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FINDINGS AND CONCLUSIONS

Findings and conclusions

   Studies of the twenty emerging spots and the five case studies have high-lighted important patterns that demonstrate what factors are important when it comes to an emerging spot. Some of the findings are from people that we have interviewed; others come from the data we have gathered and are seen in the comparative analysis that has been made.

The emerging spot backbone

   In all of the places where we see a growing number of start-ups within the field of mobile services, we also see a large presence of what we calL "the creative class" (an expression from the US researcher Richard Florida). All of the places in the top 20 list have a large creative class community, and in the five cases that we have studied more deeply, the presence of artists, developers, media people and other knowledge workers is significant. Very good examples of this are: the Shoreditch area in London, Kreuzberg in Berlin and Móllan in Malmo; only five years ago all these areas were regarded as rough neighbourhoods, and today they are regarded as the hippest places in the region. The combination of cool clubs, new restaurants and well-educated inhabitants seem to be the most important factors when we look at the start-up scene in Europe.

   The ability to attract the right talent should not be underestimated, but if you look into policy documents from most regions in Europe, this is still an area where more work needs to be done. Of course everybody realises that talent is important, but few regions have a clear strategy on how to attract talent (not only within Europe). All of the interviewees in our research have said more or less the same thing: A rich cultural life, top class restaurants, openness, a democratic society, multicultural environment and so on, are key factors. Researchers like Richard Florida and Daniel Pink have already pointed out most of these things. Very few regions in Europe though, have, for instance pointed out that the cultural sector is a key element to attract the right talent; even though this and many other studies show a very clear connection between culture and the creative class.

Correlation between different factors

   We have also seen that successful regions often have the right mix between different important factors. You don't have to be strong in everything, but, if you are weak in one part, you need to put more effort into other areas. However, when the values of the parts in the market mix are more equal, we do see that some factors play a larger role than others in those regions that have succeeded. Some of the very clear correlations found were:

Industry presence and access to capital beats policies

   Some of the regions in our study have very well developed regional policies. Amongst the five case studies, Barcelona and Catalonia where exceptional with very well-developed policies, probably one of the best defined in Europe. But, we could also see that a region with almost no policy at all (like Berlin) or with a very general policy (like London or Malmo) had a higher success rate due to the fact that either access to capital or industry presence was higher. Looking at other studies has also strengthened our finding that policies alone are insufficient if the industry presence is low and access to capital is limited.

History is more important than we believe

   When looking at the different regions we can see a clear pattern, those who have a history within the mobile industry, research in mobile technology or areas that are close to the mobile industry have a higher success rate than those who have none at all. We can also see that regions with a histo­ry of heavy industry where the transformation to a more knowledge-based society has taken place are over represented in the statistics. This leads us to believe that "telling the story" about the region is important especially for the image the region and its inhabitants have about themselves. We can see this very clearly in for instance Estonia, where the nation has been very successful in telling the story about Estonia and giving a positive image to both the Estonians and also to people from outside the country. This has certainly affected the output for the mobile sector in the country. Recent activity during the past 4-5 years can be important, for instance in the Malmo/Lund case, where a number of acquisitions of SMEs by Apple, Microsoft, Intel and Huawei has helped to build the image of an innovative region.

Incentives has low impact

   Many regions have tried different types of financial incentives in order to attract SMEs into the region. Tax deductions, cheap office space, business developers etc. have been used by regions in order to increase the flow of start-ups from other parts of Europe. During the interviews with the start­ups it is very clear: financial incentives are of course interesting but the final decision is often about other things such as access to talent, low le­vels of bureaucracy, closeness to the market and critical mass in start-ups (more start-ups is regarded as good). We see this very clearly in the case from Catalonia/Barcelona where some of the companies we talked to had decided to move due to the complicated tax systems and the fact that the initial tax deduction they got when they started had ended.

A small home market is often an advantage

   Why is it that countries like Sweden, Denmark, Finland and Estonia can produce company after company that reach the world markets, even though they are countries with a very small population? The answer is probably (and confirmed by interviews) that when you have a small home market, you are forced to think about internationalisation from the start. There is also a significant difference between for instance an SME in Southern France whose main focus is trying to get into the market in Paris and a start up in Estonia or Lund who are focused on starting selling in Silicon Valley. Regions could probably make a difference in how business support is set up with focus on internationalisation outside the country.

Infrastructure, infrastructure, infrastructure

  If we name only one factor that we think (as-well as the SMEs interviewed) is important, then it is infrastructure. The best example from this report is London, where the national government has focused mainly on infra-structure investments and not on butilding advanced innovation systems. This has paid out in the Shoreditch area. The infrastructure has helped thestart-up community to grow rapidly over the past five years. We can also see this clearly in Berlin where there is a huge number of start-ups located around the number 7 metro line, or in Barcelona where the area of 22@ Barcelona has the entire infrastructure that is needed.

But we can also see that it is not enough to provide just a company oriented infrastructure. The creative class demands good public transport, 3G and 4G connections all over the city, Wi-Fi in cafes and bars and of course, fast internet connections to peoples homes. This is something that we have seen as a problem for people, in for instance, Barcelona where there are still problems in getting fast domestic internet connections (and where also the delivery time is too long). This is an area where public authorities can have a great impact on how to provide infrastructure investments, based on a sound understanding of business needs.

Public sector can play a role as a buyer

   As we have seen in Estonia, the public sector can help the mobile sector to grow by introducing a number of advanced mobile services. Estonia is still the most mobilised country in Europe with everything from tax declaration to voting in public elections possible on your mobile. It was also amongst the first countries in Europe to introduce for instance, mobile parking systems, text message payments and mobile bank transfers. There is still a lot that could be done in this area and there is a very clear correlation between systems of well-developed public services that are mobile and a growing start up community within mobile services. A simple service such as mobile payment for using public transport is something that will create growth within mobile start-ups.

Lack of capital can be compensated

   Another finding is that some of the regions in the study suffer from a lack of capital, for instance the Malmo/Lund region and Estonia. In Estonia this has been mitigated by a very clear national agenda where the state has been a buyer. In Malmo/Lund the presence of large companies like Sony Mobile, Ericsson, Microsoft, Huawei and Intel has provided the injection the start-up community has needed to start growing. In both Estonia and Malmo/Lund the ecosystem with large potential customers shows that lack of capital can be compensated for and that in the long term the ecosystem itself will attract traditional actors like VC companies.

Finally - what more?

   Out of the 106 interviews that have been made some findings have been very clear whilst others are more complex and not so easy to validate. We have in this report chosen to put the spotlight on those factors that have been validated by the people interviewed and by the results that we have seen from the different regions. Of course there are other findings, personal opinions and things to think about. But, in order not to jump into any vague conclusions, we have chosen not to publicise them.

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