This summer, aside from my normal analyst workload at Newlin Ventures, I have made it a personal goal to learn more about startup ecoystems in Europe. This pursuit of mine has taken me to numerous events and conferences, including Viva Technology in Paris, HUB Berlin, and Plug and Play’s InsurTech Expo in Amsterdam.

My goal was to explore the European ecosystem by traveling to what I felt were important cities for European innovation. By meeting with entrepreneurs and investors at the biggest events I could find, I was able to get an up-close taste of a few different ecosystems in Europe.

Europe, when compared to North America, is a less uniform landscape. For one, there are 27 official languages on the continent. Each country is unique for its own culture and history, which, in many cases, have developed independently across their own timelines. In the United States, on the other hand, there is a prevailing shared experience which supports a strong collective identity.

These dynamics play out in the startup ecosystems, too. Not every startup ecosystem is designed equally in Europe. They are each influenced by the host country’s mode of being. In particular, I became interested in exploring one trend: to what extent are European ecosystems centralized? What I mean by centralization is whether a startup ecosystem within a country is based mostly around a single metropolitan area (usually the capital city), or is more evenly spread out among a number of cities (in which case the capital is probably still important, but not the “be-all and end-all”).

The UK, for example, is somewhat centralized. London, being the 3rd most active city in the world for startups, certainly brings the bulk of the attention there. But the broader ecosystem is still balanced by other innovation hubs, such as Manchester and Cambridge.

Another example, Spain, sees most of its activity centered around the Catalan capital of Barcelona. Madrid, the capital city in the center of the country, comes in second. Spain is not terribly centralized, but rather sees a number of active hubs.

Comparing Germany vs. France

To get a further sense of what a decentralized ecosystem looks like, let’s take a look at Germany. For reference, my familiarity with Germany is largely rooted in my trip to Berlin this summer, where I attended HUB Berlin on June 22–23. I learned about Germany’s ecosystem through the Digital Hub Initiative.

Above is an ecosystem map of the Digital Hub Initiative. There are 12 “HUB cities,” which are also noted for their respective overperforming industries / verticals. Though big cities like Berlin (the capital) and Munich (the Bavarian capital) host most of the entrepreneurial activity, other cities, such as Frankfurt maintain strong identities and a well-fleshed-out ecosystem.

Frankfurt’s FinTech focus, for example, seems to make sense, considering Frankfurt is the financial capital of mainland Europe.

Another interesting case is Karlsruhe (pictured on the map above), which has a competitive advantage in AI. The reason for that is logical considering the strong presence of research institutions in the area. Of note is Karlsruhe Institute of Technology, a European leader in AI research.

In comparison, the French ecosystem exists in a much different way. I saw little to no emphasis placed on a French network of ecosystems during my time at Viva Tech. While other ecosystems exist in cities throughout France, it really is a case of Paris, and then the rest.

I suspected this throughout the month of June during my travels. After doing some further research, I discovered that StartupBlink’s Global Startup Ecosystem Index would confirm this suspicion.

When taking a look at the city rankings, Paris is the first ranked city in France, having a global ranking of 10 and a total score of 52.877. The next city in France is Toulouse, which has a global rank of 155 while having a total score of 4.974; Lyon follows. This represents an astounding gap in the comparative strength of cities within a country and the largest gap for any country with a city in the top 20.

Why is the French ecosystem so centralized, while the German ecosystem less so?

This is a big question, and while I’m not an expert in the history of tech innovation in Europe, I would like to direct your attention toward history. If you take a look at the nation-state birth stories of France vs. Germany, you will see some stark differences.

On one hand, Germany is actually fairly young for a European state. That is to say, the state of Germany was not actually born until 1871 with the unification of Germany. Though German culture and language go back much further, in terms of German national identity, this was non-existent until the 19th century. For over a thousand years, Germany, as we know it today, existed as a set of separate princedoms. Though they were united politically under a confederation, largely nested within the Holy Roman Empire, these princedoms remained largely autonomous.

As opposed to the example of the Kingdom of France, the German ethnicity was but a series of unconsolidated, autonomous entities (see above).

The fact that each of these princedoms was able to develop independently explains the large degree of regionalism that exists in modern-day Germany. The cultural heterogeneity of a newly united Germany was a defining factor in its development. These cultural barriers were not immediately struck down in favor of a new collective German identity, but rather remained a piece of the picture moving forward. Today, Germany has an effective and powerful central government, though each of the 16 federated states maintain a relatively strong identity independent of Germany as a whole. This is evident through the wide degree of German dialects still present in the country and the practice of unique regional traditions. Furthermore, there is a lesser desire to concentrate all activity around the capital, Berlin.

In contrast, the story of France is one of unity and collective identity from the beginning. One of the oldest nations in the modern world, France is a product of a set of alliances that appointed a single leader in the Middle Ages. Unlike in Germany, the French nationality has had a clear case of statehood for a long time.

And at the center of this identity, from the beginning, has been Paris. As early as the 12th century, Paris was the clear capital and center of the French Nation — and in some cases has been considered the capital of the world. Historically, Parisians were often known to consider France as existing in two parts: Paris and le désert (referring to the rest).

With this historical backdrop, we can imagine why France’s ecosystem seems to be “Paris and the rest” whereas Germany fronts a number of innovation hubs with developed, standalone identities.

So, what does this mean for the ecosystem more holistically?

For today, one thing remains clear: as a German entrepreneur you have many viable options to set up your first office: Berlin, Cologne, Frankfurt, and Munich are all strong options, for starters. If you’re a French entrepreneur? Well, you probably are considering moving to the ville lumière.

And if you are — I don’t blame you. Paris fronts an impressive startup ecosystem; what better place to go to share ideas, attract talent, and get in front of investors? But hopefully as France seeks to establish herself as a leading startup nation, it will further invest in its developing 2nd tier cities. Otherwise, there will be a wealth of French talent and potential which will remain underleveraged — those from le désert.