September 29, 2022

StrategisChhr

Skillful Business Crafters

Improve the start-up ecosystem? ‘Look beyond city limits’

Rotterdam is in 30th place worldwide in terms of the most attractive cities for start-ups. At least, if you are to believe British Money – a comparison site for financial products. The comparison site looked at such things as opportunities for establishing businesses, the percentage of students in the city and – brace yourselves – the number of cafés per capita. All these scores were added together to form an average. Denmark’s Copenhagen leads the list and Amsterdam is in 19th place.

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The number of cafés per capita according to Money’s list. (c) Money

When asked about this research, Lars Crama and Wouter van Rooijen of Up!Rotterdam are unable to suppress a mocking laugh. “Have you seen what place Tel Aviv is in? Dangling somewhere down at the bottom. Ask people who are in the know and they will put Tel Aviv somewhere at the top.”

According to them, the number of cafés per resident of Rotterdam does not say much about how successful a start-up in the port city actually is. Crama: “Maybe for the lifestyle of certain entrepreneurs, but the success of a start-up does not depend on how many café’s there are in the city,” Crama laughs.

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What is important in an ecosystem?

So, which things in a city are important for attracting start-ups or enabling them to grow? Crama and Van Rooijen at Up!Rotterdam look at different things than the British agency had looked at. Up!Rotterdam is a public-private partnership from the municipality of Rotterdam that tries to help innovative start-ups grow. Here, the focus is on talent, the market, capital and strengthening the ecosystem.

“The market, the number of investments, or the pool of talent are, of course, things that can be measured quite well. Without talent, capital or a clear market, you can’t grow as a start-up. But this also entails other things that are not so easy to measure. For example, how connected is our ecosystem? How does it compare to other ecosystems? Can an entrepreneur quickly find investors or other parties who can help them further? That connection with other ecosystems is especially important for an international region like Rotterdam.”

Not enough start-ups sustain growth

In 2019, Up!Rotterdam began mapping the start-up ecosystem in the metropolitan region of the port city. From less than a thousand start-ups then, to almost 1800 now. Good for a market value of over €3 billion. It shows that business activity is on the rise. Van Rooijen: “But only a small percentage of all those start-ups manage to grow into scale-ups. This holds true not just for this region, but also for the rest of the Netherlands. By working with entrepreneurs to see what they need, we try to help them on their way.”

This is not done from ‘an ivory tower’, according to him. “We do this in a market-driven way and look with our network at what is really needed,” he explains. This network comprises entrepreneurs, academics, investors, accelerators, incubators and other individuals or institutions. Crama adds to what he says: “In the Top 10 percent companies, we know exactly what they are looking for in order to grow. That’s how we introduce companies to international VCs in a targeted way. A scale-up that works with hydrogen will stand to benefit from a different investor than a scale-up that offers business-to-business software as a service.”

Read more about innovation coming from Rotterdam here

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Lars Crama
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Wouter van Rooijen

More vacancies than at Unilever

Crama is well aware that finding the right talented people can also be a challenge for start-ups or scale-ups. “Job seekers don’t tend to end up at a scale-up, they often look at large corporates like Shell and Unilever instead. To show that there is more out there, we have put all the vacancies of the 140 fastest-growing companies in the Rotterdam region together on an international platform: HackYourCareer.com. By doing this, we want to show that there are far more options than just the well-known companies. Take HousingAnywhere for example, a fast-growing company in Rotterdam, they have more vacancies in the Netherlands than Unilever, if you don’t count internships.”

Unlike scale-ups that have more or less proven themselves, working for, or setting up, a start-up can involve a degree of uncertainty. Yet Van RooijenCrama sees more and more start-ups taking this step after their studies. “In 2012, when I had just left Erasmus University, more than half of the students went on to work for a large-scale company. Nowadays, that has turned around and only a small portion goes to work for a corporate. The rest either start their own business or join a start-up.”

Whereas previous generations first worked until they were 50 and only then gave something back to society, the newest generation wants to make an impact sooner. “They are opting less for the money, but find it important, for instance, to make transport more sustainable through a company such as Hardt Hyperloop. We want to support these ambitious young people with ideas so that they can continue to grow. To do this, we don’t start an accelerator program ourselves, but we look at what is already in place and try to connect parties with each other,” Crama goes on to explain.

Read more about Hardt Hyperloop here

Returning knowledge and capital to the ecosystem

This is also where successful entrepreneurs, who have already played the game before, have an important role to fulfil. Take Graduate Entrepreneur for example, where successful alumni of the Delft University of Technology (TU Delft) and Erasmus University not only pool money to fund start-ups, but also share their knowledge to help new entrepreneurs move up the ladder. There is already around €21 million in several of these funds. The money is designed to guide innovative start-ups through the first phase.

“In the US, you can see that successful entrepreneurs who have made an exit use some of that money to reinvest in new businesses. It is important for an ecosystem that money and knowledge flow back into it. That’s why it’s great that successful entrepreneurs and alumni are joining forces for the Rotterdam region. They know the ropes. They have had their breakthrough on an international level or have made a successful exit themselves. Not only does this offer starters easier access to capital, but they also benefit from the wealth of experience that these alumni bring with them.”

Both Crama and Van Rooijen believe that rankings, such as those like Money’s, should focus less on city limits. For example, the Rotterdam ecosystem is much wider than the city itself; it also includes Delft and surrounding municipalities. “Rotterdam is often associated with the port. That is very true, but it is so much more. By acting together as a region, we can showcase that ideal combination of entrepreneurship and technological innovations much more effectively.”

Improve the start-up ecosystem? ‘Look beyond city limits’