Athens as a Startup Hub
29 April 2014

Athens as a Startup Hub: a Success Story in Making?

The next stop of our startup Euro roadshow will take place tomorrow in Athens – check all the details here. Like we already did with Berlin, here is an introduction of what is going on there.

As the crisis gets most of the media attention, a startup movement emerges in Greece – and it’s giving results.

Startup Live is one of the former European startup events. For three days, participants live together to go from their business idea to the launch. Founded in Austria in 2008, it was summer of 2011 when Konstantina Zoehrer decided to set it up in Athens. “The news about Greece are mostly about the crisis. There is much more happening in the mediterranean country and also with positive impact, even if it seems small scale at the moment”, she wrote back then.

Next edition, taking place next month, will be the third one. “The first was more generic because the startup ecosystem was still quite young”, says on the phone its organizer Xenia Matropetrou. It’s April, 2014. “Now it is more mature. A lot of startups have jumped out of events and co-working spaces”.

Is it? There has been media attention to Greek startups lately. Last month we saw two articles about them: take The New York Times, “With Start-Ups, Greeks Make Recovery Their Own Businesses” story, as well as Time’s magazine “Tech Start-Ups Bloom in Recession-Hit Greece” one. Both have a similar narrative: crisis have led to startups, and startups can lead to recovery. The country’s economy is troubled since 2008, with a skyrocketing unemployment hitting records of 27%, 58% (!) among people under 25.

“Of course!”, Matropetrou reitarates when I ask if the crisis has really played a role on the startup ecosystem. “The crisis has cost the jobs of many people. In two years people have understood that there’s no chance to get the job back or to find a new one so they thought that maybe that was a good idea”. 

In fact, the story sounds familiar – especially for someone coming from Spain (like me). Last November, I attended a conference on youth unemployment where Dimitris Kalavros, a Greek entrepreneur cofounder of the blogging network Nest Media and curator at TEDxAthens talked about “pushed entrepreneurs”, or people that, because of the crisis and the startup hype, feels “forced” to become so. In his intervention, Kalavros wondered whether the messages encouraging everyone to start businesses plus the high youth unemployment rate and skilled population, were forcing people to become entrepreneurs without noting how laborious it actually is to start and to succeed.

The Global Entrepreneurship Monitor, the most important report on the state of entrepreneurship in the world, highlights Greece in its 2013 edition. “The entrepreneurial profile of Greece differs quite a lot from the average profile of an innovation-driven economy (…) It is apparent that due to the crisis in Greece, perceived opportunities to start a business are dramatically low, even though perceived capabilities are quite high”, it states. “Second, the nature of entrepreneurial activities tends to be one of low ambition and relatively driven by necessity”.

According to the firm Endeavor Greece, there were 144 new startups founded in 2013, compared with 65 in 2012 and 16 in 2010.

The Acropolis in Athens, Greece.

 

“At some point there was a bubble”

Greece seemed to be joining the start-up fever, but things are getting calmed after a couple of hype years, or at least getting more sense and becoming more organized, according to Mastropetrou. “I agree with Kalavros. I am not sure of what it is going on in Spain but sometimes I think we try to copy the U.S and we’re not good at doing that. There was a big hype in Greece in 2010 and 2011, at some point there was a bubble of entrepreneurship. Two years ago every weekend there was an entrepreneur event, it was crazy. Now there are less events and people understand that you have to do things, have a team, leadership skills, raise funds…”

When it comes to funding, things already started running. Endeavor calculates that thirty of the new companies attracted 42 million euros of investment in 2011, compared with just a total of 500,000 euros in 2010. 

The “turning point”, as TIME defines it, came in 2012: Openfund, a venture capital firm founded in 2009 with the goal of investing in greek innovative companies addressing international markets and creating technology, started executing money from the European Investment Fund that specifically targets tech startups in the country. A new round of €10 million – 70% come from those European funds – was announced in December 2012.

Openfund has invested in eight companies since then (see their portfolio here). And the Government is, as we have seen in other hubs, doing efforts to support and promote the hub. Guess who toured startups some weeks ago. In her visit to the country, Greece’s Prime Minister Antonis Samarás took Angela Merkel to talk to successful greek entrepreneurs. During the visit, they said they would accelerate the creation of a “500-million euro fund for small and medium enterprises, sponsored by Greece, the EU and Germany”. But that’s just the news. Actual numbers say that in 2013 around 55 million were invested by VC’s in Greece. And there are companies achieving results. 

Who is getting the money? Although  the narrative talks about crisis and youth unemployment leading to startups, the companies that are getting seed rounds have been founded by experienced entrepreneurs. Incrediblue, defined as an ‘Airbnb for boats’ was founded in 2012 by three entrepreneurs in their early 30s and recently raised 100k. Workable, a recruiting software tool, got 600k as well as € 1.5 million from the UK/Israeli firm Greylock. Its founders come from another noteworthy greek startup, the mobile monetization network Upstream, where they worked together as CEO and CTO. 

There has been a successful exit too (something that always cheers up the scene). BugSense, a mobile analytics platform founded in 2011, was acquired by Splunk (terms were not disclosed) a San Francisco based entreprise data company that went public on 2012. Some other names in the scene include Taxibeat. a taxi app founded in 2011 which is now expanding internationally, from European capitals to bigger cities in Latin America, including Mexico City, Río de Janeiro and Sao Paulo. It was founded in 2010 and, so far, has raised USD 3,4 million. And Pinnatta, a social sharing cards app operating mainly in the US founded in 2011 recently announced  a 1.5 million round.

“These are exciting times for the scene in Athens!”

So what comes next? According to the EGM, the Total Early Estage Entrepreneurial Activity, that indicates that there was a small ‘boom’ during the beginning of the crisis that has decreased over the last couple of years. Whereas in 2008 9,9% of adult population were potential or established entreprenurs, it lowers down to 5,5% in 2013. “Greece actually needs to start things that also have an impact on real life problems. This, along of the sustainability are the most essential things for greek startup ecosystem”, adds Xenia. She is also positive with the Government efforts. “The point is that they are not only giving money away. They are also creating coworking spaces and consultancies, funded by the greek fund. So it’s a more hollistic approach”.

Others are even more positive about the city becoming an important startup hub. In a recent guest post at Telefónica blog, entrepreneur Mike Muzurakis, founder of mist.io, examined the local advantages of Athens (including the highly skilled workforce that have come out of public greek universities) and concluded: “These are exciting times for the scene in Athens! While the ecosystem matures and more startups succeed we are positive that the city will become an important hub for southeast Europe and West Asia”.