Aarhus – one of the best places to start your business!
According to Global Entrepreneurship Index 2016, the Scandinavian country Denmark wins the 1st place in Europe by earning top scores in opportunity perception, competition, technology absorption and product innovation. On the world map, Denmark takes the fourth place just after the USA, Canada and Australia.
Denmark is also praised for its human capital, providing highly educated and skilled workforce.
WingzIt had the chance to ask the mayor of Aarhus, Jacob Bundsgaard about entrepreneurship and the startup ecosystem in his city. Aarhus is the second biggest city after Copenhagen. It is the cultural and economic core of the region and the largest center of trade, services and industry in Jutland.
1. What is the situation in Aarhus at the moment, when it comes to startups?
It’s been a few rough years, but actually right now we are back to where we were before the financial crisis. There are about 1,200 new startups in Aarhus every year, so it is definitely picked up. There is also a quite high survival rate for startups. 76% of the starting companies survive the first 3 years.
The startups ecosystem is growing; the number of entrepreneurs is increasing. They are huge part of the job creation in Aarhus, so they are really contributing to the development of the city right now.
2. What about the investors, are they increasing? Are there more investors in Aarhus?
There are. There is still a lot of work to do; especially attracting a foreign capital to the city, but having 1,200 startups takes a lot of investments. There are investors, which are always looking for good startups. The low interest rates are making the risk of supporting startups lower compared to the possibilities of making a profit from them. There are positive circumstances that we need to take advantage of right now.
3. How does the municipality support startups?
We support startups in a number of different ways.
First of all, we try to recognize the people that are taking the risk of starting a company and have the ideas and we try to support them with praise and recreation. We have quite large support for startups; they can get free guidance and consultation at Startup Aarhus (StartVækst Aarhus). Entrepreneurs receive help in the initial phase of the development, the business strategies and to get the business case right. We also try to assure that the good ideas and the good businesses find the right money.
On top of that, we have very strong clusters in ICT, Food, Renewable energy, and Health. We set up international venture contests, to pair good ideas with the right investments within these areas. Especially, investors see our strongholds in Health and ICT as big opportunities, because they are scalable and if you find the right idea, you can go global from the beginning.
4. When you talk about global, let me ask you are there international people that are starting companies in Denmark or international companies that are planning to establish companies in Aarhus?
I think that both established companies that have moved part of their business to Aarhus and international entrepreneurs starting their business here, are growing. I recently had a meeting with TATA and I can say that there are more and more international companies that are placing their research and development departments in Aarhus. We are experiencing also more and more startups created by internationals and I think this is due to the fact that there are more international people here. We are also becoming better and better in providing support for people with international background, who want to start business here. According to many different ratings and reports it is really easy to establish a company in Denmark. There is no corruption and the bureaucracy is held to minimum. The combination of these factors probably makes it attractive to look at Denmark as a good place to start your company.
5. What are the reasons people choose to invest their money and time in establishing a company in Aarhus?
The establishment barrier is very, very low. Of course you still need the right idea and the energy to take all the risks in order to develop your idea and business, but it is definitely doable in Aarhus
6. What about the infrastructure for entrepreneurs? Is it going to develop?
Yes, it will. We support the development of different sorts of startup houses. If we have a temporary available building for perhaps a year or two, we make sure that startups can use it for a while to lower their initial cost and hopefully to develop a business that can survive without help after an initial period of time. We try to support that part of the infrastructure, but in terms of traditional infrastructure, we make sure that the right research environment is provided as well as the combination of business, research, students and customers. We are also using ourselves as a large buyer of many different types of goods and services as an initiative taker, and in this way, startups can get their first reference, which can be very important.
We are developing projects together with startups in some instances, but if it has a specific value over a set amount, we need to have a tender. It is difficult for new companies/startups to go into the tender process, because it is a bureaucratic process, but on the small scale we can and try to support them.
7. What is your plan and vision for the next year or two?
Everything is aligning right now for even more startups to be established. We need to push it forward and we also need the different startups to learn from each other and create the right environment for people to share their knowledge and experiences. And hopefully to have more already established companies take the potential startups and nurture them by providing a good platform for development of their ideas. We are trying to support that and I do have few good examples.
For instance, we have one of the oldest companies in Aarhus, called Stibo that supports startups. In their basement they have allocated an area for startups to come in, get guidance and be nurtured by the experienced employees that they have and to develop their ideas. Some of them are still students, but have an idea and want to start a company before they finish. Some of them just graduated and perhaps based on their master thesis, they are realizing an idea and they get to test it out in this company. Either because it is interesting to have young people there to be part of the environment of the company, but also because some of the ideas can be implemented in the company’s own development research, so that type of cooperation is really interesting. For larger companies, it is more difficult to be really fast and flexible and highly reactive to what happens in their area of business. This can be a great experience for both parties and a great support to push forward faster if the established larger companies have smaller more agile companies to help them out.
8. What is your advice for entrepreneurs?
Get moving and do it!
Especially for young people, before you establish yourself with a house, a car, a dog, a wife and a kids you need to test out your ideas, because the more established you get the higher the risk is if you fail. Many entrepreneurs will experience failure when they start up, either because the idea is not good enough; they are not experienced enough or they didn’t meet the right people and the right money at the right time. So you need to be able to have few failures before you really hit it and that is just easier, when you are young and less established in your personal life. So people should really get going.
The city of Aarhus has so many young people that are holding the skills and knowledge both in terms of research, but also the energy. The dynamics in the city, makes it just a perfect place to try it out. You can do it almost with just a good idea and few bucks.
9. What about your advice to investors?
They should come and have a look at some of the brilliant ideas and people who are here. Hopefully they will be able to attract more and more investors through showing some of the good cases. They should be in Aarhus also because it is an interesting city and many of the business strengths in the city will help save or change the world and we need to take initiatives to handle the global challenges.
July 22, 2016