Thursday, April 23, 2015

Why Startups don't Network within the V4 and How to Change It

Sara Koślińska

The general tendency of the V4 countries and the rest of CEE is to look to Western Europe and the United States rather than to neighboring countries for models of change and development. This holds true for technology startups. Participants in this ecosystem do not yet see much value in collaborating with the other V4 countries and have not yet developed the necessary links between local communities at a level necessary for building a real network.

Is there anything in the CEE that could stop startups from only looking to the West and instead looking to their neighboring countries? I believe in the potential of the region and in the benefits of cooperating with neighbors for a number of reasons:

1. Building a network of professionals with different areas of expertise would enable the easier flow of knowledge and exchange of skills, resulting in the strengthening of startups’ competitiveness.

2. Getting startup teams acquainted and involved with each other would help in building business ventures of regional or global potential, rather than duplicating business ideas and introducing them for local markets only.

3. As countries vary in their development of different sectors and specialization of their investment sectors and acceleration programs, closer cooperation would increase the chances of getting better investment conditions for startups – not necessarily in terms of numbers, but also regarding the expertise of investors.

4. Cultural, historic, and linguistic similarities make the mentality in countries of the region significantly more similar to each other than any are in Western countries. As a result, the kinds of issues we are facing are similar, and thus an exchange of experiences and ideas would make it easier for all of us to overcome different kinds of barriers and obstacles: political, economic, educational, legal, and financial.

I recently decided to share the question of what is needed to strengthen networking and collaboration among startups of the region via a few Facebook groups related to startups in CEE. Unsurprisingly, one of the answers I got was: “Co-ordinated action between government, financial institutions, and business is a must […] But then again no big guys can have the same impact as a startup ecosystem’s influencers – people who organize formal and informal events like Startup Weekend, Silicon Drinkabout, etc. […] And, finally, there’s the national brand. All sides must invest quite a lot of time and money in attracting foreign capital and talent.” This response came from Dimitar Nikolov from Bulgaria, a co-founder of Clusterize, but is definitely applicable to other CEE countries and the region as a whole.

Another answer I got was from Anca Albu, founder of the social enterprise CEE Changers, originally from Romania: “[…] it has more to do with how they [CEE countries] view themselves and their neighbors, as a whole post-communist region […] they have no role models to follow. […] CEE looks towards London and SV, London looks towards SV … it is a geographical directional pattern that affects us all, and I think it would be a lot more helpful if we tried to figure out our own identity, rather than look up to one that was born thirty years ago.”

It was apparent to me from this and other answers that the most pressing needs of the community are creating the role model of founders by encouraging successful entrepreneurs to share their experiences, promoting countries of the region as great potential for investment, and, most importantly, creating an entity that could coordinate startup-related activities by different players across the region. For now, there is no close cooperation between national and local ecosystems, rather, just a loose assembly of connections between certain countries and influencers.

Earlier this year, I wrote an article entitled, “The 10 Main Challenges of the CEE Startup Ecosystem.” My most important conclusions were that there is a major need for a single, region-wide entity that would have decisive impact on the communities across the V4 and the whole CEE area by strengthening transnational collaboration between startups, linking ideas with capital and ideas with knowledge, and acting as a representative to the European and national parliaments.

Let’s identify what a few of the main duties of such an entity would be:

- promoting local and national events in the other countries of the region and outside the region, while minimalizing the chances of duplicating event formats

- connecting startups with capital across the region, given the differences in the development of startups from different areas and VCs with different investment profiles

- clearly and coherently promoting the region as investor-friendly, in accordance with a consolidated promotion strategy

- connecting startups with mentors from specific sectors across the region

- promoting successful founders and examples to give startups role models

- connecting individuals with similar business ideas with each other in order to build regional and global players

- communicating the specific needs of the tech community both as a whole and locally to the European and national parliaments

- connecting influencers with each other, so they can share their ideas, their experiences handling different issues, and tips on how to deal with government, as well as predictions about the ecosystem’s evolution in the coming years.

The form this entity should take is yet another issue. Although there are cases of successful public initiatives, such as those introduced by the EU’s Digital Agenda, I would opt for a private one, as it would allow much more flexibility, more prompt paths to change, and would ensure that the solutions introduced would indeed be necessary.

Next, it is important to discuss whether the private entity should be one company or a network of existing companies. In addition, should it be subsidized by public money – either national or European – or be fully independent, either supporting its initiatives with crowdfunding or generating profit otherwise?

To sum up, influencers have started realizing the potential for cooperation between startup ecosystems within the region. They also agree that an entity that would coordinate activities in the region is needed. While its legal form, responsibilities, methods, and financing must be discussed further, one may be sure that there is growing belief in a startup society, that taking actions in this matter is vital to the growth of startups in the region and as a result, to economic growth.

The details relating to the creation of this entity and the requirements it must meet to be fully efficient remain elusive, but the first step has already been taken – discussion is taking place among influencers.

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This is a repost of an article that appeared on on March 30, 2015

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