global tech cities

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MADRIDSYDNEY

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QuickView | Global Tech Cities

Every week there is a new startup, industry stat, IPO and exit, that stops you in your tracks and makes you think about just how much impact technology will have on our lives.From banking to pharmaceuticals to farming and manufacturing, whole industries are simultaneously disrupted and enhanced the world over.

Taking advantage of private and public partnerships as well as the plummeting costs of technology and cost to start up, groups of tech pioneers are bringing redundant areas of cities to life, adding jobs and growing economies.

Silicon Valley is the original (and most successful) entrepreneurial ecosystem, New York was recently crowned top of CITIE’s ‘innovation index’ and London has firmly established itself as the fintech capital of Europe. But what about other ‘tech cities’?

Exploring Global Tech Cities QuickView highlights five of the world’s most ambitious tech cities, uncovering what’s making these destinations so attractive for tech innovators.

QuickView

Released monthly, Sonovate's QuickView series provides recruiters with key information about industry sectors.

Previous editions:

• Fintech• Mobile • Big Data• Enterprise Technology• Cloud • 100 Fastest Growing UK Tech Companies (by

employee growth)

To download other editions of Quickview click here.

BER

With a strong history of creativity, Berlin has perfected the art of building tech companies.

The special mix of music, art, nightlife and relatively low costs of living continuously attracts talent.

It’s impossible to write about Berlin without including SoundCloud, the startup which encapsulated the city’s love of music and tech, however, the cities fintech scene is growing, and quickly.

According to a recent FinTech Forum study, the DACH region (Germany, Austria, Switzerland) attracted US$300 million in 2014, the second largest amount of fintech funding in Europe after the UK.

Silicon Allee

1WeltSparen (SavingGlobal)

What: Deposit-brokerage

What they do: Self-described as the “Amazon for deposits” SavingGlobal launched the first pan-European deposit-brokerage platform in German enabling German savers to access to the best interest rates from banks across Europe. What they say: “Europe’s #1 marketplace for term deposits.”

Investment: $10.2m from one round.

Website (savingglobal.com/)

Number26

What: Online & mobile banking What they do: Digital-only bank account accessed through an app. While Number26 only accepts German and Austrian customers for now, 8,500 people signed up already and 15,000 others are waiting for an invite. What they say: “Europe's most modern bank account.” Investment: $12.7m from six investors.

Website (number26.eu)

Leading Disruptors

Why Berlin

VentureSource estimates that $2.2bn was invested in Berlin firms in 2014, compared to

$1.5bn in London.

McKinsey research revealed that Berlin startups could

generate 100,000 jobs by 2020.

Deutsche Bank aims to launch three technology innovation labs in Berlin, London and

California in 2015 designed to accelerate development of so-called fintech firms that

could aid the banking sector and its clients.

In April 2015, realbusiness.co.uk reported that London was beginning to face

competition from Berlin, with global real estate portal Lamudi

predicting that the German capital could overtake London

within five years.

Mobile is leading the startup funding, according to data from

CB Insights, growing at 115% year-on-year deal growth at an average deal size of $26.42m.

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Home to where Skype - the first bn-dollar technology company outside Silicon Valley - was born, Stockholm’s tech scene is thriving.

In the last few years, Stockholm has become one of the most talked-about places in the world thanks to its apps, games and digital services.

CB Insights data shows that $787m of venture capital was pumped into Swedish companies last year, making 2014 “the best year for funding since the dotcom boom 15 years ago”, according to Torbjörn Bengtsson of Stockholm Business Region Development, the city’s official investment promotion organisation.

The Nordic region represents 2% of global GDP but has accounted for almost 10%

of the world’s bn-dollar exits over the last decade, with more than half of these coming from Sweden.

Source: Creandum

STKWhy Stockholm

After Silicon Valley - Stockholm has more multi-million pound startups than anywhere else

in the world.

Sweden's tech industry attracted nearly £560m of

investment in 2014

According to the Stockholm School of Economics, 18.3% of all fintech investments in

Europe over the past five years went to the Swedish capital.

The fintech industry is estimated to employ 4,600 full time employees (as of 2014),

with fintech roles increasing by 44% from 2010 to 2013.

According to a study by Atomico, “on a per-capita basis, Stockholm is the second most prolific tech hub globally, with 6.3 bn-dollar companies per million people compared to

Silicon Valley with 6.9.”2

Startup Syndrome

21%YoY Deal Growth

Q2’15Biggest Quarter ($ Funding)

54%% of deals in Internet

29%% of deals in Internet

Source: CB Insights

Investment in Stockholm

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Why Manchester

Manchester’s technology and communications sector was

responsible for £1.9bn in 2013/14, making it the highest

gross value added (GVA) outside of London for technology,

employing over 30,000 workers in the digital space.

In March’s (2015) Budget, Chancellor George Osborne

announced funding of £4 million to create an eight-floor tech incubator in Manchester’s

Northern Quarter.

Manchester is the most popular place for foreign direct investment outside

London, according to the New Economy think-tank.

The Centre for Cities think-tank says that Manchester is one of only three large cities (Leeds

and London are the other two) with a higher share of private

sector jobs than the UK average.

Oxford Economics, predicts Manchester will grow faster

than the average for the rest of the country over

the next 10 years.

I don't care about the second city title. London and

Birmingham can fight over it amongst themselves.

Tony Wilson

MCRWitnessing 70% growth in digital companies between 2010 and 2013, Manchester’s tech scene is rivalling London and is acting as a magnet for nationwide talent.

Thanks to cheaper rent, new workspaces are popping up, notably TechHub and the Sharp Project, and the city’s Northern Quarter is fast becoming a hub of startup activity. In 2014, Chancellor George Osborne announced that he wanted Manchester to be the engine of a “northern powerhouse.” Reflecting this ambition is job growth, which, over the next five years (2015-20), is set to outpace other tech cities including Paris, Berlin and Tokyo.

Northern Swagger

38%% of deals in Mobile

28%% of deals in Green Tech

5%% of deals in Software

Source: CB Insights

Investment in Manchester

3

Barclays’ Fast Growth Tech survey predicts a 10.4% growth in 2015 for businesses in Manchester - four times faster than the UK’s GDP forecast.

Source: Techcity

Number of Digital Jobs: 56,145

Cluster capabilities: Network Infrastructure and ProtocolsCloud ComputingSaaSWeb Services,Visual and Audio Design

QuickView | Global Tech Cities

MAD

With record rounds of funding taking place for Madrid-based Coinffeine and Kantox, fintech is firmly establishing itself in the capital.

To spearhead this growth, six companies have joined forces to form the Spanish Association of Financial Technology (SAFT) with the objective of pressuring the government to offer better conditions for fintech startups.

Spain’s banks have been quick to invest in fintech with BBVA was the first incumbent traditional financial institution to venture into fintech, and Santander putting $100m aside to invest in fintech startups.

Real Banco

Why Madrid

Spain is one of the leading countries for smartphone

adoption. By 2016 it is forecast that smartphone penetration rate will reach around 70% of population.

Madrid achieved a 461% year on year funding growth.

Mobile is the fastest growing industry segment with a 17%

year-on-year growth and average deal size of $25m, according to CB Insights.

Q1 2015 saw $220m investment into Madrid tech businesses,

the highest funding quarter on record. Firms receiving funding

include: Bitext, Spotahome, Suop, Sentisis and Trappit.

EY has opened its Global Innovation Center in Madrid in July that will focus exclusively

in managing and analysing big data in financial services with 50 data scientists and aims to grow

to a 200-strong team.

Kantox

What: Currency

What they do: an online finance platform, provides currency exchange and international payment solutions. What they say: “Europe’s #1 marketplace for term deposits.”

Investment: $21.1m from nine investors.

Website (kantox.com)

Besepa

What: Online payments What they do: process direct debit payments in a cleaner, simpler and quicker way in comparison to banks.

What they say: “Besepa simplifies the way you handle your direct debits.” Investment: Undisclosed from one investor.

Website (besepa.com)

Leading Disruptors

4QuickView | Global Tech Cities

SYDWith strong foundations within the financial, digital and creative industries, Sydney is well placed to become a global fintech hotspot.

Overall, Sydney’s finance and professional services accounts for 5% of Australia’s GDP and produces more wealth than Australia’s mining sector.

To support startups looking to disrupt the Asia-Pacific financial services industry, the New South Wales government, together with some of Australia’s largest banking, property, and technology firms, launched Stone and Chalk, a not-for-profit fintech hub. Over 300 entrepreneurs from 120 fintech start-ups registered to work in the space, which opened in May 2015.

Fintech’s Rising Star

5

Tyro

What: Payments

What they do: Tyro Payments is Australia’s only independent and fastest growing EFTPOS provider. We serve 12,000+ customers, process over $6.5 bn annually in card transac-tions, and have tailored best-fit solutions for the retail, health and hospitality sectors. What they say: “Innovation that pays.”

Investment: A$31.6m in 15 rounds.

Website (tyro.com) SocietyOne What: P2P lending

What they do: SocietyOne is Australia’s leading P2P lending platform connecting credit-worthy borrowers with savvy investors. What they say: “Connecting creditworthy borrowers with savvy investors.”

Investment: A$28.1m in two rounds.

Website (societyone.com.au)

Leading DisruptorsWhy Sydney

The Australian financial services industry contributes

the highest share of sector val-ue to the national economy (9%)

and employs 420,000 people.

As a leading global centre for financial services, coupled with

a strong cluster of professionals in the IT, digital and creative

professional services industry, Sydney is ideally positioned to

capitalise on the growing fintech movement.

Smartphone penetration of almost 90% and fast adoption

of electronic-payment technology make Australia a prime target for disruption.

To unlock the potential of Fintech, the state government

of New South Wales has teamed up with more than 20 large

financial institutions, including Westpac and American Express,

to help turn Sydney into a global fintech hub to rival New

York and London.

A new type of visa available from July 2015 is turning heads

from California to Helsinki. Under new rules, foreigners will

be granted permanent residency if they divert at least

A$500k from a total A$5m investment in Australian

companies into venture-capital or private-equity funds

supporting growth startups.

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New EconomyRealbusinessStatistaSydney Morning HeraldTechcityTechcrunchTechworldthelocal.deVentureSource

AtomicoBarclaysBdailyCB InsightsCreandumCITIEFinextraManchester DigitalMcKinseMEN

Reference Shelf

Madrid

Brad HammondsDavid HurtStefan Schmitz

Sydney

Mikhail BorovkovAlan Lam

Berlin

Jörg SchubertHåkan DahlströmHeisenberg Media

Manchester

Keith JustKeithRichard HeyesMikey

Stockholm

Román EminGiuseppe Milo

Photo Credits

QuickView | Global Tech Cities