In German-speaking countries, the word regular table refers to the regulars’ table at the local inn. But, in the Austrian start-up world, that meaning has evolved: once a month, between 100 and 300 people gather to hear successful entrepreneurs tell their stories, debate, exchange ideas and network at AustrianStartups’ Regular table.
“At the time it was just a start-up gathering of a few people, but over time it has grown with a stage, speakers and panel discussions – [today]it’s the biggest monthly event in the Austrian start-up scene,” says Markus Raunig, executive chairman of AustrianStartups – which describes itself as an umbrella community platform aimed at “making entrepreneurship as mainstream as skiing in Austria”.
Founded in 2013, AustrianStartups has more than 1,000 members, including almost 80 sponsors ranging from national banks, law firms and angel investors to international companies such as IBM and Google. As good as regular tableit runs a series of programs to educate entrepreneurs and even high school students about starting and running their own business.
AustrianStartups’ expansion – from Vienna to every province – mirrors the sector over the past decade, which has seen a proliferation of coworking spaces, incubators and mentors in the capital and across the country.
The results have been spectacular. In 2021 Austrian start-ups 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, published by professional services company EY.
Florian Haas, the author, warns that more than half of the 2021 figure relates to transactions involving just two companies: Bitpanda (a fintech investment platform) and GoStudent (an education platform connecting students with tutors), which together represented 652 million euros. Despite this, with the average deal size increasing from €4.5m to around €12m, he says this “funding boom” means that “Austria is knocking on the door of the top 10 in Europe – in terms of both number of funding rounds and volume.”
Additionally, the range of sectors in which start-ups have received investment is wide, led by software and analytics, e-commerce and healthcare companies.
One of the factors driving this growth has been the enthusiasm of Austrian governments of all political stripes for funding start-ups through the Austrian Research Promotion Agency (FFG) and the Austrian Promotional Bank (AWS).
“In the recent past, there have been huge developments, a lot of specific programs,” says Philipp Aiginger-Evangelisti, FFG’s Head of Design and Innovation, General Programs. “There is a great understanding of the needs of start-ups, which did not exist 12 years ago.”
FFG, which takes no equity instead of funding, handed out €78.5m in grants and non-repayable loans to start-ups in Austria last year, double the €38.7m allocated in 2017.
Since start-up funding is very diverse, ranging from “several thousand” euros to larger research projects of up to 3 million euros, Aiginger-Evangelisti says it is “very difficult” to name a average figure, but “typical ticket sizes for start-ups – funding is between 3,000 and 1 M€”.
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The spread of business incubators has been equally important for the overall growth of start-ups. The fourth floor of what was once a police residence near Vienna’s Karlsplatz, dating back to the days of the Austro-Hungarian Empire, is now home to a growing group of start-ups. This is i²c, the innovation incubation center of the Technical University of Vienna, dedicated, according to founding director Birgit Hofreiter, to “transforming the often innovative research of the many brilliant master’s and doctoral students of the ‘university in successful business operations’.
Some of the current incumbents have already seen commercial success – for example, Contextflow, an artificial intelligence-based system to help radiologists quickly identify health issues from chest X-rays. Legitary is another, which also uses AI, but in the music industry, to accurately determine streaming downloads. And NovoArc is dedicated to more efficient drug delivery, with the ultimate goal of allowing diabetes patients to replace injections with insulin pills.
However, despite the successes, many industry players argue that more can and should be done to unlock Austria’s potential.
Lukas Herrmann, a lawyer at Dorda, a Viennese law firm, is one of many to point out the lack of active domestic venture capitalists.
“For a lot of founders, the first million is easy, and then it gets really complicated,” he says. “When you need real capital for Series A and Series B [investments] to rock the party, you want to look at the US and 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 in the country, as the society is much more risk averse than in Germany – where similar capital is routed to family investment companies.
However, whatever her shortcomings, Nermina Mumic, CEO and founder of Legitary, the streaming music audit software company, is succinct in her appreciation of her homeland. “I think Austria is generally amazing when it comes to science and research,” she says.
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