The mission of digitalswitzerland is to strengthen Switzerland’s position as a leading innovation hub. This includes fostering a world-class start-up ecosystem that helps our entrepreneurs grow and scale. In this three-part blog series, Jan Friedli, Project Manager at digitalswitzerland takes a closer look at the contemporary phenomenon of Superclusters.
The trend of spatial concentration of economic activity, which characterised the industrial era, is continuing well into the digital age. This is particularly astonishing for digital startups, who deliver value digitally and whose teams can work from anywhere.
Intuitively, one would expect that the new online tools – to distribute digital innovations and to facilitate communications – would end the spatial concentration we’ve seen during the industrial era. All digital startups from Switzerland to Singapore should be able to compete seamlessly in a single global marketplace.
Paradoxically, reality contradicts this expectation. The digital future is being built regionally. Digital startups, in their thousands, are flocking to clusters. They go to places like the ‘Silicon Roundabout’ in London, ‘Silicon Valley’ in San Francisco, or ‘Silicon Wadi’ in Tel Aviv – all of which have been expanding rapidly since the turn of the millennium.
But that’s just the tip of the iceberg. Simply congregating in broader regional ecosystems is not enough anymore. Startups are increasingly looking to come together under the very same roof.
This desire for hyper concentration of innovation activity has fuelled the rise of so-called ‘Superclusters’. While their designs vary widely, most Superclusters allow entrepreneurs to work in co-working spaces and provide an abundance of in-house resources and funding opportunities – often in the same building. Consequently, they are commonly referred to as ‘schools’ or ‘factories’ for startups.
To illustrate, let’s take a look at STATION F – arguably the most important Supercluster in Europe. When in 2016, an abandoned train depot in East Paris was remodelled, the world’s largest startup facility was born, stretching 51,000m2 across a ‘share’, ‘create’ and ‘chill’ zone.
Under one roof, the self-proclaimed ‘startup campus’ hosts over 3,000 desk spaces, 100 venture capital funds alongside 30 industry-specific accelerators from large corporates including Facebook, Microsoft, L’Oréal, and adidas. The campus admits startups into a fixed-term programme, which features mentorship and educational components, with a single goal: produce world-class startups. STATION F officially opened its doors in June of 2017, after being unveiled by French President Emmanuel Macron.
In less than two years, over 1,000 startups have joined from all over the world.
Seen as a symbol of Europe’s tech renaissance, the unparalleled growth of STATION F has earned it global praise. It has established itself as the heart of the French tech-innovation scene – all with an impressive economic impact: French startups raised $4.8bn in VC funding in 2019, up nearly threefold since 2015.
As this example shows, the innovation capabilities of Superclusters and the investment appetite from VCs are too astonishing to ignore. Policy makers, academia and practitioners have started to pay attention.
There is no doubt that something extraordinary happens in Superclusters, yet what exactly goes on has long remained mysterious.
In 2020, I committed myself to shed light on this contemporary phenomenon. Via the London School of Economics (LSE), I conducted a comprehensive study about the world’s biggest startup campus – France’s STATION F.
Over multiple months, I gathered empirical data by interviewing numerous startup founders – in industries ranging from Agriculture to Advertising to Aerospace – with the aim of understanding these ‘Superclusters’ from the ground up.
In light of the practical relevance, the research was chosen as the Best Dissertation of my graduating class at LSE, and is currently under consideration for publishing.
While the Full Study is academic in nature, it provides an initial answer to some of the most pressing questions on Superclusters, such as: Why are startups so eager to join? How can we conceptualise a Supercluster? And, what exactly makes them so effective?
The first question will be discussed in the first blog post, while the latter two questions will be picked up in the second post, where I will also conclude with practical implications for Switzerland.
Let’s first understand the appeal of Superclusters. When over 1,000 startups come together under one roof in less than two years, we can be sure something astonishing is happening. But, what exactly drove all these startups to undertake the considerable effort to relocate to Superclusters?
Primarily, startups join Superclusters to amplify their growth. According to the study, 91% of entrepreneurs value the centralised nature of Superclusters, which allows for an equally concentrated selection of resources and co-located stakeholders (e.g. VCs). Startups thus have better access to funding, talent, and resources that they would elsewhere.
Additionally, startups benefit from peer-to-peer assistance for tackling ‘common challenges’ (e.g. setting up a legal entity, tracking customers). At STATION F, 83% of entrepreneurs contend that mature startups are willing, and even feel obliged, to help less experienced startups with such problems. Being in the same building – and within walking distance from other entrepreneurs – enables this knowledge exchange to flourish.
«The idea of STATION F is to have everything in one place. Everything that a startup needs. […] Your lawyer, your VC, your mentor – everybody’s here!» – Aerospace Startup
«It goes back to the principle of, you know, 90% of your problems have been solved by other entrepreneurs.» – Smart City Startup
«We thrive because we help one another and because we are one desk away. […] When my CTO has questions, he walks over to the other CTOs.» – Talent & Recruiting Startup
Secondly, startups join Superclusters to attain corporate legitimacy. According to the research, 75% of entrepreneurs feel that the association alone validates and legitimises their companies, which opens doors to potential customers and venture funding. In fact, 41% of entrepreneurs claim that clients and investors actively seek them out precisely because they are part of a Supercluster.
«For your investors, you need to be able to grow quickly. And for customers, you need to appear as a credible partner. And being here is important for both because you appear serious.» – Agriculture Startup
«In the past, we spent our days in the tube to go meet clients in their offices. Here at STATION F, we managed to have a lot of them coming to us. […] The clients were not so interested in us, but they came because of STATION F.» – Talent & Recruiting Startup
«When you’re here, you have the STATION F label and it simply opens doors. […] It’s easier to get in touch with VCs. It’s a quality label.» – Mobility Startup
Thirdly, startups join Superclusters to tap into the collective momentum. 66% of entrepreneurs believe that the working atmosphere has an energising effect. Specifically, the success of other entrepreneurs (e.g. completing a funding round) helps entrepreneurs envision their own success and creates an implicit expectation that they are eager to fulfil. It’s widely held that this ‘momentum’ can only be experienced in Superclusters where startups work side-by-side. Additionally, 42% of entrepreneurs value the emotional support from the community because building a startup is a lonesome journey full of uncertainty and stress.
«I felt that energy in the room just by virtue of being physically next to these startups. […] This feeling of innovation and of hustling.» – Supply Chain Startup
«One startup – just right across me – raised some six million euros. Just right next to me! […] I think that really helps because you can foresee yourself. Like, in one or two years, I might be like that.» – Travel Startup
«Startups are lonely. And when you’re in communities, you remove this element of it. You feel like you are part of one big team, even though you’re a group of many small teams.» – Smart City Startup
In summary, startups join Superclusters to amplify their growth, to attain corporate legitimacy, and to tap into the collective momentum. For these reasons, 1,000 startups have come together under one roof in less than two years. This, alongside the economic impact that followed, is unprecedented.
It would be wrong to assume that Superclusters – such as STATION F – are isolated exceptions. On the contrary, they indicate a new trend towards hyper-concentration of innovation activity. A new imperative for the digital age. Their continued success simply underscores this fact. Places everywhere – from Helsinki to Lisbon to Hamburg – have recognised this new imperative and have begun building their Superclusters.
Before discussing the ramification for Switzerland, we need to first sharpen our understanding by asking ourselves: How can we conceptualise a Supercluster? And, what exactly makes them so effective?
In the second part of this three-part series, I will outline my perspective on these two questions, and conclude with practical implications for Switzerland.