Who is best at attracting investment into a city, traditional government-led investment promotion agencies (IPAs), or the business ecosystem into which that investment will flow? Perhaps the answer is neither. A cohort of organisations in some of Europe’s most vibrant cities are betting they can give their destination an edge by using the private sector to turbocharge their foreign direct investment (FDI) attraction efforts. 

This often forms just one pillar of a bigger operation aiming to lure a spectrum of players to their city. In this sense, they are more akin to economic development organisations or destination management agencies than traditional IPAs. Tourists, international students, foreign talent, congresses and events often fall within their remit. Some help homegrown firms expand, too. This multitude of efforts, they claim, helps lay the foundations of a business environment able to sustainably absorb more foreign capital while maintaining the city’s heritage. 

They invariably have some form of government support — be it financing, partial ownership or close cooperation with city officials — though they are driven by private backing and leadership. They have a symbiotic relationship with their partners from the local business community, which both fund and benefit from their efforts. Indeed, it is these partners who define their identity and inspire their name.

In fDi’s latest IPA Roundtable, we speak with four of these organisations — Barcelona & Partners, Berlin Partner, London & Partners and Milano & Partners — about what distinguishes them from public sector peers, the role of their partners and their advice for other locations looking to do something similar.

The panel

Kai Uwe Bindseil, head of health, industry and infrastructure, Berlin Partner für Wirtschaft und Technologie

Neil Brigden, Director of FDI, London & Partners

Fiorenza Lipparini, director general, Milano & Partners

Montse Puig, CEO, Barcelona & Partners

Q: When and why did your organisation start investment attraction? 

KUB: Berlin Partner is the result of mergers over several decades between organisations involved in economic development, foreign trade, technology and marketing.

Our investment attraction really originated with the creation of our partner network in 1994, shortly after Germany’s reunification. It was created for companies that were based in west Germany, and came to the new capital Berlin needing help to grow and interact with the government. We created this paying partner structure for them, which we’ve been proud of now for 30 years.

FL: Milano & Partners is the city’s promotion agency and destination management organisation, and our investment activities started in late 2020.

Milan is the biggest attractor of FDI in Italy, and we thought it important to leverage this and offer a more granular approach and services specific to our ecosystem. We’ve started by focusing on fintech and life sciences, as these are strong industries in which we feel the city has an important value proposition for foreign entities. 

MP: Barcelona & Partners was launched three years ago by an entity called Barcelona Global, which itself was set up by civil society back in 2010 to act as a think tank for what the city needs. It decided the city needed a private investment attraction agency, because investment decision-makers have a private mindset, and to have as many stakeholders as possible pushing inbound investment. So it set up Barcelona & Partners as a ‘selective’ investment attraction agency which now focuses on five sectors: life sciences, climate-tech, digital tech, advanced manufacturing and gaming.

NB: You can trace London & Partners in its current form back to its hosting of the 2012 Olympics. The year prior, a decision had been made to bring together a disparate bunch of independent organisations promoting London for different things, creating a single ‘front door’ to promote the city in a joined-up way for the Olympics.

Since then, we’ve been London’s business growth and destination agency, promoting the city as a great place to scale, do business, bring your event and be a tourist. 

Q: Who owns the organisation and how is it funded? 

FL: Milano & Partners is a public–private partnership (PPP) at its heart. It’s a non-profit and our two founding members are the Municipality of Milan and Chamber of Commerce of Milan. But we also rely on funding generated by our 26 private members’ fees.

These members — which include Milano Convention Centre, the city’s airport operator and developer Lendlease — are the strength of our model. They’ve joined to have a stake in making our city as competitive, inclusive and connected as possible.

KUB: We also regard ourselves as a PPP. The biggest owner is Investitionsbank Berlin (the development bank of the state of Berlin) with 31.5% ownership. It’s followed by the independent Technology Foundation, private members, then three smaller chambers and business associations. Our members and partners provide around a quarter of our funding, the Berlin state contributes around 65% and the remainder is from different German and European project sources.

MP: We are a private, non-profit organisation financially backed by private companies that pay the Barcelona & Partners partnership fee. But we also receive some financial aid from the public sector. 

NB: Among our stakeholders, at the very top level, is the Mayor of London. The other ‘members’, as we call them, are the equivalent of our shareholders: the London Chamber of Commerce and Industry, UKHospitality, the Association of British Travel Agents and Society of London Theatre. We are strategically aligned with City Hall, but we’re operationally independent, are a non-profit and are governed very much along private sector lines.

Q: What advantages does privately driven investment promotion have over traditional IPAs?

KUB: We are not dependent on the current government or impacted by elections. So politically, the country might be going in one direction, but we know if industry needs something else, and we can navigate that within different interests. We can also bring together companies coming to Berlin with the interests of those already in town.

Spending public money in Germany is not easy, but with the money we receive from members, we are freer to operate. 

MP: We are a neutral third party without any political conflict of interest. If we push something, it’s because we really think the city needs it.

We have the agility of the private sector, but we are backed by the city council and public institutions. Also, our private partners are not just funding us, we also collaborate with them for our clients. For instance, if a client has questions about taxation, the tax advisers in our network can explain. Or if they want to explore what talent they can find when setting up here, we can turn to recruiting companies among our partners.

FL: We are quick and flexible enough to adjust to change and our constant collaboration with leading companies helps us be ahead of the curve. We have firsthand knowledge of where industry is going and this helps us find the right companies that would really benefit from being based in Milan.

NB: We are ecosystem builders, and where we add most value is the way that we can very quickly introduce our clients into the London ecosystem in a way no one else can do.

Everybody does introductions to banks and lawyers, but our ability to find the right people for our clients to talk to and help them on their journey is our USP. Also, because of our structure and governance, we have the credibility and connections to government, but also use the language and agility of the private sector.

Q: What are some of the shortcomings compared to traditional IPAs?

KUB: The advantages dominate. However, it’s important for our paying partners that we don’t only attract foreign companies, but that we have services available for those already here. So it’s not a situation of spending their money solely to attract competitors. 

FL: Funding, of course. Most promotional agencies in the world have core funding by public entities, which makes sense because of their public mission. That funding means you’re probably more stable and can plan a bit better. But I think this is largely offset by the good and continuous relationship we have with our private members. 

MP: We are a small team with limited resources. We have many partners — especially as our mother organisation Barcelona Global has 1000 members spanning from start-ups to big corporations to research institutions that all want to contribute to making Barcelona a better city. But if there is one thing, we would like to be bigger.  

NB: A lot of the policy levers that are important for inward investment — be it tax, immigration or sector policies — sit at central government level. As a city-level IPA, we have limited ability to affect policy change at that national level around those macro areas. That’s a challenge for us, but it’d be the same for other city IPAs, too. 

Q: What are some notable foreign projects you’ve supported? 

KUB: Within the region I got the first call from Tesla, which in the end built its gigafactory just outside of Berlin in the state of Brandenburg. But they have other activities in Berlin and we’ve been important regarding talent attraction, as many Tesla workers live and have to be educated in Berlin. A few years ago we attracted the World Health Organization’s hub for pandemic preparedness, too. 

FL: In life sciences, a flagship project was attracting San Diego-headquartered Illumina, which is a leader in genomic sequencing, to the MIND Milano Innovation District. This accelerates the development of our scientific communities and brings quality new jobs to the city. Our connection with Milan-based life sciences champion Bracco was instrumental in landing Illumina. We also used the Fintech District, which is one of our partners, to land the Italian headquarters of Klarna.

NB: Going back to the early days of London & Partners, we were involved with companies that people had never heard of but are now global names. We were working to attract Twitter and Snap before anybody had heard of them. Also, Alibaba and Salesforce — which came with pretty modest initial investments — now have 1000s of employees across London and the UK.

From India we’ve worked with Wipro, which put an innovation centre in London and a Chennai-headquartered visual effects studio, PhantomFX. Our sweet spot is high-growth scale-ups that want to become a global brand.

MP: We support three types of projects: scale-ups, big corporations and strategic projects. Among scale-ups we worked with Brazil’s Delfos Energy, an artificial intelligence-powered platform for the renewable energy industry that moved its headquarters to Barcelona.

Attracting strategic projects requires the coordination of various stakeholders, which is often not in the DNA of any particular entity. We did this for Barcelona’s hosting of the 2024 America’s Cup, and projects like these are very valuable in attracting future investments to the city. 

Q: What’s needed to establish a privately driven investment promotion organisation? 

KUB: You need to focus on a metropolitan region, not the national stage. Close contact with paying members is important, and this would be difficult throughout an entire country. But you also need a critical mass of members, so it’s not a solution for a small town. 

FL: You need to reconcile your public mission with a private approach. I don’t think a destination management organisation that is entirely private, without strong public backing, could work, as you need to make sure policies and programmes are coherent with the city’s strategy. Also, you need to focus on industries that help promote that public mission.

NB: We have funding from private and public sector streams, and that’s important. You need multiple revenue streams to build resilience into your business model, especially as government grants are always under pressure. You need the buy-in of your local political structure as their policies are important to the environment where these investors are landing. Also, it’s important to not have skin in the game. There are commercial location advisory services doing this for a profit, but what we do is free of charge to clients. If you’ve got a commercial imperative, the kind of conversation you’re having with clients is very different. 

MP: I know there are cities whose mayors would love to have a private organisation that pushes things for the city like Barcelona & Partners does. But it needs to be in the local DNA and culture. They can’t say ‘civil society, do this!’. You cannot force people to be like this. 

This roundtable has been edited for clarity and brevity.

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This article first appeared in the August/September 2024 print edition of fDi Intelligence.