A little bit of background
Last week I attended How to Web 2015 Conference, the country’s biggest event for startups & technology. I was invited to mentor via Found.ation’s partner EIT Digital, which was also partnering with the organizers of HtW. This was my second trip to Romania in 2015, since I also spent 4 days in Cluj/Napoca in May. I observe the development of the Romanian ecosystem for about two years now, primarily through local influencers and events.
During the two-day Conference, I sat down with more than 15 companies, with more than 2/3 of them coming from Romania (the rest was splitted between Bulgaria and Croatia).
Points of interest
These are some early conclusions, based on my overall interaction with the Romanian ecosystem so far:
- Romanian developers seem to be superior, compared to their Balkans counterparts, primarily because of their long tradition in the outsourcing business. Especially in Cluj, there are more than a dozen companies employing more than 500 Devs each - purely targeting international tech projects. They execute fast, they operate adequately and they follow international standards.
- Well, they don’t really get business and sales. I saw many companies with a working MVP (Minimum-Viable-Product), ready in 3–4 months, having no clue on how to monetize.I’m not talking about any “solid” financial forecasting for the next three-years, (!) for an early stage company with zero proof of any potential market fit. But it seems like they are lacking of plans and ways on how to commercialize their product. There should be no surprise here, this is typical, especially for developers/tech people and first-time entrepreneurs.
- Fintech and hardware. Interstingly, the Romanian ecosystem is flourishing in verticals that are less “sexy”, compared to social mobile/web apps. Fintech. Yes, fintech. Micro-lending (e.g. VivaCredit), financial modeling (Exigeapp), alternative banking products and services tailored to serve new needs, the new generation. Timisoara has also a good reputation for its hardware engineering community. Symme3D wants to compete in the 3D Printing space, and Scooterson (based in London) is ready to ship a new electic/mobile friendly scooter in early 2016.
Startup Investments & the bigger picture
The status of the investment scene in ICT in Romania remains dull. The country hasn’t followed Bulgaria’s and Greece’s steps in terms of the EIF involvement in the local scene (the so-called JEREMIE program has created 6 early and late stage funds in GR and BG since 2012). 3TS Capital seems to be the only (?) active player in the local ecosystem with one of its Partners based in Bucharest, yet has its focus around more mature companies aka scaleups. Pre-seed and seed companies raise funding either from local angel investors (I understand there are quite a few Angel investors already active in the ecosystem) or they prefer to move to Bulgaria in order to partner with Launchub or Eleven. Early stage is still underserved, a typical symptom for most premature European countries and ecosystems, especially if you pair it with the need of finding an early investor with deep knowledge and expertise in specific industries.
Based on the latest Eurostat data, Romanian economy in general is doing pretty well. Perhaps this is one of the reasons Microsoft recently announced its plan to hire 150 more IT experts every year in Romania, until 2020. Amazon has also a Development Center in Iasi since 2005 and multinational companies from more traditional industries are also growing their Romanian footprint.
Focus & Time
Romania, much like Greece, needs to put its focus behind industries and verticals that really understands and has/or can develop, a unique selling proposition. Israel is known for Cyber Security, and Lithuania is now developing a market proposition for Drone Builders. For Greece, these industries might be Travel and Agri. For Romania it might be hardware, drones or whatever. As time passes, and the next generation of Romanian entrepreneurs is taking the lead, better projects and companies will rise. We share a common hunger for success and the talent is here. So there is need for money and luck, but I am not really sure what comes first.. What I know for sure, is that my next visit in Bucharest will be sooner than expected!
