Rentberry’s Picks: European Startup Hubs with Affordable Housing

For a long time, Silicon Valley was considered a golden standard of innovation hubs with diverse venture investments and a vibrant tech ecosystem. Valley built up its reputation with countless startups, big corporate headquarters, innovation centers, and billions of dollars of investments. Nevertheless, the decentralized nature of the modern digital world cannot keep innovation to one location. 

European Startup Ecosystem 

In the recent decade, European countries created a welcoming regulatory environment for startup founders and tech companies. According to the report from the investment consulting firm Atomico, in 2019, European tech startups raised a record amount of funding, with $34.3 billion of venture capital attracted to the continent. Around 40% of these deals came from mega-round, an investment over $100 million, signaling that big finance is eyeing the European startup scene. The region is also home to 57 unicorns.

Another driver of growth is a well-educated local population and the abundance of home-grown tech and STEM talents. According to the report by Stack Overflow, there were 5.7M professional developers in Europe in 2019 versus 4.4M in the US.

It is obvious that Europe is challenging US dominance in technological innovation and aiming to become a new Silicon Valley. Another European strength is that there is more than one tech capital, and the landscape is expanding swiftly beyond the established hubs of Berlin, London, and Paris. 

Innovations Go East 

The number of small, successful businesses originated in the smaller European tech hubs is increasing each year. The European single market, common regulatory framework, and ease of travel mean that tech businesses can be created even in the smaller cities and still get access to the European digital infrastructure. This mobility allows tech companies from Poland, the Czech Republic, or Hungary to gain access to the vast pool of talents and quickly expand their customer base from neighboring countries. Moreover, smaller hubs in Eastern and Central Europe have lower taxes and lower costs of living, making them more comfortable launchpads for growing businesses. For investors who are looking for higher returns, looking beyond traditional tech cities is a must.

The technological ecosystem is also underpinned by an amalgam of funding sources with more than 900 startup accelerators facilitating startup growth across Europe. As a rule, those programs also nurture innovations with business mentoring, educational, and support programs for entrepreneurs. 

Due to the borderless nature of Europe, venture capital and tech talent can quickly move to places where innovation is thriving. For instance, after the uncertainty caused by Brexit, many London startups relocated or established subsidiaries in European countries.

Europe is developing cross-country regulations to bolster IT entrepreneurship, facilitating the flux of capital and workforce. Most likely, the next unicorn will be developed outside the big traditional tech hubs, in an affordable Gothic town somewhere in Central Europe. Let’s take a closer look at European start-up cities with affordable housing. 

Warsaw, Poland

Average rent price: $1,116

With the slugging economic growth in Germany and France, Europe is looking East for new drivers of growth and innovation, and Poland is up for the task. In the last couple of years, Poland gained a reputation as one of the most startup-friendly countries with proper regulatory protection and a developed ecosystem. Warsaw is the epicenter of those processes, the crown jewel of the Polish tech scene; the city is booming with opportunities for entrepreneurs. 

No wonder Google chose Warsaw as the prime location of its research and innovation center. Google Campus Warsaw is part of Google’s global initiative for entrepreneurs and technological innovators. It is one of the major hubs for the startup community in the city. It is an educational center and an accelerator with a focus on mobile gaming startups. Google Campus also frequently hosts talks and lectures. 

Another notorious accelerator of world renown is MIT Enterprise Forum Poland. The mentorship program here employs the resources of the Massachusetts Institute of Technology and provides access to the most recent technological developments, practical knowledge, and top-notch expertise from the best STEM university in the world. 

Poland already has one unicorn, the Poznan-based company Allegro. Warsaw cannot boast about one yet, but have a hopeful on the way, outbound sales automation platform Growbots. Also, Warsaw is a home base of the video gaming industry titan — CD Projekt, which by some estimates, is already a unicorn if you take into account their intellectual rights. 

The capital of Poland is also a key destination for startup conventions and forums. It hosts an annual Wolves Summit, one of the most significant networking events in Central and Eastern Europe. It is a 2-day conference that involves a big pitching contest, panel discussions, and exposition for new tech companies who want to get a name for themselves. 

Prague, Czech Republic

Average rent price: $1,073

Prague was recently gaining a lot of attention as the magnet for tech talent and an up-and-coming startup hub in a lovely Art Nouveau cityscape with one of the tastiest beers in the world. The liberal and business-friendly city opened to foreign investments, transforming it into the tech powerhouse of Central Europe. 

Prague has always prided itself on being a cultural and technological center with one of the highest indexes of human development. It is a seat of 10 public research universities that focus on applied science and host incubators to propel the cooperation between business and academia.

Prague’s digital ecosystem has long and proud roots that trace its history back to 1988 when the oldest Central European unicorn Avast was founded. It happened while the Czech Republic was still in the Soviet bloc as Czechoslovakia. From that time, Prague was growing its expertise in cybersecurity, rising to the regional leader in this field. The next cybersecurity upstarts were soon to follow, with companies like TeskaLabs, and AVG.  

Prague also proved to be a comfortable launching pad for technological companies in the fields of mobile application, SaaS, and gaming. The city was the birthplace of world-renowned startups in those industries, such as Zoom, Kiwi, and JetBrains. 

Prague rose to prominence due to the success of the local entrepreneurs and helped to attract foreign investments and expertise, integrating the city into the global tech world. The initial success of the local startup scene was largely dependent on foreign, mostly US and European, venture capital funds. However, in recent years Czech businesses started to take an interest and increased participation in the tech economy. Locally-based funds, such as ARX Equity Partners and Credo Ventures, initiated seeding and business-angel programs to reap the fruits of the booming IT industry. 

The Prague startup ecosystem is becoming more and more self-sufficient. With local accelerators, such as Akselerator Vsem, Bolt, Up21, StartupYard, providing guidance, expertise, and seed funding for domestic product companies with cutting-edge innovations. They foster business connections and networking, and promote the international brand of Prague. 

Prague is becoming a new startup darling due to a number of factors. It is located in the heart of Europe, in close proximity to major businesses: Vienna, Warsaw, and Dresden. It has an attractive business environment, an abundance of skilled labor, affordable housing, and a low corporate tax rate of 19%, making a living and doing business here very affordable. 

Tallinn, Estonia 

Average rent price: $800

Estonia is a Baltic wonder, which transformed itself from the rust belt of the European Union to one of the most innovative countries on the continent. Tallinn is the capital and the biggest city of Estonia, with a population of just above 400K. Despite its small size, it boasts one of the strongest startup ecosystems in Eastern Europe. 

After the collapse of the Soviet Union, Estonia inherited a lagging economy and was left far behind the Western European countries. However, this country pushed forward with an ambitious reform plan called Tiigrihüpe or Tiger Leap. This project involved massive investment into the computer and network infrastructure and a strong emphasis on education in IT. 

Today, Estonia boasts a strong economy, one of the world’s fully digital societies, with all government services available online and the only electronic voting system in the world. It also has one of the best free WiFi networks in the world. Tallinn University is one of the leading Eastern European centers in educating the next generation of tech founders, with strong IT expertise and partnerships with Harvard, Stanford, Stockholm University, etc. 

Tallinn left a mark in the tech landscape with two outstanding success stories — unicorns Transferwise and Skype. Despite the fact that after the companies were sold, they relocated to the Western European capitals, they left big R&D centers in the region. 

Skype set a foundation for the development of the startup infrastructure. When Skype was bought for $8.5 billion, the founding partners launched a venture capital fund Ambient Sound, which channeled much of this money back to the local economy and advanced many young technological upstarts. 

Estonian government works tirelessly to attract new investments and tech talents. One of the recent forward-looking initiatives is the launch of the e-residency program, which encourages foreign entrepreneurs to start a business in Estonian jurisdiction. 

Budapest, Hungary

Average rent price: $900

Budapest is a wunderkind of the European tech scene that managed to develop an extremely potent ecosystem in a very short period of time. This became possible due to a very active local business community that organized meet-ups, brought foreign expertise, and invested heavily in new technological developments. 

Initially, there were only a few startups and a very fragmented community. Everything started to change after the involvement of Peter B. Záboji and his Europe Entrepreneurship Foundation. He established Seedcamp, a venture capital investment fund that nurtured small tech businesses during the seeding and growing phase. He brought together innovative companies in his flagship event, “First Monday,” which helped young entrepreneurs to network, cooperate, and strike partnerships. 

The major breakthrough came with the first Hungarian unicorn, a presentation software company Prezi, which was founded in Budapest and later established offices in San Francisco and Riga. Prezi brought media attention to the IT community of Budapest and paved the way for other success stories like LogMeIn, Optimonk, and CryptTalk. 

Today, the Budapest ecosystem is maturing with new incubators, accelerators, and tech events popping out every couple of years. Oxo Labs operates both acceleration and incubation programs for early-stage start-ups that assist with developing ideas and assessing the market for the product launch. Design Terminal is another big name that runs a 3-month long accelerator program for companies that work in the field of mobility, healthcare, education, and sustainability. 

In addition to the Seedcamp, Budapest gained other major VC players, such as X-ventures, Oktogon VC, and Lead Ventures. The most notorious tech conferences include Crunch Conference (the biggest Central European event for data engineering and analytics) and Craft Conference ( a two-day event for agile coaches, team leaders, and founders where they share the best practices in software development management).  

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Budapest, HungaryPrague, Czech RepublicTallinn, EstoniaWarsaw, Poland