In almost every industry sector, attention tends to focus on the largest players, but often this is not where the real action is happening.
Across Europe, start-up firms are redefining categories and providing stiff competition for incumbent operators. If you want to see the future, watch the small players at work.
The evidence of the growing power of start-ups is everywhere. In many countries ride-share firm Uber has come from nothing to be a serious rival for established taxi companies. More recently, start-ups such as Stockholm-based Spotify, London-based Shazam and Berlin-based SoundCloud have changed the rules when it comes to digital music.
While success is to be admired, the typical start-up faces big challenges during times of rapid evolution and growth. Attracting seed capital, developing a business plan and getting offerings to market are huge tasks that take both time and experience to complete.
Getting the right people
Attracting and retaining talented staff is another big challenge. With start-up numbers growing by the week, finding the skills needed to get a particular business off the ground can be very difficult. Many firms offer share options or other financial incentives yet still find themselves battling with rivals for the very best of the talent crop.
One London-based firm, Entrepreneur First, is taking a different approach to the challenge by recruiting talented IT specialists directly from university and then matching them with an appropriate start-up. According to the company, it has already supported the creation of more than 40 successful firms.
>Related: What are US VCs looking for from European start-ups?
Meanwhile, cities across Europe are racing to position themselves as start-up hubs in an attempt to attract fresh talent and investment. They’re hoping to foster a Silicon Valley-like ecosystem of small firms that feed off each other and create long-term value for their country.
For example, in the Netherlands monitoring group Startup Juncture calculates some 75 small firms attracted investment of around $US560 million in 2014, helping to establish a vibrant business ecosystem. Indeed, both Netflix and Uber have opted to place their European headquarters in Amsterdam.
To support their bullish plans for growth, start-ups must also have the right IT infrastructure in place. Where once this would have required significant capital investment, now many are opting to embrace outsourced and cloud-based resources and take more of a ‘pay-as-you-grow’ approach.
IT infrastructure
Rather than investing in expensive CRM and ERP systems, start-ups can make use of on-demand offerings such as Salesforce.com and NetSuite
Because such technology is critical for a start-up, ensuring it’s housed in a purpose-built and well-managed data centre is vital. Any disruption to core applications or data loss could be a disaster to a small firm enjoying a rapid growth rate.
A start-up should check the credentials of a data centre partner carefully before retaining them as part of the team. Do they guarantee appropriate levels of performance and redundancy? How secure are their facilities? Do they ensure that smaller private IT deployments are interoperable with public clouds together with providing provisioning automation to and between these cloud environments?
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Because start-ups are likely to initially only require modest resources, the ability to co-locate equipment within a secure data centre facility is also important. Rather than paying for space that’s not required, start-ups can increase their floor space as business grows together with supporting burst capacity requirements in public cloud environments.
Effective data centres should also have robust connectivity with other facilities. This will allow a start-up to readily shift data between geographic locations as well as take advantage of the rapidly growing range of cloud services. The mix used can evolve as the business develops and forms the foundation of a hybrid cloud strategy.
Start-ups have the potential to reshape the European business landscape and, with proper planning and execution, many may very well achieve this goal. The appropriate blend IT infrastructure pools will greatly enable them getting there.
