In his debut piece, The Kernel’s central and eastern European columnist, Ivo Spigel, explains why the region deserves to be taken seriously in tech.
It reminded me of a Roman Colosseum. In the audience, a few journalists were seated among a merry crew of early stage investors, ranging from individual angels to partners in blue chip venture capital firms. “There are three or four billion dollars of capital in this room. I guess that takes care of the myth that there is no capital in Europe for start-ups,” pronounced Seedcamp emperor Saul Klein.
We were at Imperial College in early September 2011; the occasion was Seedcamp Week demo day. The founders of twenty companies, which the accelerator had chosen to invest in during the year, had been through a gruelling three days of presentations, mentoring, keynote speeches and endless polishing and rehearsing of their slide decks.
Now, like the gladiators of ancient Rome, they crouched in a dark hallway adjacent to the main stage, waiting. Sitting on desks and on the floor, palms sweaty and eyes bleary from the previous days’ working, they were getting ready to take their turns in front of this multi-billion dollar audience.
I’ve been a Seedcamp mentor since Mini Seedcamp Ljubljana back in 2009, which of course now seems ages ago. The one thing I’ve seen over time has been the rising quality of the teams.
Regardless of whether they were presenting at regional events in the quaint cities of central and eastern Europe such as Zagreb, where I live, or Ljubljana, or at the main, week-long London event, the quality, ambition and pedigree of start-ups has been steadily evolving over time.
Teams that would have easily secured a spot at a Mini Seedcamp just one year ago didn’t stand a chance last year. You had a statistical chance of 1:2 of presenting two years ago – that dropped to 1:5 in 2011.
Another visible trend has been the invasion of the Eastern Barbarians. By “Eastern” I generally mean “New Europe” or “Central and Eastern Europe”, whichever you prefer, but in my worldview this start-up region goes from Estonia in the North to Turkey in the South and from Austria (yes) in the West to Russia in the East. Russia – of course – is always a special case, but more of that later.
Legend has it that the term and Twitter hashtag #EstonianMafia was coined by Dave McClure, ever present at Seedcamp Week. Indeed, the Mighty Estonians manned fully four of the twenty projects at Imperial College. Add to that two Slovenian and two Austrian projects, one Russian and one, to my particular delight, Croatian – well, do the maths! The mafiosi hashtag soon developed to cover #SlovenianMafia, #CroatianMafia and so forth.
There’s no question that the region is on fire, as confirmed by prominent investors on their blogs. “The big “aha!” moment for me was to see how much talent, energy and passion we’ve discovered coming out of Eastern Europe,” remarked Fred Destin on his blog. Robin Klein chimed in: “We are inspired by the progress we’re seeing – especially from Eastern Europe.”
Eastern Europe, of course, is as nebulous an idea as Europe itself, in terms of being a “place”. Viewed from faraway Boston or Silicon Alley, Europe might seem to be one place, but windy Bodø in Norway and the charming fishing villages of Halkidiki in Greece are worlds apart.
So, too, are Estonia, with its population of 1.34 million people, and dynamic Turkey with more than 70 million. Both, however, could be said to belong to the “New Europe”, regardless of the fact that some countries in the region are EU members and others not.
Austria, EU member state since 1995, is not only geographically near the East, but has been closely linked with its Eastern neighbours through centuries of political, commercial and cultural ties.
As legend has it, Eastern Europe has no lack of technical talent. Certainly, talented people are putting together some fascinating projects and companies. Talent, however, is not all that it takes to create a sustainable, growing high tech industry. Another key element is money, and that is where the gap is.
Happily, Western Europeans and a few daring American investors have taken notice of the interesting opportunities coming from the still-recently-Red East. Our enterprising founders can look forward to term sheets and obligatory company formations in London, New York and the Valley. The usual formula says “Sales and biz dev Stateside, low cost developers back home”, although there have been some interesting exceptions to that concept.
And that, too, could change. The governments, business communities and the people with money – be they banks, wealthy individuals or others – are wake up to the region’s potential. The start-ups are here, and so is the window of opportunity to support them and keep at least some of the upside at home.
This will take some new thinking in an environment that only twenty or so years ago focused its most creative minds on the finer points of five-year plans. But we’re a tough bunch. We beat Napoleon, Hitler and the Communists. Surely we can figure out a way to get our money men to bankroll our best and brightest? Watch this space.