CEE makes quick steps towards a strong startup ecosystem

CEE makes quick steps towards a strong startup ecosystem
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With all those issues about government non-participation in startups’ development, lack of investment activities and certain borders preventing active international business cooperation, CEE countries do make a progress! (and it’s not only about the so-called leading parts of the region, like Estonia, where the digital society has truly stolen the show).

In Ukraine, the local community seems to be truly enthusiastic about creating a perfect infrastructure for realization of innovative ideas by the talented youth. Every year we learn about new exits and impressive achievements made by Ukrainian startuppers, which, not surprisingly, causes the infrastructure to grow at the same pace. There have been quite a few incubators and accelerators launched during 2016, which demonstrated various work quality and outcomes. What became really new for the country is a launch of acceleration programs organized and sponsored by the big corporations. Such programs have been popular around the world for a while: Telefonica, Deutsche Telekom, Philips and other tech giants are used to selecting projects by entrepreneurial teams and then applying them within new products’ development. In Ukraine, similar initiative was taken by Kievstar – the country’s largest mobile provider joined a telecom-accelerator under VDNH as the main supporter. By now, there are 4 winners selected out of 11 program participants (initially, 119 startup applications): inCustVirboxGravitecNravo Kids. The company is eager to create an open interface for startups that will eventually demonstrate them all benefits from entering the market in partnership with Kievstar thanks to scaling – the corporation has access to millions of clients, whose problems and needs can be successfully resolved by a startup.

CEE makes quick steps towards a strong startup ecosystem

 Source: kyivpost.com

Also recently a non-government organization “The platform of innovative partnership” together with Cisco company announced the launch of business incubators’ network. They will function on the basis of 4 Ukrainian universities: Kiev national economic university, National aviation university, Donetsk national tech university and the Science Park of Kiev national university by Taras Shevchenko. New co-working spaces will open under the YEP incubators program, where students will join a 9-week incubation program. The application deadline is 26th of March. Apart from Cisco, VDNH-Tech, Lizard Soft and Axon Partners provide financial, organizational and PR support. The incubation program covers numerous lectures, workshops and exciting mentorship sessions by the leading experts from Ukraine, Poland and Israel.

Some more positive changes are on the way in Ukrainian schools! Volunteers Anton Melnik and Kirill Savchenko from ‘Coding Academy’ are planning to organize free courses of programming for kids in Kiev. The pilot project was already launched on 1st of February in one of the city schools. The guys are now collecting money to buy equipment and set up the courses in the other institutions on the online platform “Spilnokosht”.

CEE makes quick steps towards a strong startup ecosystem

 Source: biggggidea.com

Another interesting fact – in January, Ukrainian prime minister Vladimir Groysman instructed the local executive authorities to contribute to development of “Ukrainian Wikipedia”: the politician suggested introducing an online encyclopedia into the school program, which would consist of the articles prepared by students.

Meanwhile, Polish government is busy selecting the most promising startups to invest in. The authorities are going to sponsor VC funds to cooperate with Polish startups.  The direct governmental investments will be available for local and foreign businesses, where VCs’ minimum share is 20% with potential funding from EUR 5M to 25 M. Polski Fundusz Rozwoju (PFR, Polish Development Fund) – a state-owned financial group responsible for supporting the development of emerging companies – will not transfer the money directly to companies, instead it will act through VCs. Just a while ago, PFR announced implementation of the investment plan by its subsidiary and one of the biggest venture funds in CEE – PFR Ventures, with an approximate budget of EUR 500M. 

CEE makes quick steps towards a strong startup ecosystem

Source: linkedin.com

VC funds will be selected according to their work experience, track record and future investment plans.

Not long ago, Belarusian government joined the startup vibe too. An agreement about the creation of joint Russian-Belarusian venture fund with the target amount of $23M was signed in December 2016. This is the first venture fund of such a kind open in the country, where venture financing is still far from a well-known practice. Soon after, Belarusian authorities announced the launch of a joint venture fund with China with the capital of around $20M, whose creation was confirmed by a pact signed during the opening of Chinese-Belarusian center of innovations commercialization. The venture fund will focus on drones, edible package engineering and nano-coating – pretty ‘techy’ issues. Let’s see if the local startups will be innovative enough to get the chance to use this money.


CEE makes quick steps towards a strong startup ecosystem

 Source: dev.by

Currently, Belarusian startuppers mostly have to seek for investment abroad: there are no grants like in EU, angel investors are very few here, incubators and accelerators are non-existent either. In addition, the legislation that regulates venture financing is full of contradictions. What’s more, many people even have no idea about such laws. Hopefully, government participation in venture activities will lead to an innovation breakthrough and somehow influence the way all ecosystem stakeholders interact with each other.

Belarus is not the only CEE country where the government is only starting to get aware of the benefits that new high-added-value companies and digital entrepreneurship may bring. Romanian startup community has been demonstrating impressive results so far despite lack of support and system regulations.

Last month, Risky Business accelerator fund of EUR 250.000 was launched with common effort of over 30 local businessmen in Cluj, the center of Transylvania region in Romania. The private fund intends to support around 15 companies in 2017. Some of the investors are known names in the local tech scene like Andrei Dunca, founder of LiveRail, a company acquired by Facebook for $500 million, Sergiu Biris, Zonga & Trilulilu founder, Phillip Kandal, who sold his company to Telenav 24 million, Voicu Oprean, Marcel Anghel or Calin Vaduva, the founders of the biggest IT companies in Cluj. Others come from industries that have little in common with startups, but are absolutely convinced that investing in their own ecosystem is vital, since no one else from abroad will be as interested in its development as the residents themselves.

Another good news from Romania is about opening a new co-working space in Timisoara – a hometown of such pretty famous startups as 123ContactFormStyle Jukebox and Movidius. This new hub for creativity and digital innovation is to become a local midpoint of hackathons and workshops, as well as a connection point for potential initiatives guided by local private and public organizations.

CEE makes quick steps towards a strong startup ecosystem

 Source: coworktimisoara.com

Cowork Timisoara is the result of a project led by three entrepreneurs: Cosmin Andrei Munteanu, Andrei Firoiu, and Adrian Pica. All three have been active in the Timisoara startup community for a long time, organizing events such as Startup Weekend Timisoara, Startup Pirates or Startup Survivor.

Latvian government has proved to be exceptionally engaged in startup development. With an attempt to make Latvia an attractive base for startups, they signed a new tax law in January 2017 that considerably lightens the tax burden on startup employee wages. Now there is a flat monthly tax of EUR 252 per startup employee regardless of the salary amount. On top of that, there is a special clause for highly qualified employees, which claims that all their social and personal taxes are covered by the state and they receive full social benefits.

CEE makes quick steps towards a strong startup ecosystem

 Source: labsoflatvia.com

The eligibility criteria for a new startup law in Latvia are the following:

  • minimum EUR 30K in early-stage venture capital funding
  • less than 5 years of work
  • less than 200K in earnings during the first 2 years of existence.

This is only the first step forward in Latvian legislation. Currently, the local authorities are working on a new law that will legalize ridesharing, thus supporting innovative initiatives offered by startups.

You must have already heard about the new Estonian Startup Visa program launched in January and allowing non-EU citizens to come and work for Estonian startups or found new companies in the country. It is not the first visa program of its type – these days, similar programs exist in over 10 countries around the globe, thus confirming the growing competition for obtaining international talent.

To apply for the Estonian startup visa, one must fill in the application form providing info about the business and the team. The application then goes for evaluation and approval by a startup committee, represented by the key members of the local startup community. With an approval, startup founders can choose between a one-year visa to be extended and a five-year permit for startup entrepreneurship. For startups participating in either the Buildit Hardware Accelerator or Startup Wise Guys Business Tech accelerator programs, there is a fast-track process available and they do not need to go through the Startup Committee evaluation.

CEE makes quick steps towards a strong startup ecosystem

 Source: startupestonia.ee

By the end of February (one month after the visa program launch), there have been 50 applications from 10 countries. 14 applications have already been approved and now proceed to the next step, 22 received a negative answer, 9 were rejected and 6 in process.

A similar visa program was introduced in Lithuania.

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