Although 2020 has the potential to be another record-breaking year in terms of capital invested in Europe, it has been an intense and difficult ride for many founders.
This chapter sets out to understand how the journey of starting and building a company has evolved in 2020 against the backdrop of the ongoing Covid-19 pandemic and uncertain and volatile macroeconomic conditions. As well looking in the rear-view mirror on the past year, this also takes a forward-looking view at the journey ahead.
The pandemic made the Maria 01 community stronger and proved how this startup campus transcends the space. Furthermore, during a crisis, people resort to people as a means for support and guidance. During the crisis's peak, our focus was to listen, support, and connect the entrepreneurs to the right opportunities. The measures taken to support our startup companies went from granting rent waivers, actively sharing information related to grants to weekly peer support calls to listen, and map out struggles from the entrepreneurs and possible solutions.
The lack of an advanced ecosystem can be a challenge for building a tech company that wants to win the global market from Italy. That said, overcoming those challenges in the early days can strengthen you, and in the long run, those challenges can even turn into advantages.
For tech companies, talent is a critical competitive advantage, and the ability to attract and retain the best people plays a - if not the - pivotal role in the success of a company. Remote work and the adoption of distributed recruitment strategies undoubtedly add complexity to unlocking that talent advantage.
On one hand, technology helped improve the experience of the lockdown and many organisations saw that they can in fact operate remotely. On the other hand, we were more strongly than ever before reminded about the importance of human connection and, maybe for the first time ever, the limits of technology. As we come out of this new experience, organisations will increasingly trust their employees to work independently, and thus people will have more freedom to choose their own paths. At the same time, people will value physical togetherness much more than before the pandemic. This will create more organisations with greater flexibility for remote work, but will also balance that new paradigm with more meaningful time together in the same physical space. As a relocation company directly affected by the pandemic, we saw very clearly that even throughout the turbulent year for travel, our number of relocations continued to grow. In fact, our relocations grew by 365% during 2020.
Another thing that will likely emerge from this pandemic is the explosion of digital nomads. There are a few things that will lead to this: 1) Employees and their bosses know that they can work remotely. 2) People still have dreams of traveling and with travel having been restricted, this itch will find its relief as soon as the opportunity to travel resumes.
What this will also mean is a new kind of legal hassle for organisations since most countries in the world have not adapted their immigration policy in order to legally accommodate a digital nomad workforce. In order to legally travel and work in a country a person has to have, in most cases, a local employer. If they travel as tourists then they are not allowed to work. It’s possible for 1 freelancer to take a risk and enter a country with a tourist visa, but imagine if Facebook has 5000 employees working illegally across the world - that would be an HR nightmare! Interestingly enough, Estonia approved this visa during the lockdown. Together with my Jobbatical team and Estonian Ministry of Interior we initiated this policy change in order to set an example for other countries. This policy update is something that all countries who are interested in attracting this highly skilled workforce would benefit from adopting.
How much does it cost to start and build a team in different European cities? We (still) don’t have a perfect answer, but we are providing a revised version of our illustrative org chart for a Series A stage software-as-a-service (SaaS) company. We think it provides a reasonable benchmark on what a team might look like for this type of business at that stage.
The dataset on rewards data (covering base salary and actual incentives) is provided by Aon and CBRE is providing the prime rent cost of office space dataset. We then built this out to give cost benchmarks for ten key European tech hubs, as well as providing a comparison with the equivalent cost to build the team from the Bay Area. Given the rise of remote work, we have revised down our estimates of sqm per headcount to account for employees who may have an assigned office space but chose not to be based there five days per week.
No methodology is ever perfect, but this should help founders (and others) to understand what it costs to set up and build in different European tech hubs.