Austria’s start-up scene is coming to maturity – but local venture capital is lagging behind

In German-speaking countries, the word stamtech He points to the regulars’ table at the local inn. But in the startup world in Austria, that sense has evolved: once a month, between 100 and 300 people gather to hear successful entrepreneurs tell their stories, debate, exchange ideas and network with Austrian startups. stamtech.

“In the past, it was just a gathering of a few start-up people, but over time, it has grown with a platform, speakers and panel discussions – [today]“It’s the biggest monthly event in the Austrian startup scene,” says Markus Rönnig, CEO of AustriaStartups — which describes itself as a comprehensive community platform that aims to “make entrepreneurship as popular as skiing in Austria.”

Founded in 2013, AustriaStartups has more than 1,000 members, including nearly 80 sponsors ranging from local banks, law firms and angel investors to international corporations such as IBM and Google. Beside stamtechIt organizes a range of programs to educate entrepreneurs and even high school students about starting and running their own businesses.

The expansion of Austrian start-ups – from Vienna to all the provinces – mirrors the sector in the past decade, which has seen a proliferation of co-working spaces, incubators and mentors in the capital and across the country.

Austrian Startups Marcus Runig

Markus Raunig from AustriaStartups, which organizes Stammtisch gatherings for entrepreneurs

The results were dramatic. In 2021, start-ups in Austria received a record €1.23 billion in private investment — five times the €262 million in 2020 (itself a record year, despite the Covid pandemic), according to the Start-up-Barometer Österreich report, which Published by the professional services firm EY.

Author Florian Haas warns that more than half of the 2021 figure concerns deals involving just two companies: Bitpanda (a financial technology investment platform) and GoStudent (an educational platform that connects students with teachers), which together accounted for 652 million euros. However, with the average deal size rising from €4.5m to around €12m, he says a “financing boom” means that “Austria is knocking on the door.” Top 10 in Europe – in terms of the number of financing rounds and volume.

In addition, the range of sectors in which startups have received wide investments is led by companies in software, analytics, e-commerce and health.

One of the drivers of this growth has been the enthusiasm of Austrian governments, regardless of political colour, to fund startups via the Austrian Research Promotion Agency (FFG) and the Austrian Promotion Bank (AWS).

“In the recent past, there have been huge developments, a lot of specific programmes,” says Philipp Aiginger Evangelisti, FFG Head of Design and Innovation, Public Programs. “There’s a lot of understanding of what startups need, which didn’t exist 12 years ago.”

The FFG, which takes no equity in lieu of funding, distributed €78.5m in grants and non-refundable loans to start-ups in Austria last year – double the €38.7m allocated in 2017.

Because startup funding is so diverse, ranging from “several thousand” euros to the largest research projects of up to 3 million euros, Aiginger-Evangelisti says it is “very difficult” to cite an average number, but “typical ticket sizes for start-up Additional financing ranges from 3,000 to 1 million euros.

The proliferation of business incubators has been equally important to the overall growth in startups. The fourth floor of what was once a residence for police officers near Karlsplatz in Vienna, which dates back to the era of the Austro-Hungarian Empire, now hosts a cluster of growing startups. This is the center of the Technical University of Vienna’s innovation incubator, says founding director Birgit Hofreter, “to turn the often groundbreaking research of the university’s many master’s and doctoral students into successful business operations.”

Some of the current incumbents have already tasted commercial success—for example, Contextflow, an AI-based system to help radiologists quickly identify health problems from chest X-rays. Legitary is another company that also uses AI but in the music industry, to accurately identify streaming downloads. NovoArc is dedicated to more efficient drug delivery, with the ultimate goal of enabling people with diabetes to replace injections with insulin tablets.

Nermina Momik of Legitari

Nermina Mumic from Legitary’s © Getty Images

However, despite the successes, many in the sector say more can and should be done to tap Austria’s potential.

Lukas Herrmann, a lawyer at Dorda law firm in Vienna, is one among many to criticize the lack of active local venture capitalists.

“For many founders, the first million is easy, and after that it gets really complicated,” he says. When you need real capital for Series A and Series B [investments] To get the party moving, you want to look at the US and the UK, because that’s where it usually comes from.”

Austria has a lot of “old money” held by wealthy families, but Herrmann says this source of funding is little tapped within the country, where society is much more risk-averse than in Germany – where a lot of similar capital is funneled into companies. family investment.

However, regardless of its flaws, Nermina Mumic, CEO and founder of Legitary, a music streaming auditing software company, is convinced in her assessment of Homeland. “I think Austria is generally great when it comes to science and research,” she says.

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