If there is an optimum size to be a city, then Edinburgh has struck gold. As business leaders in the Scottish capital comment, it is small enough to join the dots, but big enough to have critical mass. This – combined with its population’s high-quality skill set and the city’s relentless enthusiasm and pride in what it does – mean that complacency does not seem to be an issue either. These are all factors that have helped Edinburgh to win a clutch of awards, including one for the best large European city for FDI in fDi Magazine's latest European Cities of the Future awards.

High skills levels are a big plus for companies in the city, with a number of leading educational institutions and 17,500 post graduate students based within its boundaries. Dr Ken Sutherland, president of Toshiba Medical Visualization Systems, Europe, says: “Edinburgh has fantastic universities with a very strong talent pool.”

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Well connected

But Edinburgh’s attractions are not just about academic excellence. “It is compact and you can get around it easily, but you can also run a global business from here,” says Gerry Grimstone, chairman of savings and investments firm Standard Life.

And the city is fostering partnerships with other locations around the world. “We recently signed a memorandum of understanding with Shenzhen in China to make it easier for people in its creative sector to come to Edinburgh,” says Elaine Ballantyne, head of investor support at the City of Edinburgh Council (CEC). “We’re also establishing links with other locations including Istanbul, Munich and Qatar,” she adds.

The city enjoys good links with the rest of Europe and the world, although some business insiders report that they would like to see air links established with the west coast of the US from Edinburgh Airport. “The airport is very focused on developing new routes,” says Ms Ballantyne. “Over the past few months, it has announced more new routes to Germany and Chicago. We had a summer route to Toronto and there’s a new Turkish Airline route to Istanbul, which acts as a hub to Asia, so we’re pretty well served. The airport has had a record-breaking summer and is now investing £150m [$245m] in an upgrade.”

Edinburgh also boasts good rail connections with the rest of the UK. “We are four or five hours from the London market, and internet connections available on the train make rail a viable travel option,” says one investor.

Getting around the city is also easy: investors say its compact size and efficient public transport make their lives easier. “We’ve also got the tram coming on board next year, which will connect the airport with the city centre and go through the main business park,” says Ms Ballantyne.

Quality of life

The reason Edinburgh has been able to attract and retain the right calibre of staff is the quality of life that the city offers. “Edinburgh is a great place to live,” says Nigel Eccles, CEO of fantasy sports site FanDuel. “It’s a big enough city that you can do everything, but in 20 minutes you can be out in beautiful countryside. It’s a cultural capital and the schools are excellent.”

Investors are also giving the city a strong vote of confidence. “Last year we had more inward investment projects than in previous years, with 22 schemes creating 13,000 jobs,” says Ms Ballantyne.

Regional organisations have played their part in assisting investors. “We have had significant support from the city's chamber of commerce, the CEC and the Scottish government in ensuring that our proposals are considered in a sensible manner by all interested parties,” says Michael Tomkins, acquisitions and development director at property development firm Jansons Property.

However, Scotland is due to vote in September 2014 on whether it is to remain part of the UK, and as yet it is unknown what impact this will have on investor sentiment. For some companies, there is still not enough detail about what a post-independence Scotland would look like. For others, there are questions of how long the transition would take, and whether it would be worth it. Others consider independence a positive step. “The track record of the government proves it can attract investment. A ‘yes’ vote could see collaboration increase,” says Cally Russell, CEO and founder of personal shopper app firm Mallzee.

Innovation target

Regardless of the result of the referendum, though, Edinburgh's reputation as a world-class centre for innovation seems assured. Indeed, it’s innovative spirit even passes the taxi driver test. “See that building over there? That’s the home of Grand Theft Auto,” says one cabbie proudly. “We’ve got tons of technology firms here, ” says another, before reeling off  a list of home-grown and multinational firms that have set up home in the city. There is no doubt that the innovation theme runs through every part of Edinburgh, with the city’s promotion of technology signalling its dynamism, innovation and go-getting spirit.

“Edinburgh has been responsible for some outstanding innovation. It has world-class universities and a good infrastructure with organisations such as the BioQuarter helping entrepreneurs get a good start in realising their commercial aspirations,” says Peter Estibeiro, CEO of visual field analysis developer i2Eye Diagnostics. “Organisations such as Scottish Enterprise, the local chamber, the city council and Business Gateway Edinburgh are all outstanding in the mentoring and support they offer.”

The range of companies that have set up shop in the capital is also appealing to businesses. “Companies that are complementary to our work are here and that’s good from the point of view of stimulating ideas,” says Mr Sutherland at Toshiba Medical Visualization Systems. “I'm quite strong on the innovation-on-the-edge concept. If we’re at the edge of our knowledge and somebody is coming to the edge of their knowledge to meet us, then the opportunities for innovation are very strong at the mid-zone, as you've got that cross-fertilisation of knowledge.”

Education excellence

One of the reasons Edinburgh stands out for science and innovation is its sheer number of high-quality universities and colleges – such as Edinburgh, Heriot Watt and Napier universities – which attract some of the brightest and best students from around the world. Global experts with links to these institutions include particle physicist and Nobel prize winner Professor Peter Higgs.

“Edinburgh offers access to world-class technical talent,” says Graeme Smith, managing director of Amazon's development centre in Scotland. “We hire graduates and postgraduates from Scotland’s universities, particularly Edinburgh University, which came top for computing science and informatics in the UK in two recent research assessment exercises. Our location next to Waverley Station helps us to attract candidates from across the central belt of Scotland. Additionally, Edinburgh’s reputation as a great international city helps us to attract the best candidates from further afield.”

“Edinburgh University’s School of Informatics is the largest informatics research centre in Europe, and carries out more world-leading and internationally excellent research than any other UK university,” says Colin Adams, the director of commercialisation at Edinburgh University's school of informatics. “It is rated ‘excellent’ in the SHEFC Quality Assessment for teaching and was number one in a 2010 Guardian survey for teaching.”

“The school has more than 470 academic and research staff, and spends more than £12m per year. There are currently in excess of 260 PhDs [here], 210-plus Masters students and about 150 final-year graduates. It has good links with industry and collaborates with names such as Microsoft, Cisco, HSBC and GSK.”

Impressive skills

“There’s a strong intellectual property culture here,” says Mr Sutherland. There are also good opportunities to continually develop skills as technology advances. “We have good links with the universities, so we encourage lifelong and continued professional and personal learning," adds Mr Sutherland. "We’re a member of the Scottish Life Sciences Association, which also helps promote these things, and we work with Skills Development Scotland.”

Document generation software firm Hotdocs started business in Edinburgh in the 1990s. Russell Shepherd, its managing director, says he is pleased with the level of expertise in the city. “As we get bigger we’re finding it easier to get a higher calibre of candidates. Our technical guys are forging relationships with professors at the universities who can talent spot candidates coming through. We’re also going to recruitment festivals, which we feel is a worthwhile exercise as we can show people they can work for an interesting global software company [in Edinburgh] rather than having to move out of the city to get that experience.”

Craneware, which specialises in software for the healthcare sector, established itself in Edinburgh in 1999 with a chargemaster management solution for US healthcare. In 2007, it was listed on the London Stock Exchange's Alternative Investments Market market. Keith Neilson, chief executive officer of the firm, says: “We chose to [issue an] initial public offering in the UK because we could have a far lower level of market capitalisation in the UK and get [better] quality coverage than in the US. This allows you to build and grow the business until you have options to go for main listing in London or dual listing.”

Forward looking

It seems the whole city is keen to drive innovation. The CEC is a lead partner in the Open Innovation Project, which is funded by EU co-operation initiative Interreg IVB NW Europe. This project works with businesses, academia and communities across north-west Europe to promote collaborative approaches to innovation. “This has really strengthened links between the public, private and academic sectors in the city,” says Graeme Rigg, Open Innovation Project's manager at the CEC’s economic development service. “It has benefited small and medium-sized enterprises and start-ups, and enabled mentoring for lots of businesses, but the overall advantage is creating the ecosystem that supports a successful innovative city.”

One of the highlights of the year for those connected with hi-tech industries alike is the city’s Turing Festival, which takes place at the height of the Edinburgh Festival, one of the world's leading arts festivals. This series of talks, workshops, networking events and parties features start-up founders, millionaires, academics, business leaders and artists. Mr Rigg says: “Coinciding with one of the world’s top cultural events, it has been successful in attracting big technology names, including Apple co-founder Steve Wozniak.”

And it is not just the Turing Festival that is forging links between the arts and technology. “The city is fantastic for innovation,” says Mr Russell at Mallzee. “Companies are pushing the boundaries in so many different ways. I’m blown away by what I see.” In October 2013, Mallzee joined forces with the city’s improvement district, Essential Edinburgh, and Summerhall, a creative hub for the arts, to create a Halloween fashion-finding app.

“We’ve had fantastic assistance to support and promote our development,” says Mr Russell. “And the promotion of our event in a key Edinburgh location highlighted that this is young, this is innovation and this is happening in the city – and it is fundamental to get that sort of support.”

The cost of this report was underwritten by the City of Edinburgh Council. Reporting and editing were carried out independently by fDi Magazine.