February 2, 2012, 12:11 PM GMT
By Ben Rooney
Who is going to be Europe’s main technology hub? While London and Berlin both see themselves as claimants to the title, if you look at the numbers (and you take a Eurovision Song Contest view of the Continent) arguably neither can challenge Tel Aviv.
It was Ron Huldai, Tel Aviv’s 13-year mayor and a former combat pilot, who, while London’s Tech City was not even the subject of an interdepartmental memo, had got on with building a tech center second only to Silicon Valley. He did it not by installing high-speed fiber or hosting conferences. His approach, as he said in a recent interview with The Wall Street Journal, was much simpler.
“Tel Aviv had become a city that people used, not a city they lived in,” he said. “We are creating a good place for hi-tech people to live in—I am doing it for the people working in hi-tech,” he said.
It is the ”Field of Dreams” model. If you build it, they will come. It is no coincidence that Tel Aviv was recently named the world¹s best gay city.
“It is about building an environment that is supportive,” he said. Young digital entrepreneurs tend to be counter-cultural— attracted to cities that are vibrant, diverse and international. One third of the city is under the age of 35, and there is one bar for every 200 residents.
His bottom-up model—worry about the people—has proved successful.
According to a report commissioned by the city, Tel Aviv and its surrounding area, hosts more than 600 early stage companies. Access to venture capital is, per capita, 20-fold greater in Israel than in the rest of Europe. “If you take the amount of VC per capita, in Europe, it is $7. In the U.S. it is $72. In Israel it is double that,” Jan Müehlfeit, Microsoft’s European chairman asserted last year.
London has approached the problem with more of a top-down approach. The government-backed Tech City, in the region between London’s financial district, and the new Olympic Park in the east, has attempted to take an existing small tech community and build on top of it a corporate ecosystem, by courting the likes of Cisco Systems, Google, Facebook and Intel into the area, wooing the financiers (Silicon Valley Bank) and pulling in big names (McKinsey).
But to be fair to the U.K. government, it is doing a lot behind the scenes—including improving access to visas, and making capital easier to obtain. In a recent defense of Tech City, entrepreneur Glenn Shoosmith, founder of online booking service BookingBug, wrote: “The reality is that there is a long list of things that have been done over the past year. But much of it has been done in the background. It¹s like complaining a submarine isn’t very impressive because you can only see its periscope.”
It too has met with success, although a recent map promulgated by the Tech City Investment Organization, the body charged by the government with masterminding the development, that showed some 600 start-ups was met with some skepticism as companies that were not high-tech start ups had been included.
And what of Berlin? Talking to Berlin-based entrepreneurs, it is a tech hub despite itself. Asked what the German, or even Berlin, government has done, most struggled to think of anything outside of money from the IBB Beteiligungsgesellschaft, the VC arm of the state bank. “We don’t have a tech city like London, the same financing like Dublin or a president hosting a start-up tour,” said Nora-Vanessa Wohlert, who writes for Gründerszene, a Berlin-based blog covering the start up scene.
Instead, it is a community that has helped itself. Henrik Berggren chose Berlin over his native Stockholm to launch ebook social network Readmill. “The city, the vibe, the culture, the history and the attitude. All of these things combined creates a great city to live and run a company in,” he said, a view shared by Jochen Hummel, chairman of virtual-world creator Metaversum. “The quality of living is very high but at a fraction of the living cost,” says Mr. Hummel. “This attracts all kind of nonconventional people who often simply cannot afford to live in a city like London, Paris, Rome et al. These people create a scene which is fueling start-ups.” Or put more simply: “Party-wise there is no such a place like Berlin in the world. New York is dead boring in comparison,” said Thorsten Lüttger, CEO of Musicplayr.
Other cities, both in Europe and without, are looking at the high-tech sector to provide economic stimulus. Russia, for example, is planning a $4 billion project to build, from scratch, its own Silicon Valley—Skolkovo—just outside of Moscow. It is the epitome of top-down planning.
Paris, Singapore, Dublin and Barcelona have plans to lure entrepreneurs. The question for these and other cities is who to follow: London, Tel Aviv, or Berlin? “You need people with crazy ideas who are willing to build something very big and then go to the next club around the corner in order to have some fun. You need people from all nations. The next big player will be a very diverse company,” said Gunnar Berning, founder of twago.
But then he is from Berlin.