Entrepreneurship in Czech Republic, Romania and Slovenia: everything you need to know.
Entrepreneurship in Czech Republic, Romania and Slovenia: everything you need to know.
Authors
About Nova Universidade NOVA de Lisboa is a public Portuguese education institution with around 20,000 students, 2000 professors and 700 staff members distributed through five faculties, three institutes and one school, providing a variety of courses in several fields of knowledge. NOVA is distinguished by a culture of excellent teacher-student relationship and an intense academic life with many dif- ferent cultural and sport activities. Main authors: Aneesh Zutshi, Tahereh Nodehi
About Bar Ilan Bar-Ilan University, founded in 1955, was one of the first comprehensive research universities to be established in Israel. From 70 students to 17,000, its milestone achieve- ments in the sciences and humanities have made an in- delible imprint on the landscape of the nation. The univer- sity has 8 faculties: Jewish Studies, Medicine, Engineering, Law, Life Science, Exact Sciences, Social Sciences, and Hu- manities. These faculties are active partners in national science and technology initiatives. Main authors: Ayelet Sapir, Eyal Yaniv, Eli Even
About Nacue NACUE (National Association of College and Universi- ty Entrepreneurs) is committed to advancing education and supporting bespoke solutions in developing greater engagement with students, to encourage the knowledge building of enterprise and entrepreneurship, working with students from diverse backgrounds, providing unique op- portunities to support them in developing the skills they need to succeed. Launched in 2009, NACUE completed a national rollout fo- cusing on the development and sustainability of over 200 enterprise societies driven by young people on a peer-to- peer basis, with the support from the UK Government and corporate backers. Main authors: Till Spanke Contributors
About Spherik Accelerator Spherik is the first accelerator launched in Romania whose mission is to connect startups with strategic resources and support the growth of the local ecosystem.
About Startup Slovenia Start:up Slovenia is an active facilitator and promoter of public and private stakeholders of the Slovenian startup ecosystem.
About CzechInvest CzechInvest, Investment and Business Development Agency, is the Startup Europe Ambassador in the Czech Republic and has the responsibility in National Innovation Strategy 2019-2030 in the terms of National Start-up and Spin-off Environment. Czech Republic is the Country for the future.
About Europa Media Europa Media is an independent, non-profit SME active in European Union affairs, in particular in EU research and innovation policies, programmes and projects. Es- tablished in 2003, Europa Media has been working to effectively gather and spread dispersed and complex information on EU policies, funding opportunities and programmes in a streamlined and simplified manner to potential stakeholders in Europe and worldwide. About MY-GATEWAY Startup Europe initiative which aims to strengthen the ca- pacities of high-tech startups and innovative SMEs in the Central and Eastern European region to become better connected, gain higher market exposure and have im- proved, streamlined access to funding opportunities and talent.
This report was produced by Nova and Bar Ilan as part of MY-GATEWAY project. This project has received funding from the European Union’s Horizon 2020 research and in- novation programme under grant agreement No 780758.
Design: Hugin and Munin Global S.L.
July 2019 © EuropaMedia 2019.
This work is made available under a Creative Commons Attribution-NonCommercial- ShareAlike International Li- cence 4.0. Index Interactive index Click on the page numbers to navigate through the document.
1. Understanding the Slovenian, Romanian and Czech startup world. Their differences and their similarities 08 1.1. Introduction ...... 09 1.2. Country Overview 13 1.3. Startup Investment Trend ...... 20 1.3.1. Financial instruments from EIF in the three selected countries ...... 21 1.3.2. Traditional and Public Fund Overview ...... 22 1.3.2.1. Czech Republic ...... 22 1.3.2.2. Romania ...... 24 1.3.2.3. Slovenia ...... 24 1.4. Public policy ...... 40 1.5. Major Startup Ecosystem Actors ...... 43 1.6. Talent 54 1.7. Technological Trends 61 1.8. Challenges and Opportunities ...... 64 1.9. Questionnaires data analyses 66 1.10. Questionnaires data analyses from the CEE countries . . . 76 1.10.1. Entrepreneurial Perceptions of the Ecosystem 76 1.10.1.1. Czech Republic ...... 76 1.10.1.2. Romania ...... 83 1.10.1.3. Slovenia ...... 90 1.11. References 97
2. Startup in the spotlight Interviews to outline perceptions ...... 103 2.1. Introduction ...... 104 2.2. Methodology 105 2.2.1. Sample ...... 105 2.2.2. Tools 106 2.2.3. Process ...... 107 2.3. Conclusions ...... 109 2.3.1. Central and Eastern European Region 109 2.3.1.1. Czech Republic ...... 110 2.3.1.2. Romania ...... 112 2.3.1.3. Slovenia ...... 113 2.3.2. Summary ...... 114
06 3. Mapping the startup ecosystem in Slovenia, Romania and Czech Republic. The general picture . . . . . 115 3.1. Introduction ...... 116 3.2. Theoretical background ...... 117 3.3. Research design 118 3.3.1. Questionnaires 118 3.3.1.1. Sample 119 3.3.1.2. Tools ...... 119 3.3.1.3. Process ...... 119 3.4. Method for mapping the ecosystem 122 3.4.1. Sample ...... 122 3.4.2. Tools 123 3.4.3. Process ...... 124 3.5. Conclusions ...... 125
4. Central and Eastern European Startups: Demands and Needs ...... 126 4.1. Introduction ...... 127 4.2. Levels of Entrepreneurship Support and Capability Gap ...... 130 4.2.1. Methodology ...... 130 4.2.1.1. Demands and Needs of Romanian Startups . . . . . 130 4.2.1.2. Demands and Needs of Slovenian Startups 132 4.2.1.3. Demands and Needs of Czech Startups ...... 132 4.2.1.4. Overall Demands and Needs of CEE Startups 133 4.2.2. Support Services and Networks in Place ...... 135 4.2.2.1. Funding Opportunities 135 4.2.2.2. Ecosystem Support Services ...... 138 4.2.2.3. Talent Acquisition 140 4.2.3. Capability Gaps 142 4.3. Funding Capability Gaps 143 4.4. Ecosystem Support Structures Capability Gaps ...... 144 4.5. Talent Acquisition Capability Gaps 146 4.6. Potential Solutions to Key Issues 147 4.6.1. Approaching Funding Capability Gaps 147 4.6.2. Approaching Ecosystem Support Services Capability Gaps 148 4.6.3. Approaching Talent Acquisition Capability Gaps . . . . . 150 4.7. Conclusions ...... 151 4.8. References 153
07 1. Understanding the Slovenian, Romanian and Czech startup world Their differences and their similarities
1.1. Introduction
1.2. Country Overview
1.3. Startup Investment Trend
1.4. Public policy
1.5. Major Startup Ecosystem Actors
1.6. Talent
1.7. Technological Trends
1.8. Challenges and Opportunities
1.9. Questionnaires data analyses
1.10. Questionnaires data analyses from the CEE countries 1.1. Introduction
Over the past few years, Europe has seen an unprecedented boom in the Start- up and Technology sector, with various Startup Ecosystems such as Berlin, Am- sterdam and Lisbon seeing unprecedented growth. Europe’s policy makers have realised the strength of Startup Ecosystems in terms of revitalising the economy, create jobs, and develop innovative solutions that will make Europe a global leader. However, now much of the growth focus is shifting from Western Europe to the Eastern Europe which has the unique combination of high-quality tech talent, and comparatively lower costs of operation. The project MY-GATEWAY was designed to focus on spreading the experience of the previous Startup Europe Projects towards the rapidly growing Central and Eastern Europe (CEE) countries. For this project, three countries were se- lected to be the focus of the activities: Slovenia, Czech Republic and Romania. This report shows an in-depth analysis on the recent Ecosystem trends of the above-mentioned three countries. The research is based on various recent- ly published reports, articles and web resources that led towards a deeper understanding on the various trends in those regions. The current document provides a broad overview of the current level of development of the targeted ecosystems which will be used to define the next chapters of this overarching report. Since much of this report is based on secondary sources of information, diverse sources of information have been included to minimise the bias and to repre- sent as many perspectives as possible. The initial search included analysis of books, papers, reports, whitepapers, news and web blogs.
Two major challenges were faced in the process. The first one was related to relevance of the information. Since ecosystems evolve rapidly and the scenario can significantly change within a year, most of the published resources were already obsolete and could not provide a perspective on the current situa- tion. To find out the latest ecosystem trends, research had to be complemented with latest news and blogs published through online mediums. However, such sources often pose the challenge of credibility and authenticity. Hence, dis- cernment was used to keep the balance between credibility of resources while ensuring its relevance. Therefore, most of the resources consulted were not more than two years old. The second issue was the difficulty in making -di rect country comparisons, especially when the information available was very country focussed. Some of the more recent studies focussing on cross country analysis such as the “Startup investment & innovation in EMERGING EUROPE” series by East West Digital News Agency (2018) and Southeast Europe Startup Report by ABC Accelerator Group (2017) provided us with a good basis to make cross country comparisons. Overall more than 80 References were considered in the compiling of this report.
my-gateway Report 2019 09 1.1. Introduction In order to fully understand the perception of those ecosystems from those who live and work in them, ad-hoc questionnaires were prepared and sent to startups. Chapter 2 will look into those questionnaires and their results. Further details will be disclosed in the third chapter of this report: Mapping the startup ecosystem in Slovenia, Romania and Czech Republic. The last few years have seen an active ecosystem in those target countries with a significant number of accelerators, incubators, technology parks, events and other initiatives that support innovation (East West Digital News 2018b). This rapidly developing scene has led to a large supply of innovative teams that attract more and more investors, who form angel networks and venture cap- ital (VC) funds focused on cross-border deals. However, the three presented ecosystems are diverse and at different stages of development. This report presents a comparative analysis of their similarities and differences. Slovenia scored high in all major parameters such as per capita investment, innovation systems, solid startup ecosystem, and GDP Purchasing Power Parity (PPP). Czech Republic has also seen significant growth in all major innovation parameters. Romania, on the other hand, scored lower on the parameters such as funding opportunities and other innovation parameters, but has been stead- ily catching up over the last two years, with many success stories (East West Digital News 2018b). It is difficult to predict how the CEE startup ecosystem will look in the future, but based on the recent years of stable economic growth, there is a great promise that entrepreneurship and innovation will continue to develop systematically (East West Digital News 2018b). The CEE region is expected to strongly benefit from the European Union funds that aim to boost innovation, as well as from the emergence of new accelerators and VC funds. Also, the global investors and big firms are actively seeking out investment with low cost countries with high quality talent, and CEE countries, particularly MY-GATEWAY targeted countries, to be major beneficiaries of such investment. Considering all the factors, there is a great prospect for the CEE region to become one of the most prosperous startup ecosystems worldwide. Country wise highlights from the Report:
Czech Republic: •• The Czech Republic has laid solid foundations to develop its startup indus- tries and record significant investment flows by regional standards (East West Digital News 2018b). •• The Czech Republic boasts a significant number of technology startups, many of which operate in several fields. The ones that work in the field of IT security tend to be more successful in comparison with other countries. More established players are thriving in the fields of software, scientific in- struments, hardware, electronics and biotech. •• Startup support mechanisms have developed rather locally than as a result of a national strategy.
my-gateway Report 2019 10 1.1. Introduction •• Initial Coin Offerings (ICO)1 (Fenu et al. 2018) investment in Czech Republic is active with several fundraising projects completed in the last two years. •• Major exits in last 2 years include: be3D, Twisto, Rohlik.cz, Damejidlo, Do- tykačka, Apiary, Woodplastick, DIVR Labs, Ytica, Slevomat, Skrz.cz, Jidloted. cz, and Dateio.
Romania: •• Although being a late starter (East West Digital News 2018b), Romania has a rapidly developing ecosystem as shown by large number of exits in the last 2 years (See section 0). •• With nearly 20 million inhabitants, Romania is the most populated country among the three selected countries. •• Some 100,000 engineers are employed in outsourcing, with IT firms account- ing for more than 6% of the country’s GDP. •• ICO investment in Romania is a growing trend with 6 fundraising ICO pro- jects already executed as of April 2018 (Anon 2018). •• 2 unicorns in recent years: UiPath, and BitDefender. •• Major exits in last 2 years include: eRepublik, CleverTaxi, CyberGhost, Mon- itor Backlinks, iRewind, Voo, iRewind, Oliviera, Binisoft, Smart Data, Froala, HipMenu, Simfony, and much more.
Slovenia: •• Slovenia has been described as a mature ecosystem according to the Start- up investment & innovation in EMERGING EUROPE (East West Digital News 2018b). It has the most mature startup ecosystem in CEE. •• Startup investment is relatively high. •• It is considered a strong innovator in EU rankings (European Commission 2017a). •• Slovenian startup entrepreneurs, including those established outside the country, raise considerable amounts on the global VC and ICO markets. •• ICO investment in Slovenia is also extremely active. •• Slovenian startups usually operate in the fields of IT, agritech, energy, aer- ospace and defence. •• 1 unicorn in 2017: Outfit7 (Talking Tom). •• Major exits in last 2 years include: Mimovrste, Zemanta, iTivi, Cubesensors, Bigdeal, Klika, Kosei, Najdi.si, Zootfly, and Toboads
1 ICO has become a popular method of fundraising through blockchain technology, which allows new startup and projects to raise funds from the international crowd (Fenu et al. 2018).
my-gateway Report 2019 11 1.1. Introduction Structure of this chapter
This chapter is built primarily as a summary to all published litera- ture on the three countries with respect to the following themes: General Country Overview, Investment Trends, Public Policy, Major Ecosystem Actors, Talent, and Technological Trends.
Section 2 presents an overview of the three countries, providing a background and historical context to the evolution of the Startup Ecosystems. It also identifies the main Startup Ecosystems in the three countries and presents the results of the European Innovation Scoreboard. Section 3 discusses in detail the Startup Investment Trends in the three coun- tries. Funding sources are organised in the following three catego- ries: Traditional and Public Funds, Private and Venture Funds and ICOs and Crowdfunding. Section 4 studies the Public Policy towards Startups, and highlights the main initiatives made by the governments of these countries. Section 5 identifies the main ecosystem actors including accelerators and incubators. Here we also list the major recent Startup Exits. Section 6 focusses on Talent development and also identifies the main areas where talent is available in these three countries. The universities in these regions are also discussed. Section 7 identifies the main technological trends and how the startups have embraced new technologies. Section 8 summarises the sections and identifies the Challenges and Oppor- tunities present in our target countries. Section 9 and 10 present an overview of the questionnaire and its analysis of the three ecosystems. This is a basic overview of the work that will be presented in Chapter 2.
my-gateway Report 2019 12 1.1. Introduction 1.2. Country Overview
This part provides a brief overview of three selected CEE countries (Czech Re- Germany Poland public, Romania and Slovenia) as an introduction to the rest of the report.
Prague Czech Republic
Slovakia Austria
1.2.1. Czech Republic
Germany Poland
Prague Czech Republic
Slovakia Austria
Part of Czechoslovakia until the “velvet divorce” in January 1993, the Czech Re- public has a robust democratic tradition, a highly-developed economy, and a rich cultural heritage (BBC News 2018a). It was the first former Eastern Bloc state to acquire the status of a developed economy. It joined the European Union in 2004.
Startups play an important role in the Czech economy, where they are known to quickly innovate, find market gaps and create new jobs (Osimo & Startup Manifesto Policy Tracker Crowdsourcing Community 2017). The Czech Republic is popular for information-technology professionals. Moreover, the Czech Republic is known for a solid infrastructure, a highly educated and skilled workforce (Anon 2017a). The country is strong in technology startups, in par- ticular cyber security. It is important to mention that world-known software/ applications products like AVAST and AVG are developed by companies with Czech origin (Curda 2018). More established players are thriving in the fields of software, scientific instruments, hardware, electronics and biotech. There are more than 20 funds and support startup activities (East West Digital News 2018c). Startup support mechanisms have developed rather locally than as a result of a national strategy (East West Digital News 2018c). The startup ecosystem is growing mostly in Prague as well as highly-qualified jobs, academic research and funding capacity. Also, a structured startup support system has emerged in South Moravia. Moreover, in cities such as Brno Ostrava, Plzeň and Zlín, other projects have been developed with support from local authorities and universities (Hodges 2016).
my-gateway Report 2019 13 1.2. Country Overview The Czech government acknowledges the critical importance of tech entrepre-
neurship and the pivotal role of startups for the economy (Osimo & Startup Manifesto Policy Tracker Crowdsourcing Community 2017). CzechInvest, a gov- ernment agency, runs accelerator, incubation and mentorship programmes. Recently, CzechInvest launched a new website portal CzechStartups.org (Anon 2016). Under one roof, it provides information on incubation possibilities, con-
tacts and consulting as well as possibilities of financing. Also, there are several strong private incubation and venture-capital funds kraine which are discussed later on in this report. Moldova ungary Romania Bucharest
Serbia Black Bulgaria Sea
1.2.2. Romania