IT Start-Ups Have It Easier Than Their Biotech Counterparts

MODUL University Vienna Analyses the Properties Available for Start-ups in Vienna

Vienna, 27 January 2016 – The supply of properties available for start-ups in the Vienna region is considerably better for start-ups in the IT sector than their biotech counterparts. This is the conclusion reached by a study carried out by the MODUL University Vienna which investigated the supply of and demand for properties among technology-based start-ups in the Vienna region. While a wide range of both co-working spaces and small offices are available for young IT companies in Vienna, suitable commercial properties and, particularly, incubators for biotech start-ups are thin on the ground. The MODUL University Vienna already identified the poor availability of suitable premises for university start-ups as an obstacle to their success in a previous study. The new study examines the situation in greater detail and makes clear recommendations on how it can be improved.

Finding suitable premises poses a major challenge in the early days of a company. This is the conclusion reached by a research team from the MODUL University Vienna when it investigated the obstacles to the establishment of university spin-offs in Vienna some time ago. Dr. Radinger-Peer from the university's Department of Public Governance and Sustainable Development has now analyzed the situation in greater detail and concludes her study with some concrete recommendations.

NO ROOM TO GROW

"Start-ups can quickly find suitable commercial properties in the Vienna region if they don't need much space," notes Dr. Radinger-Peer summarizing one of the main findings of her study. "However, if the number of employees increases, they soon find themselves bursting at the seams." According to the study, larger premises are disproportionately expensive. Moreover, added to the difficulty in obtaining the necessary long-term finance, is the problem of having to move while operating normally.

While the typical IT start-up only needs a few square meters of space, new companies in the life sciences sector require special infrastructure, which includes laboratory space in addition to offices. "It emerged from the expert survey that the available supply in this segment of the market in the Vienna region is not suitable for start-ups", adds Dr. Radinger-Peer. "The minimum lease period is ten years in some cases, the minimum rental space is often far larger than these companies require and the price per square meter is very high." Another problem for biotech start-ups is the lack of centralized information about the availability of suitable premises. Biotech entrepreneurs with underdeveloped networks have few opportunities to access the information they need about available laboratory and office space. According to Dr. Radinger-Peer the situation is not entirely rosy for IT start-ups either: "The rapidly increasing supply of co-working spaces and small offices in recent years is also leading to a low concentration of IT start-ups. The biotechs, whose clusters are located at the Vienna BioCenter, in Muthgasse, at Vienna General Hospital (AKH) or in Tulln, enjoy a certain advantage in this regard, however."

A STRONG REGION

The study also highlights some of the general strengths the Vienna region has to offer. Overall, the surveyed experts described the start-up community in Vienna as very lively. Along with the city's renowned good quality of life, this kind of dynamic scene is a factor that attracts start-up founders from other regions. This, in turn, has a positive effect on both the supply of office space and laboratories and the demand for them. As Dr. Radinger-Peer explains: "Thanks to the international presence and excellence of the universities and research institutions and its renowned hospital, Vienna is the Austrian center for basic research in the life sciences." To this is added the fact that start-ups can also avail of considerable funding like that provided by the AWS Austria Wirtschaftsservice to pay their rent. In addition, Vienna has very professional consultancy services (INiTS, LISAVienna) and the expertise provided by the start-up funding bodies is generally very good. All of this creates fertile ground for the establishment of biotech companies and the resulting demand for premises for them. IT start-ups also benefit from the availability of very attractive start-up funding and, unlike their biotech counterparts, can also rely on the support of a number of incubators. These offer an ideal start-up environment which is complemented by numerous co-working spaces and small offices in the Vienna region.

ROOM FOR IMPROVEMENT

Against the background of these advantages, in Dr. Radinger-Peer's view the economic interests of the city would be well served by responding to the challenges that exist in the property sector through the implementation of certain concrete recommendations. The surveyed experts agree that the establishment of incubators – decentralized start-up centers near the universities and research centers – is a crucial measure for improving the situation of start-ups in the life sciences. A coordinated medium to long-term strategy between the national and regional levels is seen as expedient in this context.

A structured and centralized overview of the available office and laboratory space should also be established. In addition, young companies should be given options for expanding in their existing locations so that they can avoid the upheaval and expense of moving in the event of their expansion. According to Dr. Radinger-Peer, overall, an investor-friendly climate in the region would also be helpful as an increase in the availability of financial resources would balance out the very high cost of the current property supply. Although the recommendations for the IT sector also include an increase in the supply of flexible short-term office properties and small offices, it would appear to be more important to strengthen the international standing of Vienna as a technology location. In contrast to the life sciences sector, it is not a very developed location for the IT sector.

The MODUL University Vienna continued its constructive critical analysis of the start-up scene in the Vienna region with this study. The university's Managing Director Christian Hoffmann notes: "Vienna has a lively and very successful start-up community which is growing steadily and becoming an important location factor. We would like to provide scientific support for this very welcome process through the expertise of our Department of Public Governance and Sustainable Development."

About MODUL University Vienna (status January 2016) MODUL University Vienna is an international private university in Austria and is owned by the Vienna Chamber of Commerce. It offers study programs (BBA, BSc, MSc, MBA and PhD programs) in the areas of international business and management, new media technology, public governance & administration and sustainable development, as well as tourism and hospitality management. The study programs meet strict accreditation guidelines and, due to their international focus, are conducted in English. The university campus is located at Kahlenberg, in Vienna’s 19th district. The research program at the Institute for Public Governance and Sustainable Development focuses on issues that deal with the main political challenges of the 21st century, such as the development and role of university institutions, changes in democratic processes and the sustainable use of resources.

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