There aren’t sector-specific startup hubs in Europe. Here’s the data
Tags: K Analysis, Sector, European, VC, Industry

By sector-specific Hub I mean a location that has a higher presence of a sector in two ways:

The percentage of that sector in that location is higher than the percentage of the same sector in other locations.

than the percentage of the same sector in other locations. The percentage of that sector is higher inside the location than the percentage of other sectors inside the same location.

To analyze the relationship between an Industry and a region I use catscatter charts. The data used is the number of startups with headquarters in Europe (and then with a focus in Spain) that received seed capital between 2015 and 2019. There are two types of charts:

By percentage of Industry: given an industry, each circle represents the percentage of deals that each region takes. Each column must sum 100% (if all regions were included). So, vertically, it helps us see which regions are more important for the industry. Horizontally, it helps us compare the relative importance of an industry withins regions.

given an industry, each circle represents the percentage of deals that each region takes. Each column must sum 100% (if all regions were included). So, vertically, it helps us see which regions are more important for the industry. Horizontally, it helps us compare the relative importance of an industry withins regions. By percentage of Region: it’s the opposite of the above. Given a region, each circle represents the percentage of deals that each industry takes. Each row must sum 100% (if all industries were included). Vertically, it helps us see which industries are more important within a region. Horizontally, it helps us see which regions are more important for each industry.

Here is where things get interesting. There seems to be a general trend.

On charts divided by Industry we can clearly see horizontal lines, meaning that the the location on the left has the same importance for every industry. On charts divided by Region we can see clear vertical lines, meaning that the specific sector has the same importance in every location.

These two situations happen across top locations in Europe, meaning that we have hubs of many different sizes, but there’s a bit of everything in all of them. However, inside Spain you will see it’s not the case, which means that in Spain every location has its own particularities. Or maybe that they are not big enough yet to be diversified.

Let’s start exploring!

In Europe there’s everything everywhere

In Europe there’s one big hub

Looking at the chart below (Europe Countries By Industry) we can see clear horizontal lines. ~30% of all deals in Top 20 industries happen in the United Kingdom (from 35% of Fintech to 25% of Internet of Things), followed by France, Germany and Spain. We can highlight that Italy has slightly more presence in E-Commerce and Food and Beverages or Switzerland more Biotechnology.

We do mostly two things

In this one (Europe Countries by Country) we see vertical lines in some Industries.~5% of all deals in Top 20 Countries are in Software and ~4% in Information Technology. Then Internet, E-Commerce and Health Care. In the United Kingdom there is such a high number of deals that their leading presence in Big Data overall (30% of all deals) represents less than 1% of the deals inside the country. Switzerland doesn’t have bigger presence in Biotechnology than other industries.

London is the biggest hub

Looking at the same charts with cities instead of countries (Europe Cities By Industry), we can see that the United Kingdom really means London, except for Biotechnology. Germany is Berlin and Hamburg, France is Paris, Spain is Barcelona and Madrid, Italy is Milan, Switzerland is Zürich.

There’s everything everywhere

And if we divide now by cities (European Cities by City) we can see there’s more than 1% presence of every sector in almost every city. Except for Biotechnology and Medical (only 2 and 3 respectively). Biology people may not like big cities.

In Spain every hub has its own singularities

At Spain, 70% of the deals happen in two regions

Looking at the chart below (Spanish Regions by Industry) we see two clear hubs. Catalonia represents ~42% of all deals in every sector. Madrid ~30% of the deals, except for Biotech (with less than a 1%). Comunidad Valenciana is also becoming more active with ~10% of the deals, followed by Andalucía and Basque Country with ~4%. Cantabria is not represented because there were no deals between 2015 and 2019 on Crunchbase.

Spain hubs are different

But if we divide it by Region (Spanish Regions by Regions) we can see that no vertical lines appear, which means that every region has its own singularities. For example, in Galicia there’s more Software and Artificial Intelligence. In Asturias, Navarra or Canarias, there’s slightly more Software than other deals. In Islas Baleares there’s more Travel.

Barcelona and Madrid are the two big hubs

Looking at the same charts with cities instead of countries (Spanish Cities by Industry), Barcelona represents ~40% of deals in every sector. Madrid ~30% except for Biotechnology, with less than 1%. Valencia is winning some presence overall with ~8% of the deals. Bilbao and Seville are competing for the fourth place.

Spanish Startup Hubs are not homogeneous

And if we divide again by Cities (Spanish Cities by City) we can see that almost every city is doing something in Information Technology, however, this is not the leading category overall (3% of all deals). Cities like A Coruña or Malaga are more focused in Software and Artificial Intelligence. Donostia-San Sebastian is the hub in Basque Country for Biotechnology.

Conclusions

It’s true that the United Kingdom copes 30% of the deals overall Europe but it’s also true that there’s everything everywhere. As the majority of European countries have their own language and culture, European startup hubs can be of many different sizes, but they are all diverse. Maybe this is not the most efficient thing to do, but I’m sure it’s the richest.

It’s also true that Madrid and Barcelona combine for 70% of all deals in Spain. However, some other regions are developing their own startup hubs, wining importance within a specific sector.

The conclusion is that if you’re thinking of creating something and you have the resources... Think twice before moving to a “bigger hub”. Maybe where you are is big enough. If you are in a European location I’m sure it’s equally diverse and if you are inside Spain, maybe you are in the right place for your sector.