Vienna, the City of Dreams?
With an increasing flow of early stage capital, innovation in chatbots and an enviable quality of living, is Vienna emerging as a viable alternative to traditional European hubs for global entrepreneurs?
By Kajal Sanghrajka, @kajalnyclon
Located at the heart of the continent, bridging Eastern and Western Europe, Vienna is the cultural epicenter of Europe. The home of Mozart, Freud and 630 coffeehouses now often doubling up as co-working spaces. While it is not an obvious choice as a startup hub, the city is beginning to sow the seeds for a more vibrant entrepreneurial ecosystem.
Vienna is Austria’s main hub for entrepreneurs. One third of its startups are located in the city with access to a strong talent pipeline; over 60% of all Austrian university students study in Vienna. According to the Startup Heatmap Europe Report in 2016, Vienna ranked second for the percentage inflow of foreign founders.
At an Austrian startup panel (in a palace of course) Baher Al Hakim, a former Dubai based founder commented “We wanted to access the German speaking market, we chose Vienna primarily because of the support available”. His company Medicus won a place on Vienna’s Start Up package run by the Vienna Business Agency.
The program offers free co-working space, coaching and networking for international start-ups who want to develop their business in Vienna. The Agency’s programming is robust and promotes inclusive growth “We can operate in 17 different languages here — that is unique in Europe” said Tuncel Tulay, head of migrant enterprises, herself an immigrant from Turkey.
On the surface, it is not hard to understand Vienna’s appeal, it has always been an international city and one of unmatched beauty. But the Viennese by their own admission are both complacent and risk averse; traits positively correlated with riches and beauty but negatively to entrepreneurial growth.
“We are trying to change the mindset by increasing awareness of entrepreneurship as a viable path earlier on” said Nikolaus Franke Professor of Entrepreneurship at WU Vienna (Vienna University of Economics and Business). Entrepreneurship Avenue, an initiative launched by the University, equips students with entrepreneurial tools and showcases role models to make starting a company a less danting prospect.
For universities, the Austrian government has also proposed funding fellowships for academic spin-offs: scientists or students with innovative ideas can be supported via financing of salaries and access to academic infrastructure.
Runtastic is a case in point — started as a project at the University of Applied Sciences in Linz, it was acquired by Adidas in 2014 for $240million and is one of the most successful Austrian startups to date
The fellowship funding is one of several initiatives proposed as part of a founder’s strategy launched by the government, with one of its key goals “making Austria the door to Europe for emerging Asian startups”. Observations from models in other cities such as Berlin suggest that successful implementation must be a careful balance between a bottom up and top down approach and one that minimizes bureaucracy.
Markus Raunig, CEO of AustrianStartups, a non-profit dedicated to strengthening the Austrian ecosystem, recognises there is more work to be done to reduce bureaucracy. He cited complex legal frameworks and difficulty in allocation of stock options as two examples. However, he also highlighted Austria’s important advantages; access to affordable tech teams in Bratislava, its high quality of living and availability of public grants to name a few.
An increasing volume of early stage capital has also been a more recent and growing strength for Vienna. The average Austrian business angel holds 7 active investments with an investment of 120,000 Euros per startup. With more emphasis being put on developing international investor networks for cross border investment, Vienna’s startups are set to benefit.
Perhaps the most interesting investment opportunities in Austria are in Chatbot startups. Today, usage of messenger apps surpasses that of social networks with Facebook Messenger and WhatsApp at 2bn Monthly Active Users combined. Vienna is able to fully capitalise on this trend with its growing chatbot expertise and community talent pool.
Vienna is home to Europe’s first bot accelerator run by The Ventury, Austrian chatbot specialists. For the community, a chatbot conference is hosted in Vienna every October
Recent commercial chatbot applications include the Austrian Airlines chatbot, Toni, the Football Chatbot for Facebook messenger and Oratio with plenty more in the pipeline as part of the Ventry’s accelerator portfolio of companies.
Vienna is in a good position to exploit its existing assets and enable the proverbial entrepreneurial dream. In common with other European hubs, the most pressing challenge is the mindset shift to one that embraces risk and failure. What is needed though is not a replica of Silicon Valley but an individualised approach which fully capitalises on Vienna’s strengths. Emerging models are cause for optimism but the pace of the shift will dictate whether Vienna becomes the start up door to Europe that it aspires to be.
Acknowledgements
I’d like to thank the following people for their time and insights Peter Vandor, Dr Nikolaus Franke and Dr. Rudolf Dömötör at Vienna University of Economics and Business. Markus at AustrianStartups, Tuncel at the Vienna Business Agency, Philip at Digital Claims Management, Klemens at Toni, Philipp at uugot.it
Sources and Recommended Reading
2. Overview of the Austrian Angel Investors Scene
3. Austrian Government passes a comprehensive startup program
4. TwinEntrepreneurs — Vienna-Bratislava, Regional Study
About the Transatlantic Post
Written and edited by Kajal Sanghrajka, founder of Growth Hub and a 2017–18 Churchill Fellow, the Post provides an insider look at entrepreneurial ecosystems in cities across Europe/North America.
We interview pioneers at the frontlines of each city’s entrepreneurial ecosystem with an emphasis on how cities attract and integrate global immigrant entrepreneurs. We report from a different city each month in 2017. You receive findings via a special email letter at the end of each month.
