The past 2 years have been turbulent for the business world, with COVID-19 having a massive impact on businesses. From companies going bust to brand new businesses starting up, the pandemic has been ‘make or break’ for many, but it’s also given some the chance to start a brand new venture.
There are an estimated 52,000 new startup businesses in the EU every year, according to GlassDollar [1]. With this figure only growing we wanted to find out if there have been new spots of growth in Europe for businesses after the pandemic, as well as an incline in new business ventures with the pandemic evolving our spending and shopping behaviour.
Our last report, Europe’s Most Popular Startup’s, created in 2018 revealed that the UK was leading the European startup business world, so we have updated this study for 2022.
We created an updated index looking at the number of startups in each EU country, the business survival rate of each country and the number of different startups in each city. The findings have revealed the top 30 countries in Europe with the highest number of startups, as well as the cities across Europe with the highest five year survival rate. Our data also explored which industries are growing the fastest.
If you're in the process of starting a new business, keep reading to find out the best place to set up in your industry.
Ranked: The countries with the most startups in Europe
At Paymentsense, we’ve looked at the countries with the most startups in Europe so you can see where in Europe is best to start your business!
Our data revealed the top 30 countries in Europe who have produced the most startup businesses in the last five years.
Paris in France has the highest number of startups in Europe
Best known for its romantic setting, Paris is a dream destination for most, but it’s also home to the most startups in Europe. Between 2015 and 2019, 2,000,100 startups have been registered in the city of love, a 56% increase. Interestingly, for a city renowned for its fashion industry, Software companies are actually the most popular type of startup in Paris - great news for anyone with computer skills.
The United Kingdom is the second most popular country in Europe for startup businesses
London in the United Kingdom ranks as the second most popular city for startups in Europe. While it has only seen an increase in startup businesses of 1.1% between 2015 and 2019, overall there have been an impressive 1,755,035 startups registered in the same period.
Spain is Europe's third best country with the most startups
Home to a selection of Europe’s astounding architecture, Barcelona is revered for its artistic licence.
The cosmopolitan city also ranked in third place for the most startup businesses in Europe. The city had
1,438,815 startup businesses between 2015 to 2019, with most in the software industry.
So there we
have it, the three startup capitals of Europe. But which industries are booming, and fraught with
competition, from all of these new startups?
| Rank | Country | City with the most startups |
Most popular type of startup in that country |
Number of startups from 2015 To 2019 |
Percentage change in number of startup businesses between 2015 and 2019 |
|---|---|---|---|---|---|
| 1 | France | Paris | Software | 2,000,100 | 56.10% |
| 2 | United Kingdom | London | Fintech | 1,755,035 | 1.10% |
| 3 | Spain | Barcelona | Software/SaaS | 1,438,815 | 5.73% |
| 4 | Italy | Milan | E-Commerce | 1,403,569 | -0.66% |
| 5 | Poland | Warsaw | Software/SaaS | 1,279,577 | 5.00% |
| 6 | Germany | Berlin | SaaS/Software | 1,041,221 | 25.90% |
| 7 | Portugal | Lisbon | Information Technology | 693,279 | 13.85% |
| 8 | Netherlands | Amsterdam | Software/SaaS | 595,531 | 31.17% |
| 9 | Czechia | Prague | Artificial Intelligence | 464,772 | 9.35% |
| 10 | Romania | Bucharest | Software | 402,428 | 9.47% |
| 11 | Hungary | Budapest | Information Technology/Fintech | 344,772 | 39.75% |
| 12 | Slovakia | Bratislava | Software/Internet Of Things | 296,047 | 17.45% |
| 13 | Sweden | Stockholm | Software | 255,865 | -7.14% |
| 14 | Belgium | Brussels | Artificial Intelligence | 219,533 | 21.99% |
| 15 | Bulgaria | Sofia | Software | 205,253 | -1.47% |
| 16 | Lithuania | Vilnius | FinTech | 195,301 | 24.44% |
| 17 | Greece | Athens | Travel | 185,094 | -1.43% |
| 18 | Switzerland | Zurich | Information Technology | 138,324 | 4.79% |
| 19 | Austria | Vienna | Software | 136,581 | -9.47% |
| 20 | Denmark | Copenhagen | Software | 126,814 | 12.15% |
| 21 | Norway | Oslo | Software | 120,913 | -15.87% |
| 22 | Finland | Helsinki | SaaS/Software | 116,888 | 40.19% |
| 23 | Ireland | Dublin | Software | 88,506 | -20.12% |
| 24 | Latvia | Riga | FinTech | 78,980 | -30.84% |
| 25 | Croatia | Zagreb | Software | 76,808 | 89.26% |
| 26 | Slovenia | Ljubljana | Blockchain/Cryptocurrency | 75,858 | 2.28% |
| 27 | Estonia | Tallinn | Blockchain/Cryptocurrency | 50,044 | 23.67% |
| 28 | Cyprus | Limassol | FinTech | 26,029 | 18.29% |
| 29 | Malta | Valletta | Blockchain/Cryptocurrency | 24,034 | 95.13% |
| 30 | Luxembourg | Luxembourg City | FinTech/Financial Services | 15,339 | 8.50% |
The most popular industries for startups in Europe
We analysed 20,000 new startups from Eurostat and EU Startups to find out which industries are attracting budding entrepreneurs, and how likely these new businesses are to survive.
| Rank in Europe | Industry | Number of businesses in sector |
|---|---|---|
| 1 | Software | 2,160 |
| 2 | Information Technology | 1,635 |
| 3 | FinTech | 1,296 |
| 4 | SaaS | 1,128 |
| 5 | Artificial Intelligence | 1,016 |
| 6 | Financial Services | 936 |
| 7 | E-Commerce | 915 |
| 8 | Health Care | 905 |
| 9 | Internet | 795 |
| 10 | Machine Learning | 687 |
| 11 | AI | 661 |
| 12 | Marketplace | 605 |
| 13 | Blockchain | 586 |
| 14 | Marketing | 469 |
| 15 | Apps | 425 |
| 16 | Biotechnology | 422 |
| 17 | Technology | 421 |
| 18 | Finance | 399 |
| 19 | Analytics | 388 |
| 20 | Education | 377 |
If your skills are designing, developing and maintaining computer software and you're thinking of setting up in Europe with your own business, you're in for some tough competition. The software industry stormed the leaderboard with over 2.1k new businesses, a figure only set to grow.
Remaining in the tech sphere, the information technology industry is also thriving. From fixing hardware to creating computer security policies, there have been 1,635 business startups in this sector. Lisbon in Portugal is the most popular place to be with this particular skill set.
The European cities with the highest five-year survival rate for startups
As we’ve seen, there are an abundance of new startups all vying for investment and customers, and unfortunately, not all survive.
Here at Paymentsense, we analysed the 5 year survival rates of 20,000 startup businesses. Our research shows the locations across Europe where businesses have the best chance of survival in the first five years of operating.
Valletta in Malta has the best five year survival rate in Europe
Known for its museums, palaces and grand churches, Valletta is home to landmarks like St. John’s Co-Cathedral. The picturesque city has also proven itself to be relatively successful for new businesses, with the strongest five year survival rate in Europe. An impressive 78.7% of businesses here survive from conception to five years.
Sweden is the second best country in Europe for business survival rates
Aside from being the capital of Sweden, Stockholm is also the largest urban area in Scandinavia. The sprawling city has a 60.8% five year survival rate for startup businesses, which is great news for any prospective innovators thinking about setting up shop in Sweden. Steeped in rich culture, with the likes of the Kungliga Slottet Royal Palace and the Nobel Museum, Stockholm is a great place to work, and play.
Amsterdam in the Netherlands ranks third for the best chance of business survival after five years
Recognised for its narrow houses and beer brewing, this capital city has many perks. A popular destination to visit and make a home in, Amsterdam is also a fruitful environment for budding businesses. Its startups have a promising 57.6% 5 year survival rate.
| Rank | Country | City With The Most New Startups | 5 Year Survival Rate |
|---|---|---|---|
| 1 | Malta | Valletta | 78.7% |
| 2 | Sweden | Stockholm | 60.8% |
| 3 | Netherlands | Amsterdam | 57.7% |
| 4 | Belgium | Brussels | 57.5% |
| 5 | Greece | Athens | 56.0% |
| 6 | Luxembourg | Luxembourg City | 55.8% |
| 7 | Slovakia | Bratislava | 55.1% |
| 8 | Croatia | Zagreb | 52.6% |
| 9 | Romania | Bucharest | 51.8% |
| 10 | Cyprus | Limassol | 51.2% |
| 11 | France | Paris | 50.1% |
| 12 | Slovenia | Ljubljana | 48.8% |
| 13 | Ireland | Dublin | 48.4% |
| 14 | Czechia | Prague | 47.8% |
| 15 | Austria | Vienna | 47.4% |
| 16 | Switzerland | Zurich | 47.1% |
| 17 | Hungary | Budapest | 46.7% |
| 18 | Estonia | Tallinn | 45.6% |
| 19 | Bulgaria | Sofia | 45.2% |
| 20 | Finland | Helsinki | 45.1% |
| 21 | Latvia | Riga | 44.5% |
| 22 | Spain | Barcelona | 43.8% |
| 23 | Italy | Milan | 42.3% |
| 24 | United Kingdom | London | 41.8% |
| 25 | Norway | Oslo | 41.6% |
| 26 | Poland | Warsaw | 37.3% |
| 27 | Denmark | Copenhagen | 37.0% |
| 28 | Germany | Berlin | 36.5% |
| 29 | Portugal | Lisbon | 33.7% |
| 30 | Lithuania | Vilnius | 26.4% |
A quick guide to starting up a small business
So, you're thinking of starting a business in 2022, but don't know where to start? Don’t worry, we’ve got some top tips to help get you started. From researching your business ideas to securing funding and finance, we’ve got you covered.
1. Register your business name
This might seem like a simple step but it's extremely important to getting your business started. It helps your brand stand out and shows what your business is all about.
Your name should either summarise your business or appeal to the audience you want to target.
It’s
also important that the business name you pick defines your brand, standing out from your competitors. You
also need to ensure your name is protected so you have sole authorisation over who can use your new
business name.
2. Conceptualising your business idea and doing your research
Turning a business idea into a proposition that will be successful in the long run is hard. It’s key that you explore multiple ideas, considering the pros and cons to each, before deciding which idea to run with.
In order to turn your business idea into a successful profitable business, you must do your research. The below factors are just a start on what research you should be doing when coming up with your business idea and mapping out the steps you want to take:
- Competition: Identify your competitors and understand their product or service USPs
- Market research: How saturated is the market and where you provide a better solution
- Costing: Value your product or service and how much should you charge
- Audience: What do your target audience need from your offering
- Financials: Map out how it your business will work financially, especially your outgoings
3. Test your business idea
When you have a thoroughly researched business idea, you will need to test if your idea works in the real world. One way to test your idea is to build a social media page and gauge interest through polls. You can also start small, offering limited products or services to see how they perform before scaling up.
This rings true for small business owners as well. If you’re looking to start a cafe, try renting a stand at farmer’s markets first. If you’re in IT or software, try soft launches and get feedback from other people in the industry through forums like Medium. From how much customer interest is in your new idea, to the revenue behind it, trialling your idea is an essential step to take when starting a new business to ensure there is success behind it.
4. Secure the funding and finance to your business
Depending on what type of business you’re building, you may need to consider costs before you test your product or service.
Money makes the world go round and your business will require investment, whether that’s from yourself or from a third party. But how much do you need? To work this out you will need to identify any outgoing costs and create a budget. These outgoing costs can include raw materials, employee salaries, tech or software needed. If you have savings already set aside, great, but make sure to map out a financial plan so that you don’t use all your savings at once. If you don't have any savings of your own, there are also grants for new businesses to give that helping hand.
If possible, try to get a small business grant instead of a loan. In most cases you won’t need to pay grants back, whereas loans will require you to pay it back over time, often with added interest. An example of a small business grant you can look into is the ‘Seed Enterprise Investment Scheme (SEIS)’, a scheme to help startup businesses raise money. If you use this scheme you can raise up to £150,000.
It’s worth noting that startup grants can be quite difficult to get so don’t rely on this route to get started. If a loan is your only option, there are lenders who cater specifically to startups. For example, successful applicants of the ‘Start Up Loan’ could borrow up to £25,000 and receive 12 months free business mentoring. The ‘Bounce back loan’ is another example, available through a range of lenders to provide financial support to businesses, with the maximum loan being £50,000.
5. Work out the tax behind your business
All prospective businesses owners need to think about the legal requirements that come with having a business. Understanding tax is a key part of this. As a new business owner you will need to register with HMRC or Companies house and based on the profits your business makes you will need to pay corporation tax. In addition to this you will also need to send a self assessment, as you can claim back certain expenses. To find out more about this year’s income tax and personal allowance rates, visit the UK government website here.
Europe’s most popular startup business
If you're in the process of starting your own business and don’t know where to start with receiving payment for your product or services, we are here to help. Here at Paymentsense, we understand that you’ve worked hard to bring your business to life, so let us help you get paid more easily and find out how to accept card payments for your small business.
Methodology
Data was gathered from Eurostat and EU Startups to show each European countries business numbers, including 2 to 5 year survival rates, number of new businesses, the most popular startup types and the cities which are the most popular for new businesses in each country
Sources
[1] “Estimating the number of startups in Europe” (Medium, 2020)