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Educating Entrepreneurs: B-schools Help Turn Cities Into Start-Up Clusters

Global cities court nascent entrepreneurs with offering of capital, talent and support, as business schools help form start-up clusters.

Mon Jun 22 2015

BusinessBecause
The world’s cities are lining up to court entrepreneurs and are laying claim to the title of start-up hub, as entrepreneurs seek the infrastructure that can help their ventures scale.  

Energized by technologies such as mobile computing, which has made it cheaper and easier to launch companies, cities across the globe are desperate to become hotspots for nascent entrepreneurs.

The location of launch is fast becoming a key decision for the ballooning figure of business founders, many of whom are now launching straight out of formal education, as this series will explore.

Jeff Skinner, executive director at the Deloitte Institute of Innovation and Entrepreneurship at London Business School, says cities create markets for the resources that businesses need, like employees, facilities, professional services and finance — dramatically lowering the cost of launching a venture.  

“They create liquid networks of people and ideas, and this cross-fertilisation enables the rapid creation and testing of new business ideas,” he says.

Potential hubs from Berlin to Stockholm are vying to be the next big entrepreneurial centre.

But this has raised the question of whether second tier cities can rise to global success, and whether they can hold onto their start-ups or lose them to larger metropolises such as London and New York.

“Businesses move out when it gets too expensive, when the advantages of being in a cluster begin to disappear, or when the resources they need, such as money and access to markets, are better elsewhere,” Jeff says.

San Francisco’s Silicon Valley is seen as the ultimate start-up cluster, a mixture of old and new businesses striving to innovate, often with disruptive technologies.

Thomas Charlberg, co-founder and chief of executive of San Francisco based Avalanche Biotechnologies, a Nasdaq listed biotech start-up, says that all the pieces of an entrepreneurial ecosystem are in the Bay Area — such as talent, lawyers, bankers and investors.

“The degree of innovation and entrepreneurship in Silicon Valley is dizzying,” Thomas says. He graduated from California’s Haas School of Business in 2011, a year after launching Avalanche. Classes rotated between campuses in Berkeley and Silicon Valley. “You learn so much in business school — negotiations, strategy, organizational behaviour — that as a CEO you continue to draw from,” Thomas says.

Yet two-thirds of tech start-ups that have gained a $1bn valuation in the past decade — so called “unicorns” — come from outside Silicon Valley, according to research by Atomico, the venture capital group led by Skype co-founder Niklas Zennström.

“This is the best time in history to be a technology entrepreneur in Europe, or indeed outside Silicon Valley,” Niklas says.

Silicon Valley has produced 63 unicorns, but is followed by Beijing (23), New York (11), London (7), Stockholm (5) and Berlin (5).

In the US, New York’s tech scene in particular has expanded rapidly, while cities such as Austin in Texas are developing promising start-up clusters. William Peregoy, a graduate of Hult International Business School and founder of DineMob, a Dallas based app that helps restaurants fill during off-peak hours, says the Texas start-up scene is growing fast.

“People may not think of Dallas when they think of startups — but big startups do come out of Dallas,” he says. These include Broadcast.com, the television site founded by Mark Cuban, which was acquired by Yahoo for $5.7 billion, and cloud computing group Softlayer, recently bought by IBM for $2 billion.

In Asia, Beijing, Shanghai, Tokyo and Bangalore have seen rapid growth in venture capital deals, while Singapore also has a growing start-up sector.

Shouvik Dhar, an Indian School of Business graduate and co-founder of Bangalore based Creatist, a patented, cloud-based tool to create and measure interactive content, says India has a vibrant entrepreneurial scene.

“India is a huge market that is on the cusp of opening up to innovation,” he says. He launched the venture in 2013 with minimal investment and says that even now operations are low cost.

Professor Rama Velamuri, chair of the Strategy and Entrepreneurship Department at China Europe International Business School in Beijing, says technology has made it cheaper to found companies, and most entrepreneurs in the industry “bootstrap” their initial capital requirements.

“Technology sectors rely much more on knowledge and the capacity for hard work than they do on capital or social networks,” he says.

To succeed, start-up clusters need an ecosystem which includes finance, talent, support structures such as co-working spaces, and services such as legal advice. Venture capital flows more freely into the European start-up scene, much of it from the US, but it remains below levels of funding available in Silicon Valley.

“Seed money is abundant here,” says Simon Stockley, senior teaching faculty in entrepreneurship at the UK’s Cambridge Judge Business School. “But the real issue is growth capital,” he says.

However, this has not stopped several recent eye catching funding rounds. These include by ventures Farfetch, the luxury online fashion group, which raised $86 million based on a valuation of £1 billion; and London fintech start-up WorldRemit, which raised $100 million at a valuation of $500 million.

“There is an abundance of world-class talent in the city, and the convenient time zone which enables communication with Asia and the Americas in same working day, is an attractive factor,” says Ismail Ahmed, CEO of WorldRemit and a graduate of London Business School (LBS).

The education sector has been keen to help hone cities’ entrepreneurial ecosystems.

“People tend to stay, start business and then feed back into the ecosystem,” says Cambridge Judge’s Simon. Cambridge University counts among its successes Autonomy, the software group, which was controversially acquired by Hewlett-Packard for $11 billion; and biotech company Solexa, which was sold to Illumina for $600 million.

“There is the buzz of the peer network, everyone wanting to be seen as successful by other entrepreneurs in the community,” says LBS’ Jeff. He believes that more businesses will stick around in London as financial markets begin to see the potential of larger investment rounds.

But if cities do not court their entrepreneurs, they risk losing them to more attractive start-up clusters.

Alexander Afanasyev, founder of Moscow based design start-up YDCollective, and an IE Business School graduate, says setting up a company in the Russian city was like “dating a prom queen”.

“You have to rely on no specific set of rules or regulations, but on a rather holistic approach to every business issue, and personal networking,” he says. In Russia, he says, “failure is not an option”.

Artem Andrianov, co-founder of Cyntegrity, a start-up in Frankfurt that offers risk-based monitoring services for clinical trials, and is backed by Commerzbank, says the Germany city’s start-up scene cannot yet be described as “healthy”.

“For many years German businesses have been developing slowly and, consequently, have been reluctant to take risks and innovate,” says Artem, a graduate of Cass Business School. “The absence of tolerance of business failure makes many people refuse to try their ideas.”

He says, however, that an MBA in London allowed him to observe many young people taking risks to succeed with their own start-ups. “After graduation, I was not scared to start a venture.”

Student Reviews

Bayes Business School

Student

Verified

31/10/2023

On Campus

Best Journalism school in Europe

When I first stepped onto the campus of City, University of London, I knew I was in for a ride - and not just on the Tube! With its vibrant energy and an impressive repertoire of programs, City U became my home away from home. The Journalism program was kind of a big deal. Rumour was that we were the best in Europe! The lecturers were not just experts in their field; they’re practically journalistic royalty. They were invested, passionate, and had a knack for turning the most flat press release into a riveting news story. With their guidance, I’ve learned to navigate the chaotic world of media like a pro. The campus was a melting pot of every culture, being that we had such a diverse international crowd. Being in the heart of London, I had the world at my fingertips - there was always a new corner to explore, a hidden gem of a cafe to discover, or a street performer! City, University of London wasn't just a university; it was a chapter in my life story that I’ll never forget.

Lydia

Verified

23/02/2023

On Campus

Learning environment

The teacher-learner ration is manageable, giving each learner a chance to gain personal attention. It is also easier following up on the progress of a student, as the numbers per class is not large. the conducive environment for learning includes clean classes, standard desks, world class instructional facilities and the opportunity to engage lecturers even after their sessions. The team spirit at City is above board, with learners getting chance to learn both from instructors and colleagues. This is the university of choice; the place to be.

Nathaniel

Verified

24/01/2023

On Campus

Classes

I liked that each class had a manageable number of learners, making the professor-learner ratio favor knowledge acquisition. I also liked that study schedules were manageable, and not overwhelming. The focus on talents and gifts even within the learning environment makes it possible for learners to achieve the best of their potential, and this has worked to the advantage of those that have schooled at City, University of London

Muhammad

Verified

24/01/2023

On Campus

Classes

The diversity at City University facilitates interactions and is a direction toward the unity of the world. The classes are well built to match the number and needs of all students regardless of the elements of diversity that set people apart. The use of technology in delivery makes learning even more interesting and achievable. At City University there is no distinction pegged on the issues that make people unique.

Dorah

Verified

23/01/2023

On Campus

professors

The team of lecturers at the Uiversity are well experienced. Their level of insight and the methodologies of delivery works for the interes of the leaeners. My learning experience was largely boosted by the level of knowledge of the professors at the institution, and their passion to transfer the same to learners. I appreciate every class I attended because of the level of insight I was able to gather

Nora

Verified

17/12/2022

On Campus

The best university I’ve been to

The campus and the people I've met have made it a wonderful experience. I was reared in a small town with a graduating class of only 88 individuals, so moving to City University was a huge adjustment for me. My dorm has more residents than my whole high school combined! I enjoy the atmosphere here, and everyone is so friendly. Outstanding academic options and a stunning campus. Really great from beginning to end. The educators genuinely love what they do, and the students are ready to learn. On or around college, there is always something to do with friends, and the social scene is particularly warm.

Antonia

Verified

21/11/2022

On Campus

Bayes Business School

As a student at City university attending Bayes Business School I would totally recommend choosing this university as the experience is exceptional with great social networking opportunities . Professors are significantly helpful, delivering with excellence and professionalism. Everyone is happy to help and make you feel welcomed in such an esteem university as City, offering exceptional development and guidance through out the course.

Muhammad

Verified

15/11/2022

On Campus

Economics and Politics

Incredibly amazing university, the way they polish students and help them boost their morale and think intellectually is worthwhile. Many universities have international partnerships to allow exchanges between their students. The most obvious subjects for these opportunities would be those that involve languages, and the study of people and places.

Navya

Verified

11/11/2022

On Campus

Clinical biology

I really like it it’s perfect for me with not too many people and not too few either. All the modules are amazing. I love the toy bar. I love all the societies that I’ma part of. Especially the colour Bollywood society

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