base make it an attractive market. On the other hand, recent years have shown many threats for these behemoths: Google is facing antitrust charges (on its search and Android services), Facebook is questioned on the WhatsApp takeover and Uber is far from being done with the EU court. They all live now in the fear to re-live the decade long battle between Microsoft and Europe, sentenced to pay $3.4 billion in fines.

This is Brussels, a gigantic battlefield between regulators and Tech giants but also between themselves — like Salesforce’s attempt to question the Microsoft-LinkedIn deal. Hard to know how the US Tech lobbying activities impact (positively or negatively, democratic questions aside) the local startup ecosystem.

Besides U.S. giants’ influence force, local startups also gathered in their own lobbies (even though they don’t call it that way): the European Tech Alliance, which aim is “to strengthen Europe’s digital economy” or Allied for Startups.

Belgium’s startup scene is decentralized and still young

Belgium’s startup scene shows some structural characteristics: due to the country’s size (11M inhabitants), and therefore small consumer base, business type is mainly B2B (68%) and the tech scene is scattered.

source: https://sirris.datascouts.eu/analytics

Belgium’s investment volume is showing growth over the past few years. The number of deals grew from 7 to 25 in just one year (climaxing at 30 in Q1 of 2016). Belgian startups have raised $150M over the first two quarters of 2016, placing the country at the 6th rank in Europe, after France, the UK, Germany, Sweden and Israel (source: Tech.eu)

Source: tech.eu

Brussels is one of the three main startup hubs you can find with Ghent or Antwerp. Belgium main gems are then found in these three areas: Showpad, Engagor and even Drupal are from Ghent, Netlog is from Antwerp, Djump (acquired by Chauffeur Privé), the RIP Take it Easy or Real Impact Analytics are famous names from Brussels.

Brussels’ French and Flemish positions both know their deal of great initiatives. To name a few, the startup studio eFounders is an iconic one with great successes like Spendesk, Front or Aircall (full disclosure: STATION F’s Head of Comms used to work there).

Other private initiatives can be found like Co-Station (also based in Ghent) that relies on two pillars: startup hosting and sales and coding trainings with partnerships from BrightBiz and Coding Station (behind Le Wagon in Benelux). As for Seedfactory, the place creates synergies by gathering players from the same field, media and communications. Others are considering the whole ecosystem like Startit@KBC, opening working places in different cities. The ICAB incubator and the 500K€ financial support to the highly ambitious and inclusive Molengeek show that public initiatives are not left behind.

A new digital hub seems to be in the pipe with the “Be Central” coding name, aiming at hosting startups in Brussels train station (startups in a train station, seriously??)

Some ideas to utilize Brussel’s untapped potential for the whole European startup scene

With its unique position, Brussels can further develop its startup and tech ecosystems. Here are a few ideas:

  • Bringing education to the 21st century: as shown by great local initiatives, there is a high demand for digital skills and competences and this is true for the whole continent: have a single market that embraces the digital era could add 415B € to the EU’s economy annually. To that purpose, 21B€ from the European Structural and Investment Funds over the 2014–2020 period are available with a part dedicated to education. EdTech startups can thrive in such an environment.
  • Developing democracy at a continent scale: there is clearly a crisis of the European democracy and as Amartya Sen wrote in a column in the Times, “Europe cannot revive itself without addressing (…) areas of political legitimacy”. Brussels’ startup scene must play a role here and can be inspired by the NYC Civic Hall and the not yet launched Parisian equivalent.
  • Forging an ongoing connection between political institutions and the Tech world: the Digital Champions and the newly appointed innovation advisory body show great signs but Europe can establish a Obama-like approach who use the tech sector to foster diplomacy: there is no better time, the honeymoon between the Silicon Valley and Washington seems to be over, reports the Verge

To go further:

GAFA & democracies (in French): http://www.oezratty.net/wordpress/2016/numerique-ameliorer-democraties-5/

Transparency International: http://www.transparency.org/news/feature/europe_a_playground_for_special_interests_amid_lax_lobbying_rules

Startups to watch in Ghent:http://www.siliconluxembourg.lu/10-startups-to-watch-in-ghent/

Startups to watch in Antwerp: http://www.siliconluxembourg.lu/10-startups-to-watch-in-antwerp/

Startups Belgium Map: https://sirris.datascouts.eu/analytics