What can Causasus region learn from Visegrad countries startup ecosystems

A few startup enthusiasts from Visegrad region met recently in Tbilisi (Georgia) at a cool event — the first grand finale of Euroasian Startup Awards which is a part of Global Startup Awards. EuroAsian Startup Awards is a unique opportunity for local innovators to go global and for global businesses to find innovation. “EuroAsian Startup Awards is one of the few examples of a bottom-up regional cooperation empowered by the goal to boost the local, regional and global economy,” according to EuroAsian Startup Awards CEO Attila Sándor.

The Visegrad panelists included:

István Südy — Budapest based startup scout, innovation manager advising companies on creating meaningful, executable innovation strategies

Konrad Ozdowy — from Startup Collider — Warsaw based B2B scaleup program for CEE startups

me …. Pavel Curda — Prague based hustler, writer, online projects lover

…and the moderator Zoltan Cseri

The audience included mostly startup founders and business support bodies from Georgia, Armenia and Azerbaijan.

ZOLTAN — Incubators, international investors and entrepreneurs still have difficulty understanding how to participate in the CEE market, especially when it comes to finding and building high growth startup businesses; how do you see this issue?

ISTVAN — Incubators and accelerators need to commit long term. As a new program, even if you have some star people in your team or among the mentors, it takes time to get traction. You’ll be noticed once you manage to shape some startups to stardom. Until then they won’t get A-list startups.

KONRAD- This is true, but in my opinion at the beginning startup should use local incubators, accelerators or investors. This will facilitate communication and, above all, reduce costs. Foreign partnerships are good in the next stages of growth and in fact good investment funds should support startups in getting to know foreign partners.

PAVEL — Angel and pre seed rounds are done locally almost everywhere. It is not bad for a Czech startup to build MVP locally, at a coworking space, with support of an angel, a solid incubator or startup builder that takes decent equity. After a year or two they could aim to join a top global accelerator such as alchemyst, ycombinator, 500startups. Then, big corporates or top VCs will invest.

ZOLTAN — How easy it is to gain local and international investment in the V4 region? Is it smart money or not? How do you see the governmental contribution in the VC sector?

ISTVAN — It’s relatively easy to get money especially in Poland and Hungary, but easy-money always comes with a high price. Overcontrolling investment managers, bad terms and lack of “smartness” of the funds are still prevalent. There should be more VCs managed by former entrepreneurs not bankers.

KONRAD- It is becoming easier and easier to obtain smart investment in our region from day to day. The state funds, which are primarily focused on economic growth, are a great merit of the ease in obtaining financing but less in giving advices to startups. Apart from state funds, there are more and more private funds which, modeling on Western standards, support startups with all their forces. At PwC, we have recently launched a project supporting startups of all sizes in obtaining financing throughout the CEE region, also supporting them substantively in talks with investors and preparing presentations and business plans.

PAVEL — Good startups have no problem to find money, often the money finds them. But not all VCs provide smart money. Many investors are greedy, take from unexperienced startup founders too much equity which kills next investment rounds. I am not a big fan of state support — no government fund can be a good investor. Investing public money via co-investment by the European Investment Fund through local angels or VCs is ok.

ZOLTAN — How strong is the connection between the multinational companies and the startups? How high is the need for innovation at corporations? Do big companies pick the talented people from the universities or do young people view entrepreneurship as a viable career option in your country?

ISTVAN- Some multinationals are starting to learn the game. I definitely think it’s getting better. Now they just need to stop doing less incubation and acceleration and more meaningful programs that will bring them the results they were hoping for.

KONRAD — The connection between corporations and startups is increasing and growing year by year. Large companies have noticed some gaps in innovation at home, thanks to they opened the door to full cooperation with startups, which these gaps are able to fill. Due to such synergies, corporations are still able to carry out all orders for their clients and startups have the chance to become real unicorns. Also in PwC we have Startup Collider program that’s connecting startups from all areas with our clients.

PAVEL — Fortunately , many corporates quit the idea to build innovative startups inhouse. Many monitor startups, and sometimes buy projects fitting to portfolio, or offer support via some scale up accelerations programmes. Unemployment in CZ is the lowest in the EU and students and graduates are very picky. Corporates offer big salaries to tech students, programmers. Only a few students want to start own business. And it is also hard for startups to hire programmers. Startup founders are often drop outs who realise that universities do not prepare them for real life.

ZOLTAN — How could the university tech transfer agencies help to increase the entrepreneurship spirit in the students?

KONRAD — In my opinion, universities should support students in being entrepreneurial so that they develop their passions and are not afraid of setting up companies. There will always be time for work in a corporation, but it is the startups who have the strength to invent and create non-standard solutions that can change the world!

PAVEL —There are not many examples of good businesses born at Czech univerisites . Universities should 1/ open up — invite international companies for visits (Israel visits) 2/ do more PR, show more actively their projects and patents 3/ make investments into their projects more friendly for VCs.

ZOLTAN — Could you mention best practices and good examples for the V4 cross-country governmental programmes?

ISTVAN — In my opinion the best practices are private ones. Like Eurasian Startup Awards and Central European Startup Awards.

KONRAD — There are several programs in the Visegrad Group countries supported by Visegrad Found, which brings together the most interesting organizations from startup ecosystems in V4. Many of them are supported by government startup support units. However, corporations also have programs such as: PwC Startup Collider, which connects startups from the entire CEE region with corporations and helps them become regional giants.

ZOLTAN — What do you think could we implement these best practices to Georgia and the Caucasus?

ISTVAN — Eurasian Startup Awards is a good start

KONRAD — I really like what GITA and Business and Technology University is doing in Georgia. For sure is a very nice start to building a startup ecosystem in Georgia. Of course, is not enough, but competitions such as Eurasian Startup Awards and HackMeOut hackathon certainly help to develop this segment, but of course there should be more such events, as well as more funds for innovation.

PAVEL — It was my second visit of the region. I love it here. If you guys want to build a global business, do not buy flight tickets to the US, dont move there. Start building your business from here, enjoy home environment. Use social media and ask for help people. Boootsrap as long as you can. Be picky with your investors. Smart money will come if you are building something cool. Ask for help experienced entrepreneurs — in your region , in V4 countries, in the US. I just spent a week in Armenia which has strong digital diaspora in the world ready to help. In Yerevan, I visited amazing TUMO Center for Creative Technologies which provides free education center for teenagers ages 12–18 specializing in technology and design. I spoke to kids there. They love it. And there are more amazing projects in all three Caucasus countries.