I intend to examine how two European cities, Aarhus in Denmark and Mannheim in Germany, promote entrepreneurship. People often talk about some of the great cities of the world—and sometimes about Cambridge and sometimes about areas around Harvard—but these are two medium-sized European cities. I'm going to talk about barriers to growth for medium-sized businesses, because Wales is very poor at developing medium-sized companies into large companies—we've actually done it once, haven't we—and barriers for microbusinesses growing into larger businesses, starting with Aarhus.

The second city in population in Denmark is Aarhus. Compare it to Swansea, which is the second city in Wales. GDP in Swansea is 75 per cent of the European average; in Aarhus, it's 107 per cent. So, obviously, Aarhus is doing something right. Aarhus has a university that was founded in 1928—so, compared to our university, it's quite modern—and it's Denmark's largest, with 44,500 students in January 2013. It has probably gone up since then. In ranking lists of the world's best universities, it's regularly in the top 100.

But what else does it do? The largest research area is the INCUBA science park, which focuses on ICT and biomedical research. The organisation is owned partly by the university and partly by private investors and it aims to foster close relationships between public institutions and start-up companies. As we all know, ICT and biomedical research are two of the current growth industries across the world.

Mannheim is Swansea's twin city, but that is where the similarity ends. Economic data for the two areas makes interesting—and for a Swansea resident, very depressing—reading. Mannheim's metropolitan region has a GVA of 147 per cent of the European average, but the city itself goes up to 210 per cent, compared to Swansea at 75 per cent. So, for anybody who's earning £20,000, their equivalent in Mannheim is earning just under £60,000.

An institution affiliated with the university is the Mannheim centre for entrepreneurship and innovation, which provides a founder and incubator platform for students, young entrepreneurs and investors. The institute is supported by the Mannheim institute for mittelstand and SME research, and the chair of SME research and entrepreneurship at the University of Mannheim.

Successful start-ups: according to local media sources, Payback was sold to American Express for €500 million. Delivery Hero raised $1.4 billion in funding. Auto1 raised $200 million in funding. You've got other firms, such as Goodgame, that are initiating IPOs, raising £32 million in funding. And then you've got Movilizer, which was sold to Honeywell. Not all of them stay locally owned, but they've all grown. That explains why Mannheim was ranked eleventh in the top 15 of the most inventive cities worldwide. Can we get a Welsh team, a Welsh city, in there please?

Turning to Wales, what medium-sized companies tell me are their problems: an inability to secure funding on assets held abroad; a limit of £5 million on lending by the commercial bank of Wales does not meet the needs of medium-sized enterprises; the size of Welsh Government contracts—some are put together in such a way as medium-sized enterprises cannot tender for them. In fact, many are put together so no Welsh firm can tender for them. The difficulty of raising working capital from commercial banks, and the danger that they will call it in at any time.

One microcompany that had grown into a small company told me that their problems were: finding premises that were expandable; needing to move continually as they grow; a lack of readily available buildings; late payments; in construction, the continuing growth of sub-contracted agency workers that distort competition; and difficulty of access to markets. Is it surprising that small breweries have been amongst the most successful? Because we know that large supermarkets and Wetherspoon have been keen to retail their products. We know—we always talk about our own constituencies—about Boss brewery in Swansea. You can actually buy their beer in Wetherspoon pubs and you can get it in most of the large supermarkets. But that's where you've got the large companies helping it. And microbreweries are growing the length and breadth of Wales because they have that.

So, what do we need to do in Wales? Work more closely with universities, either on the Aarhus business model or like the Mannheim centre of innovation and entrepreneurship. But we need to use universities. We also know that the term 'technium' has become synonymous with failure, but the initial idea of using it in Swansea to provide facilities for start-up companies spinning out of the university was a good one. Labelling all advanced factories as techniums was doomed to failure. We need to provide larger loans from commercial banks to medium-sized companies; provide loan schemes against overseas assets; let government contracts in such a size that medium-sized Welsh companies can bid; and make it easier for microcompanies to expand. We are no less skilled, entrepreneurial and capable than anywhere else. We need a policy that works to support the growth of Welsh companies and the starting of new ones.