The Startup Economy and phenomena in Europe and Mena

A startup is a newly emerged business that focuses on meeting a marketplace need through creating a viable business model for a product, service, or process. According to Kotsch (2017), a startup is normally formed to seek a repeatable and expandable business model. Startup companies are owned by innovative entrepreneurs who identify opportunities and develop new technologies, as well as innovative business models to create new jobs (Ripsas & Hentschel, 2015). Although startups have high possibilities of failing, the little success that comes from the business models has made them quite influential and desired. Business models for startups assume a bottom-up or top-down system. According to Sawyer (2009), financial modeling firms assume a top-down process, as most of them do not have adequate data to develop from the bottom-up process.
Startups in Europe involve the ‘one-stop-shop’ business models that connect investors, corporate networks, and universities, through various networks. They are becoming essential components in the development of policies within the European Commission, whereby they have received support from the local governments through the development of financial and administrative programs (Lugovic & Ahmed, 2015). The European Commission (EC) is involved in the development of a fairer Single Market (SM) that focuses on creating benefits for customers and businesses. The EC facilitates the development of policies for startups by reviewing entrepreneurship changes within the digital industry.
The UK and Germany have emerged as powerhouses in terms of European technology, where they have generated startups that include Delivery Hero, Hailo, and TransferWise, which come from healthy ecosystems that are saturated with accelerator programs, as well as eager early-stage investors (O’Hearn, 2014). Although employment has slumped in the recent years in the UK, the booming startup economy that has been experienced in London has helped in creating about 27% of the latest jobs in the city. The city of London leads in terms of startups owing to huge capital directed to such investment. The city has benefited from accelerator programs, which offer intangible services that include mentorship, financial and legal support, education, and workshops. Clinical legal education has also been an additional part of the startups in the UK, which has helped students to find jobs, as well as gain exposure to commercial law (Collins, Klotz & Robinson, 2016).
The UK is on the verge of being overtaken by both France and Germany based on the overall number of completed deals, though the UK has invested a larger amount of funds into startup businesses. In Germany, the tech scene has continued to record a rapid growth, with its impact being felt in healthcare, banking, and other business investments. The country is renowned for its risk-averse business culture, and most of its startups focus on developing products, and how to market those products (Geibel & Manickam, 2015). Germany startups have experienced success in 2017, as the newly launched companies made the investment rise by 88% to €4.3 billion(Buck, 2018).
Berlin-based firms had the largest share of funding in overall startup investment in Germany, thus, making the country one of the most successful startup scenes in Europe. Most of big investments went to mature businesses that have been listed recently on the country’s stock market. Berlin has won the interest of foreigners, as its ecosystem has attained the highest degree of visibility. It is the second largest startup hub in Europe, after London, with 70% of Germany’s total startup investment being directed towards the city (Buck, 2018). Some of the biggest startup firms in Berlin include Delivery Hero, Fyber, SoundCloud, Epiclist, and TestCloud.
France has benefited from startup companies, which are spread across its major cities. Paris is one of Europe’s cities that host the continent’s 100 hottest startups in 2017. The city is moving away from a long tradition of inflexible government bureaucracy by making it easy for global firms to establish themselves in France. The victory of Emmanuel Macron as the French president boosted startup companies, as he was expected to announce a reduction of taxes on investment, as well as launching a special visa scheme that would appeal to foreign tech workers (Medeiros, 2017). Paris is perceived as a real living lab, whereby all companies, regardless of their sizes, can try to exercise new ideas. Some of the startups that are based in Paris include Spendesk, Mooncard, Qonto, and Feed. Other cities in Europe that have excelled through startups include Barcelona, Milan, Sofia, Ankara, and Athens.
Startups in MENA () do not assure investors anything closer to Silicon Valley, as matters concerning ecosystem are interspersed with words such as ‘soaring’ and ‘infancy’ (D’Cunha, 2017). In MENA, even the top 100 startups are able to raise a measly average of US$500,000, which is still low compared to what startups in Europe and the U.S. can raise. However, a paradigm shift has been witnessed in technology-enabled companies as the number of startups continues to grow exponentially (Scott, 2017). Most investors still believe that the region is underfunded while opportunities are held by the capital. However, the recent sale of Souq.com, a regional commerce firm, to Amazon, has opened the possibility of attracting a huge number of foreign investors to the region.
Employment generation has been a critical challenge to policymakers within the MENA region since the Arab uprising, as unemployment levels are quite high, compared to any other region (McConaghy, 2013). Research among the SMEs in this region revealed that new jobs growth only comes from large firms and startups. The research suggested that policymakers should direct their efforts toward promoting startups to attain strong employment outcomes.
Lebanon, one of the member nations of MENA region, has managed to raise a credible niche for startups. The country has a diverse and tolerant population, which is prone to innovation. Besides that, the government has set aside a huge fund ($400 million) for the knowledge economy through the Proposal 331 of the Central Bank (Pasquier, 2014). The country boasts of being an entry to a huge diaspora, which can help in conquering other markets, as well as a tradition for conducting trade and negotiations. Some of the well-known startups in Lebanon include Cedar Books, Instabeat, Lamsa World, Anghami, and Shawarmanji. Lebanon is also home to Arabnet, a vital tech regional event/summit, with some satellites situated in Dubai and Riyadh.
In Egypt, startups are stealing the show through competition, as they reap the fruits of inventive business ideas to address the country’s most pressing problems. The country is one among the most represented in terms of the top 100 startups in MENA region. Startups in Egypt are involved in recycling cans, assisting children with autism, as well as boosting the handicraft industry (Cairo Scene, 2017). For instance, ZeroWaste is involved in recycling of cans while Tripdizer helps travelers make arrangements for all their trips at a single place. Other startups that demonstrated potential for success in 2017 include Perligos, Ta2heel, PreCogs, Fixawy.net, Mogassam, and Smart Pro Star.
Saudi Arabia has not been left behind in terms of creativity and innovation. The country has invested on startups, in an attempt to expand its business ventures away from oil. Most of the startups in Saudi Arabia have been established by Saudi investors. For instance, Saudi Aramco Ventures have invested in more than a half of the ten best funded startups in Saudi Arabia (Paracha, 2018). According to the MENAbytes, Saudi startups managed to raise approximately $28 million from 8 deals in 2017, and this figure only incorporated the deals that were reported to the public. Saudi Arabia has more than 800 startups, and Badir Program for Technology Incubators has been quite supportive, especially to technology-based companies in terms of funds and ideas, as the country endeavors to improve the national economy through technology.