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Improving Europe?s Best Startup Ecosystem in 2013

As we enter 2013, we are seeing a gradual stream of tentatively optimistic forecasts and predictions for the year ahead – something quite remarkable given the doom and gloom of just a few months ago. This optimism has been most visible in London, where the recent CBI/KPMG London Business Survey found 61% of companies expected to be hiring as normal next year – a huge leap of 45% in just five months. Similarly, a roundtable event held last month by workspace provider Avanta found business leaders of London-based SMEs to be increasingly optimistic for the year ahead, with almost all attendees planning on growing their workforce in 2013.

The positivity has been compounded by Startup Genome’s recent research which found London to have the most prosperous ecosystem for startups in Europe – and among the world’s top ten on the ‘Startup Ecosystem Index’. The report did, however, also point to improvements necessary before the city can compete with the likes of Silicon Valley: better access to funding and a less risk-averse pool of entrepreneurs willing to think big.

While these are clearly important issues to be addressed in the year ahead, it’s worth adding one more goal to the mix: to create a more flexible environment for businesses, and spread an understanding that flexibility can play a key role in equipping them for success.

The best entrepreneurs are able to quickly recognise a problem and subsequently test out new iterations on an idea until they find the approach to which customers respond best. In the same way, businesses should always be ready to evolve ideas quickly, adapting to market demands and the environment within which they operate. Finding and nurturing the right environment for doing this is crucial to start-up success – and that is where flexibility comes into play.

Service providers who offer flexibility to SMEs can play a huge role in encouraging innovation and reducing the fear of failure that cripples so many new companies, by reducing their liabilities and allowing them freedom to innovate, take risks and adapt to changes in their market.

Flexible office space, for example, can eliminate the need for up-front expenditure, administration and management time. As a result, vital time and finances are freed up for other areas and businesses are afforded the space to ebb and flow - turning services on or off as required - reducing financial risk to the business in the process. In the same way, greater flexibility from funders, suppliers and banks could pave the way for a far more dynamic startup ecosystem and breed greater success rates in the long term.

If London is to challenge the likes of Silicon Valley as an environment for fostering startups, Government and service providers must share the burden of pushing for greater flexibility and endeavour to provide ambitious businesses with the space to adapt and change that can significantly increase the chances of success.

Above all, those who do assist by offering flexibility and support should be encouraged and championed – after all, startups and SMEs play a pivotal role in job creation, economic ‘productive churn’ and, ultimately, the long-term future of the UK economy.