Building Startup Ecosystem of Central and Eastern Europe

Building Startup Ecosystem of Central and Eastern Europe
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      This is the topic of one of the panel discussions held during #SWITCH 2015 and coordinated by VCEE Startups. The discussion covered a rather hot issue provided that in recent years we have seen a very promising business potential in the region which is being unequally developed from country to country. It means that all the communities should unite and exchange their best practices in order to create a well-functioning ecosystem. Four qualified business professionals from Norway, Poland, Estonia, and Israel shared their views and former practices in building a startup ecosystem.

     The discussion was moderated by Peter Borovykh, member of VCEE Startups team and renowned specialist in financial engineering and alternative asset management strategies, currently working as Head of Quantitative Strategy at Brooklyn Risk Advisors and possessing previous career experience of working for Citigroup. Peter is on his volunteering mission to fulfill the role of a Business Development Advisor at Pyxera Global to help IPM School of Business develop the startup ecosystem in Belarus.He wonderfully got along with the speakers and kept the audience engaged.

      In the beginning Hans Lysglimt Johansen, the CEO of Norwegian company Numbercom, a startup company headquartered in Oslo and holding their development processes in Lithuania, presented his view of Lithuanian business ecosystem:
“First of all, any startup is a hypothesis that needs testing. Lithuania is a safe place for entrepreneurs to test their ideas. When Numbercom came to Lithuania, we noticed here such unique features as hospitality, safety and, most importantly, no exposing to tough competition. These are the strengths of Lithuanian ecosystem, which should be used to become competitive like Silicon Valley. Silicon Valley is a very special ecosystem that cannot be replicated. That is why you need to build your own ecosystem based your strong fundamentals: cooperation, help, society, values. Run more startups and help them test their hypotheses.”

Building Startup Ecosystem of Central and Eastern Europe
       Saul Reichman continued the discussion with expressing his disagreement on considering a startup to be just a hypothesis:
      “A startup is not just a small company. A startup today is a company that you can scale and grow very quickly. Lithuania and any other country don’t have a privilege of staying in its safe heaven and testing itself. At the end of the day, you are confronted with other players, with other competitors. So it’s not just testing your hypothesis, it’s realizing that you have to scale and grow very quickly.”

      Dr. Saul Reichman is an Executive Vice President at Challenge Fund and a member of the fund’s investment committee. He is also engaged in a wide range of various activities dealing with strategic consulting for multinational corporations, angel investments in early-stage companies, scientific research, all carried out in Israel, Central and Eastern Europe, Germany, South Korea.
Building Startup Ecosystem of Central and Eastern Europe
      Saul made a very good presentation of Israeli ecosystem, pointing out the best achievements in various industries and revealing the key success factors.

      The next point of the discussion was made by Pirko Konsa, a former member of Estonian Ministry of Economic Affairs and Communications, who is currently working as COO at the Estonian Development Fund. Pirko mainly spoke about Startup Estonia and initially stated that Estonia is not the Silicon Valley, but they have the most agile society in the world and this is what startups need. Estonian startup ecosystem is mainly created by startups and entrepreneurs. The biggest value in development has come from Skype because of showing how to develop an idea in a global project. Estonian startup ecosystem is not only for Estonians, it is open for startuppers from the whole world.
Building Startup Ecosystem of Central and Eastern Europe
      Pirko agreed with Hans’s statement about an ecosystem as a system of culture and values. He also added that it is very important for the government to encourage the right values, to keep the right education including mostly practical issues. The government enabled Estonian businesses to work with the help of e-Residence. He believes that e-Residence would be a big advantage in developing CEE ecosystem because of startups growing global.

      The last speaker of our panel discussion was Wojciech Burkot, Chief Technology Officer at Group Allegro in Poland. He disagreed with the point made by Hans Johansen and claimed that the ecosystem which is not challenging is not something for startups.
Building Startup Ecosystem of Central and Eastern Europe
       “Building an ecosystem means that one person’s food is another person’s waste. And that’s how ecosystems work. Feedback is crucial for success. The new things arrive from ideas, that is why exposing your ideas in front of people with different experiences is essential”.

       Wojciech also invited everyone to participate in Warsaw Google Campus and pointed out that this is not the only opportunity to develop in Poland implying a big number of local venture companies.After each speaker introduced their basic point of view and gave an individual presentation, Peter asked them the main question of this discussion, which turned out to be quite controversial: what are the features of a highly-successful, developed startup ecosystem?

       Saul Reichman was the first to give a specific answer: “While building a successful ecosystem, you have to develop the supportive organization with numerous mentors, incubators, accelerators, some research organizations, funding organizations. You have to be engaged with big companies like Google, Amazon to better understand the global market. And eventually you have to grow startups at different stages”.

        Hans Johansen expressed his partial disagreement to the point: “All you (Saul) describe already exists, you do not need to replicate that. You can get an e-citizenship from Estonia, you do not need to have it here because it’s virtual, you can get that”.Wojciech Burkot supported Hans in that: “You can’t succeed just by replicating the Silicon Valley or Israeli ecosystem. They are moving way too fast and it is way too hard to catch them”.

        Saul accepted the arguments and gave a worthy reply:“You can’t replicate, but you can definitely learn from those advances”.Afterward Peter asked Pirko Konsa to comment on the issue of government support in building a successful ecosystem:
“We shouldn’t treat the government just as a source of resources, we should look at the government as an environment creator. There should be an open economy ready to share innovations. The government should create the right environment that would cultivate talents in the region and provide enough capital”.

        Finally, the speakers also contemplated on the question of how innovative thinking can change the world and enable digitalization.The debate finished in a very friendly way with different ideas provided and the most interesting questions discussed. Thanks, #SWITCH for giving the opportunity to talk and compare, interaction is highly important!

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