Startup Ecosystem Toolkit 2.0 | Visegrad
Last year X-Europe published three ecosystem toolkits; this is an updated version to reflect the changes undergone in 2021. As highlighted in the previous ecosystem toolkit, the Visegrad region has strong potential for innovation that’s gaining notice. Startups can thrive in Czechia, Hungary, Poland and because of the quick and easy accessibility to big markets, human capital, and venture financing that these countries offer. As Edit Szilágyiné Bátorfi, former Executive Director of the IVF, put it: “The Visegrad region is rich in ideas but less talented in showing it to the world and in making it beneficial for the economy and citizens of the nations.”
Below we examine the state of the Visegrad startup ecosystem in late 2021, its strengths and weaknesses, and how the X-Europe programme can potentially contribute to the further development of the ecosystem.
NB! Before you continue reading, please note that there are many similar reports regarding specific countries and/or regions published every year. One thing that these reports have in common is that the numbers presented always differ. We have indicated all our information sources to keep it as transparent as possible. If you feel that your country/ecosystem has been misrepresented, please, let us know by writing to email@example.com and we'll make sure to adjust the information for everyone's benefit.
If counted as a single nation-state, the Visegrad region is the fifth largest economy in Europe: Czechia, Hungary, Poland, and Slovakia together have a population of nearly 64 million people, a fifth of the US population. Poland is the biggest of the V4 countries both in land and in population (almost 38 million people). Czechia holds the highest GDP per capita (28,000) amongst the Visegrad countries. Slovakia, the V4 country with the smallest population, is a close second with 23,000 GDP per capita, followed by Hungary and Poland.
When it comes to the index of development and level of innovation, all the V4 countries ranked rather similarly; however, Czechia outperformed the other V4 countries in both areas, being ranked #35 in the Standard of Living Global Rank and #25 in the Innovation Global Rank. Overall, the V4 countries rank similarly to the Baltic countries that we looked at before. However, the smaller Baltic countries outperform the V4 countries in terms of GDP per capita (with Czechia being the exception).
Compared to the numbers shared in last year’s Toolkit, the GDP per capita increased by 25%, by almost the same proportion in all four countries.
All of the Visegrad region countries rank in the global top 50 for entrepreneurship, once again showing the rapid growth of business in these four countries. This data has changed since last year, when Hungary held a leading role. This year, Slovakia takes the lead ranking in global entrepreneurship, followed by Czechia, Hungary, and Poland. Regarding the ease of doing business, Hungary and Slovakia takes the lead. Compared to the Baltics, startups in the V4 countries face more challenges in both starting and doing business. While the cost of starting a business and the minimal paid-in capital in all V4 countries is very affordable, the process of starting a business is hindered by the large number of procedures and the time required. With the exception of Hungary, starting a business in V4 countries takes more than 20 days. Hungary is more on par with the Baltic countries, where a new business can be started in a week's time.
It's no wonder that in countries with such a high population and various opportunities for business, the startup environment is also bigger and more diverse than that found in the. In terms of the number of incubators, Hungary has fewer than last year. Nonetheless, it’s still the leader with nearly 3 times more incubators than its neighbour countries. One reason why Hungary has such a lead is the coming impact of Hungary's Innovation Act, adopted in 2005. Hungary also holds the second-highest number of accelerators and VCs in the Visegrad region. Most of the incubators support their startups with a desk at a coworking space, mentoring, and minor financial aid to help the startups get their business off the ground.
The number of incubators and accelerators in the four countries remains almost the same as last year with the notable exception that Poland has 30% less accelerators this year. Not only the Visegrad, but the whole Central and Eastern Europe (CEE) region, has long been mostly overlooked by well-established European and US-based VCs — but it isn't anymore, it seems. The number of VCs also remained the same, except in Slovakia, whose number of VC’s doubled in one year.
The Visegrad region is home to 1,343 startups in total. Poland is the absolute leader in the number of startups with 620 startups, which is not surprising taking into account that the country's total population is larger than the total population of the remaining V4 countries. Poland is followed by Hungary, with 422 startups, and the Czech Republic, with 234 startups. Slovakia is significantly falling behind its neighbour countries with only 67 startups. The differences are very visible also in the startup funding. For example, Polish startups have received the biggest share of funding at 507 million EUR while Slovakian startups have only received 30 million EUR. Compared to the previous year, the number of startups rose by 20%, and the amount of funding doubled.
Naturally, the main startup cities in every Visegrad region country are those with the highest population, most universities, most vibrant living standards, and the highest ease of doing business - the capitals and the next-largest cities. In the startup-filled Poland, one city stands out in particular: Krakow, or the so-called “Dragon Valle”y. Warsaw still gets the lion’s share of Poland’s startup activity — only about 10% of Poland’s startups are in Krakow, compared with 29% in Warsaw — but Krakow startups tend to score the biggest funding rounds. €2.5m and above is considered a big funding round in Poland; 40% of the companies who raised this amount or more in 2018 were based in Krakow (source).
With 44 accelerators in the Visegrad region, there was a tough competition for the selection of our accelerator highlights. In order to keep it as objective as possible without going to much detail, we have highlighted the accelerators with the largest portfolios in each country. The most important accelerators have not changed from previous years.
StartupYard (CZ) Focus: Seed-stage deeptech startups Portfolio: 83 Benefits: 40,000 EUR investment and perks in the value of 1M EUR. Lighthouse Ventures (CZ) Focus: Early-stage tech startups Portfolio: 26 Benefits: Initial investment up to 200,000 EUR, possible follow-up investment up to 700,000 EUR OPIFER (CZ) Focus: SDG-related early stage startups Portfolio: 5 Benefits: Pre-seed and seed investment between 10,000 EUR and 1M EUR MKB Fintechlab (HU) Focus: Early-stage FinTech startups in CEE Portfolio: 15 Benefits: Up to 150,000 EUR investment, plus additional funds from partners. Sup VC (HU) Focus: Pre-Seed, Seed Portfolio: 16 Benefits: Mentorship, Brand & PR, office space, investor matchmaking Space3ac (PL) Focus: Tech startups Portfolio: 109 Benefits: Up to 200,000 PLN, mentoring, demo day at InfoShare Cobin Angels (PL) Focus: Pre-Seed, Seed, Late-Seed Portfolio: 16 Benefits: Between 100,000 PLN and 2M PLN investment Uplift (SK) Focus: Urban innovation and blockchain startups Portfolio: 2 Benefits: 200,000 EUR investment and potential 10,000 EUR cash prize. Launcher (SK) Focus: Seed and early-stage startups Portfolio: 10 Most recent investments: Angel round and seed-round funding
Source: Crunchbase, F6S & Startupblink
Visegrad has a very strong VC scene, with 169 total VCs offering anything from pre-seed to late-stage investments. Below, we have highlighted some of the VC funds in each country that have been the most active investors in 2020 and 2021. The most important VCs have not changed from previous years.
Credo Ventures (CZ) Focus: Seed and Series A Portfolio: 53 Most recent investments: Archbee (US), Productboard (US), Fiat Republic (UK) Reflex Capital (CZ) Focus: Seed and Early-Stage Portfolio: 35 Most recent investments: PPC Bee (CZ), Trackbar (AT), Wavepaths (CZ) Rockaway Capital (CZ) Focus: Early and late-stage e-commerce and FinTech startups Portfolio: 39 Most recent investments: Lingvist (GI), Centrifuge (DE), Gjirafa (AL) Hiventures (HU) Focus: Early and Late-Stage Portfolio: 283 Most recent investments: Hackrate (HU), HOP! (TR), Artemis (HU) OXO Labs (HU) Focus: Angel and Seed Portfolio: 16 Most recent investments: Hackrate (HU), Omnicoach (HU), Agroninja (HU) PortfoLion (HU) Focus: Early and Late-Stage Portfolio: 26 Most recent investments: Packhelp (PL), FLOWX.AI (RO), Novakid (US) MCI Capital (PL) Focus: Late-Stage Portfolio: 43 Most recent investments: Gett (IS), Answer.com (PL) Innovation Nest (PL) Focus: Early-stage B2B Portfolio: 50 Most recent investments: Welii (FR), Infraspeak (PT), Cardiomatics (PL) RTA Ventures (PL) Focus: Early-stage Portfolio: 22 Most recent investments: MNM Diagnostics (PL) Neulogy Ventures (SK) Focus: Seed and Early-stage Portfolio: 21 Most recent investments: MultiplexDX (US)
The Biggest Deals in 2020/2021
A startup ecosystem is called an ecosystem for a reason: it's not just one startup, one investor, one incubator, or one product. It's a vast variety of startups and other players. It's like an organism in which each component has a significant role. In order for the ecosystem to grow, it needs fuel. One very significant source of growth is investments and not only from investors but from other startups as well. This kind of ripple effect is what makes or breaks the startup community. Below are the largest deals in the Visegrad region in 2021.
The round sizes raised by V4 startups are comparatively small, with the exception of Polish startups and the largest funding rounds in Hungary. Meanwhile, the funding rounds attracted by startups in the Czech Republic and Slovakia are more on par with the typical funding rounds observed in the wider CEE region.
The region’s main startup events vary in size, audience, content and impact. It's hard to determine which is the biggest and the most important startup event in the Visegrad region, but these definitely are some events that the whole startup ecosystem enjoys, attends and holds dear. In 2021, there was a major shift in the event industry due to COVID-19 pandemic restrictions. Events mainly have gone fully virtual or merged into some type of a hybrid. Still, one thing remains as it is - startup events go on in some form, no matter the challenges.
WebExpo (CZ) “Central Europe's largest conference covering deep tech & practical topics for developers, designers, product managers, and marketers.”
æternity Universe One (CZ) “The æternity Universe One conference spans two days and focuses on bridging the gap between what businesses need and what blockchain technology can offer.”
HUSTEFF (HU) “HUSTEF has grown to be one of the biggest software testing events in Europe, with more than 730 attendees from all over the world attending the 2019 conference. HTB is a nonprofit organization and the local representative affiliate of ISTQB.”
WORLD SCIENCE FORUM (HU) “World Conference on Science is organised by UNESCO and ICSU and held in Budapest in 1999. The World Science Forum is the leading event of global science policy today.”
Wolves Summit (PL) “Wolves Summit is a bi-yearly international networking conference that binds together the world of business and innovation. So far we have pulled out 10 in-person events, 5 100% online conferences and one hybrid event on 5-7 October 2020.”
Digital Dragons (PL) “Digital Dragons is one of Europe's largest business events, addressed to the representatives of the digital entertainment sector.”
TechSummit (SK) “Techsummit conference is an open platform, which is focusing on the presentation of actual trends and information from the innovation area of IT with emphasis on the dynamics of large and small business environments, improvement of the public environment and international know-how exchange.”
“OpenSlava is a successful conference for a broader IT community in Slovakia and abroad and one of the largest annual international conferences organized by Accenture in CE.”
No matter how successful an ecosystem appears to be on paper, there are always problem areas that the ecosystem could improve on to rise to the next level. The best way to diagnose the sore points in any ecosystem is to reach out to the people who know it the best – ecosystem players. Below, we’ve summarised some insights on the strengths and challenges of the startup ecosystem in Visegrad according to some of the region’s main players.
Piotr Chomczyk | Founder at Renderro | LinkedIn
On strength: “I believe that the Visegrad region's greatest strengths lie in our easy access to its wonderful talent pool. This creates an amazing, buzzing ecosystem, where ideas and technology mix very well, and I strongly believe that the Visegrad region has a strong potential to create disruptive businesses.”
On challenges: “First, "internal" for the startups - for some founders there, it is still almost unimaginable that they can target a global market with their solutions. They need to have a global approach from day 1 to fully reach their own potential. The second is "external", and is focused on investors. The main motivator here (in the V4 region) for the investor is a fear of losing his money, and that differs greatly from the approach that can be found in other regions in the world.”
Agata Kwasniewska | CEO at ReaktorWarsaw | LinkedIn
On strength: “The greatest strength of the Visegrad region when it comes to startup development is the market, that gives founders much better opportunities compared to focusing just on the country of startup origin. Tech startups thrive where the founders can quickly access big markets, human capital, and venture financing, and the Visegrad region gives great promise of all that: If counted as a single nation state, the Visegrad Group is the fifth largest economy in Europe! Another great strength is the cultural similarity that all the countries in the region share.”
On challenges: “The difference in currency, legislations, language - these are the barriers that hinder growth of a shared Visegrad startup ecosystem. The sources of startup financing in the region in some cases heavily rely on government funding. The number of individuals investing in startups as business angels and privately funded VC’s is still relatively low. It would be great to see growth in the maturity of Venture Capital and more money coming to startups from private pockets.”
Terézia Kmecová | Product Manager at Startup Den | LinkedIn
On strengths: “Professional, proactive, ambitious people; great cost/benefit ratio, being so small you have to think big. ”
On challenges: “The biggest challenge in my opinion is connecting the region and the ability to function as a united market on a global scale. Selling ourselves short compared to Western Europeans or Americans.”
Vit Hanus | Chief Operating Officer at Spaceti | LinkedIn
On strengths: “Visegrad region still hides several unrevealed good investment opportunities with great founders and optimized businesses and competitive advantages of cheaper human capital resources of CEE region”
On challenges: “Visegrad region's start-ups usually start to think small / with too local focus and slow international expansion / growth. In combination with lack of international network, contacts, key markets access and without bold go-to-market strategy it limits their potential and creates the most significant challenge in order to succeed in a scale.”
Benjamin Berényi | CEO & Co-founder at Péntech | LinkedIn
On strengths: “The Visegrád region provides significant market potential and has been growing steadily over the past years. At the same time the talent pool of the region, especially in IT, is outstanding in Europe. This provides a unique opportunity to seize the market growth offered by this region whilst keeping costs at a comparably low level.”
On challenges: “Even though the region in total provides high potential, there are regulatory discrepancies between the countries which make doing cross-border business unnecessarily complicated and bureaucratic.”
László Jónás, Head of Business Development at Design Terminal | LinkedIn
On strengths: “I believe the greatest strength of the Visegrad region lies in its people. The community of talented young entrepreneurs has a huge potential to create regionally competitive businesses if backed with the needed support, as regional cooperation helps scaling up.”
On challenges: “It is a challenge to keep value-added activities in the region, as the mature economies of Western countries are perceived to have more beneficial business opportunities than CEE markets. Thus building bridges between regional startups and corporates is crucial to strengthen the ecosystem and make the V4 regional market more attractive for startups.”
On progress during 2021: “The main goal of the V4 Startup Force is to build a bigger and stronger Visegrad community. We want to foster a cohesive community, one that can show the global market: we are significant enough to make an impact.”
Dr. Márton Nagy, National Visegrad Coordinator of Hungary, Ministry of Foreign Affairs and Trade
On strengths: “On the eve of the 30th anniversary of the Visegrad Cooperation, Hungary is proud of the achievements of our regional V4 alliance. The Visegrad Group is the most effective and successful regional cooperation format within the EU. Despite the many crises that hit Europe, the unity of the V4 has remained as strong as ever, and by now, our region has become the economic engine of the EU.In 2019, the V4-German trade volume, at a combined total of over 300 billion euros, was over 75% larger than the French-German trade. Besides our economic achievements, we must emphasize that the V4 and Central Europe in general are among the safest parts of Europe. We have political stability and steady economic growth. This is an all-important value in today’s uncertain and ever changing global environment. V4 is also a strong alliance of four nations with similar cultural and historical background. Our common experiences and shared values help us better understand each other, strengthen regional solidarity and identify our common visions, common goals.”
On challenges: “Visegrad Cooperation has a vested interest in building a more efficient and competitive Europe based on strong nation states. Our opinion is that the EU's political unity can best be preserved by respecting the national and regional diversity, history, culture and traditions of the Member States. Therefore, it is of utmost importance that V4 countries furthermore agree on and represent common positions in the EU’s decision-making processes. ”
Michal Stefan | Head of Project Implementation & Communication at DEX Innovation Centre | LinkedIn
On strengths: “There is a will of cooperation among actors from the region. Experience sharing, international programmes, initiatives among the ecosystem builders are common. Also, similarity in terms of business environment and culture. Moreover, the region has a strong research base. If a company enters a V4 country, it is easier to scale to other V4 countries.
On challenges: “Availability of industry specific expertise and funding is lacking behind. Moreover, funding of startups and certification / testing as well requires a bureaucratic and long process.
On Deeptech: “Contrary to what some people think, in most cases of deeptech technology, the region is not as far behind as it might seem, granted, not many companies of any size in our reason are at the tip of the spear, but with proper governmental and private support, we could not only catch up, but even surpass other countries, which, due to numerous circumstances, might not be as able to keep up. Of course, the ecosystem is currently not as stable and rooted as in other regions, but that improves every day, despite a bit poor unified support in some cases.”
Willy Benkő, businessman, investor and V4 Startup Force mentor at Design Terminal
On challenges: “I believe that you have to grow where you are planted. So if they happen to be a Polish or a Hungarian startup, then we need to do whatever we can to get them to plant their feet in this part of the world and to make their impact first and foremost helping this region.”
Visegrad is X-Europe’s largest focus region of the X-Europe in terms of population, with more than half of the region’s total population residing in Poland. The region is a great playground for startups because it offers immediate access to large markets, human capital, and venture financing. While there are plenty of accelerators and VC funds in Visegrad, most of these are again located in Poland, which results in Polish startups attracting more startup funding than their V4 neighbours.
According to key players, the region's greatest strengths lie in the early access to big markets and very professional talent pool, as already mentioned above. Moreover, the human capital available in the region is comparatively very cheap; thus, lowering the costs incurred by startups. The low human capital costs together with the general low cost of living makes the region an attractive destination for startup relocation.
Compared to the previous report, the region’s numbers and main actors have not changed significantly. It seems that Visegrad has a lowly changing ecosystem with the same main policy actors, accelerators and funding opportunities. Comparing to the previous year, the number of ecosystem players lowered, however, the number of startups and amount of investment have increased.
The X-Europe programme can help Visegrad startups to improve their sales and marketing know-how as well as to obtain a more globally-target mindset through Growth Tribe's delivered growth training. In addition to growth training, X-Europe offers both investor and corporate matchmaking to the programme's startups. Investor matchmaking has the potential to supplement the startup funding that the region's startups are lacking from local business and angels and VC funds, while corporate matchmaking could help with strengthening the ties in the region to allow it to be more competitive against its Western and Northern neighbors.
In conclusion, Visegrad is a very large region with a big market and large talent pool, making it rather easy to attract professionals to startups of various stages. While the region is demonstrating some fear from investors to make sizable investments, the cheap cost of living and human capital still makes it an attractive destination for ambitious founders.
Data sources: Population | Eurostat
GDP per Capita | International Monetary Fund
Human Development Index | International Monetary Fund
Innovation Global Rank | Global Innovation Index
Entrepreneurship Global Rank | Global Entrepreneurship Index
Ease of Doing Business Rank | Doing Business
Ease of Starting a Business Rank | Doing Business
Research and Development (% of GDP) | World Bank
Startup Funding | Dealroom
Number of incubators | Crunchbase, F6S, StartupBlink, Baltic Startup Scene Report
Number of Accelerators | Crunchbase, F6S, StartupBlink, Baltic Startup Scene Report
Most Active Accelerators | Crunchbase
Number of Active VCs | Crunchbase
Most Active VC funds | Crunchbase
Number of Business Angels | Angellist, LatBAN, LitBAN, EstBAN
Number of Startups | Crunchbase, StartupBlink, Baltic Startup Scene Report
Main Startup Cities | StartupBlink
Biggest Deals on 2019/2020 | Crunchbase, Dealroom
Main startup events | Crunchbase