Vienna: Europe’s Small But Ambitious New Startup Hub

By Nathalie Depari

 

A “no kangaroos in Austria” sign is one image that is found in souvenir shops all over Austria. Austria is not as famous as Australia–many people don’t even know where Austria is. However, without anyone noticing, Austria has exchanged classical music and skiing for the accelerated development of many new, innovative startups.

 

I had the opportunity to chat with Markus Raunig, Managing Director at AustrianStartups, an independent non-profit platform for innovative entrepreneurship in Austria. This community has around 50 volunteers, and welcomes all who are interested in innovative entrepreneurship in Austria.

 

Every year, the organization holds 50 to 60 events, to bring together a target group of not only startup founders but also those who have an interest in the startup world. A high level of knowledge-sharing occurs at these events, and their motto is “Inspire, connect, and change.”

 

As shown by the results of AustrianStartups’ community research, Austria has yet to reach competitive levels in the EU when it comes to entrepreneurial education and conditions. Some major startup ecosystems like Berlin, London, and Paris are at a size that’s hard to compete with. Austrian society tends towards a “German first” mindset, making it hard to think internationally. It’s also a relatively conservative population, meaning that change must come slowly in order to lead the country towards a better startup ecosystem.

 

Raunig believes that the role of government policy and community thinking in boosting entrepreneurship is slowly moving in a positive direction. The fact that it is a small country with a population of only around 9 million people is also a factor in why the development of Austrian startups is not as fast as that of Britain or the USA. Some Austrian startups, such as Shpock and Runtastic (which was acquired by Adidas), even have more of a presence outside Austria. Raunig sees this as a positive step for the small Austrian market: the number of startups being founded in Austria has doubled in the last five, years and many established companies want to work or collaborate with them.

 

Part of Vienna’s potential as a hub, which according to Raunig remains undiscovered, is its strategic geographical location. Austria–and especially Vienna–is centered between Eastern and Western Europe, which potentially makes it a bridge between the two. Like any country, Austria has its share of complicated bureaucracy, but it also has a strong system of public grants which makes it possible to accumulate a significant amount of investment even before a market launch. Vienna also has many universities that provide good facilities for the development of startups.

 

Unfortunately, when viewed more closely, the growing startup culture remains unsupported by university education, which still leans towards preparing students for jobs in big companies. It’s also difficult to obtain work visas in Austria for non-EU citizens, making hiring of experienced talent difficult. Germany, Austria, and Switzerland also have particular legal systems to protect people’s money. This, while beneficial to people’s interests, slows down the process of financing for startups.

 

While German-speaking countries such as Austria, Germany, and Switzerland have complicated regulatory barriers and a strong bureaucracy, Berlin had the first-mover advantage and has escaped the issues Viennese startups are facing. Raunig argues that Berlin’s startup journey began long before Vienna’s, which also led to more experienced people in the system. The concentration of experienced founders is an important factor in the development of the startup ecosystem, but Vienna is catching up: Raunig adds that 40 percent of founders in Austria have been founders of other startups before.

 

Raunig’s five-year-plan for AustrianStartups is to position Austria within Europe as an ideal starting spot for startups, or Europe’s so-called startup hub. The long term goal is to make entrepreneurship a “national sport” and embed it into the national identity of Austria, just like skiing. Only time will tell whether Vienna can position itself at the top of the pack.

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