The economic and social weight of startups in the V4 countries

Piroska Szalai, Chairman of the Board of Directors of the Budapest Enterprise Agency, talks about the startup ecosystem as well as the economic and social weight of startups in Hungary, and in the V4 countries.

editor: REMIX NEWS


Good evening and welcome. As expected, the London Lower House rejected the Brexit agreement by a huge margin on Tuesday evening. 202 MPs voted for the agreement and 432 against it, so the House rejected the proposal by a majority of 230 people. At last week’s government press conference, Prime Minister Viktor Orbán said that they had examined and quantified the effects of Brexit on Hungarians and found that it would not have a serious consequence for Hungary or for Hungarians living in the UK.

Tomás Petrícek, Czech Foreign Minister, wrote in a Twitter post that the Czech Republic is prepared for every possibility, but he personally would prefer if the UK remained a member of the EU and believes that the rejection of the agreement was the least bad of the possible scenarios.

According to Slovakian Prime Minister Peter Pellegrini, we will have to wait and see the next step of the British government. Slovakia is willing to seek a solution by March 29th that would ensure that Brexit would not negatively affect the lives of citizens and entrepreneurs. But, at the same time, it is also necessary to prepare for the absence of an agreement.

Warsaw is waiting for new British proposals. According to Polish Prime Minister Mateusz Morawiecki, Brexit without an agreement would be a bad solution for the UK and for the European Union as well. Incidentally, last week, at the invitation of Polish Minister of the Interior Matteo Salvini, the Italian Deputy Prime Minister and Interior Minister visited Warsaw. According to the Italian politician, Rome and Warsaw could represent the new European equilibrium instead of the French–German axis. We’ll show you the details.

Poland and Italy will be the heroes of the new European Spring after the European Parliament elections in May, and a new European balance will be sought, said the Italian Deputy Prime Minister and Interior Minister during his visit to Warsaw. According to experts, Matteo Salvini visited Poland to further strengthen the alliance with the governments of those EU Member States that oppose the Eurocrats in Brussels.

The Polish and Italian governments are taking a very clear stand against immigration. Since Salvini has been Minister of Interior, the Italian government has been trying to prevent the migration pressures that are affecting the European Union and Italy on the Mediterranean route. Poland has been a very good ally for the anti-immigration league over the past 3–4 years. In the Visegrád Four, Poland and Hungary are the two countries that have been at the forefront of confronting decision makers in Brussels and offering an alternative to the pro-immigration policy. Obviously, this was complemented by the other two Visegrad countries.

Hungarian Prime Minister Viktor Orbán spoke at last week’s government press conference about the emergence of a new political power in Europe. “I wish Europe to have the Rome–Warsaw axis or whatever it is called, which is to the political right of the European People’s Party and is a political power that is capable to govern, that is responsible, and that is anti-immigration, and is willing to cooperate with the anti-immigration forces of the European People’s Party. That’s why I say it’s a great development.”

The research director of the Center for Fundamental Rights says that the right-wing conservative parties that are not radical, but strongly oppose immigration, and which will have good results at the spring European Parliament elections, will form an alliance against the current elite in Brussels.

It can be seen in almost all EU Member States affected by immigration in the last 3–4 years that those forces that stand up against immigration have strengthened, even if not everywhere in a groundbreaking fashion, but they have definitely gained a more serious electorate. This was the case in France with the Front National, in Germany with the AFD, and in the Benelux countries as well. However, these parties are alternative political forces, unlike in the Visegrád Four and the Central European Region where traditional parties represent the policies that voters expect of them. That is why there is no political force right now in Hungary, nor in the Czech Republic or in Poland, that would be considered more to the right from the government parties on the issue of immigration, as the governing parties represent what the electorate expects of them, and that is typical of this region.

Matteo Salvini said that Italy and Poland are integral parts of the EU and they both want the security and the reform of the EU. Therefore, the Italian Minister of Interior is working on a plan with the Polish allies that strengthens Europe with fresh blood, new power, and new energy.

It is not only through political interests that the Visegrád countries achieve common successes, but they also have close cooperation in the field of innovation. The V4 countries represent a market of 64 million people. According to EU statistics, the current economic growth in the Central European region is the highest in the EU. The regions of all four capitals have an innovation indicator above average. With startups, a good idea can result in a business worth of billions in a couple of years. We’ll talk about this soon with my guest, but first let us introduce two talented entrepreneurs who have become successful in the Central Eastern European region.

“Order is the soul of everything,” so goes the saying. And, while most people do like cleanliness, not everyone can or wants to spend time on cleaning. can help those who are looking for fast, reliable cleaners for their homes. The Hungarian-developed online platform connects cleaners with households. Managing Director Timur Csillik is now working to make Rendi the largest platform of cleaning organization in Central Eastern Europe.

“This includes Poland, the Czech Republic, Slovakia, Slovenia, and Romania. So, these are the five countries next to Hungary that we are targeting. The main reason for targeting this market was that we had looked at our competitors abroad, and we have seen that there is such a strong competition in Western Europe and America in the household cleaning industry that it would be very difficult for us to break into those markets. However, the Central Eastern European region is a more virgin market in this respect.” participated in the V4 Eyes startup competition in 2017, and as a result they could go on a study trip in the Visegrad countries. In Poland, they met with several local actors who connected them with potential country managers and other professionals with whom they have been in good contact since.

“In Poland, for example, we met Google’s local affiliate, Google Campus, with whom we have had a very close relationship ever since. For example, we conducted the latest country manager interviews with them. We went to the Wolves Summit startup tournament/conference where we met our Polish competitor. Also, we visited several incubation houses, and there we met with future team members who would like to join Rendi.”

Investors target not only Poland in the region. The economic environment is becoming more and more favorable every year in Hungary. It is no coincidence that the Polish-based company Blinkee has just found its first foreign franchise partner in Budapest. Tamás Varsányi worked for multinational companies for 20 years before he realized his long-cherished dream and launched the first social scooter sharing service in Budapest, Blinkee.City.

“Blinkee.City is a community electric scooter sharing service. Practically, this is a station-free community scooter sharing service. It is one hundred percent electric, which means you can start renting and picking up scooters within the zone. You can also go outside the zone up to the administrative borders of Budapest.”

The company started with 50 vehicles, but they closed the season with an 80-unit fleet. According to statistical data, community riding is becoming increasingly popular in Budapest. On average every vehicle is rented five times a day, and one use takes 28 minutes. The machines were manufactured in China but assembled in Poland and were designed to meet the needs of Blinkee.City.

“The scooter itself is a Polish development, although it is manufactured in China, but the IT structure itself, as well as the GSM/GPS system, which is used for tracking and communication, are made in Poland. They were developed and installed in Poland. In addition, the battery is Polish and is made and installed in the scooters in Poland. What we need to add is building up the structure and fully operating the local unit, and, in addition, we have to buy the scooters. It is a business based on a franchise construction.”

The success of a business is always influenced by growth. That’s why Blinkee.City’s primary goal now is to make the experience of community scooter driving available in the largest possible area.

My guest is Piroska Szalai, Chairman of the Board of Directors of the Budapest Enterprise Agency. I wish you a good evening

Good evening.

Here we are talking about an early-stage entrepreneurial form. Approximately how many startups are operating in Hungary today?

Approximately, regarding good startups that are not only in the idea phase but where there are already prototypes, there are hundreds of them. I think that there are many more than five hundred, more like a thousand of these larger, more advanced startups. At the Budapest Enterprise Agency, we focus on them in all of our competitions. We are helping those for whom international relations are very important for their business conduct and growth. The capital city is helping them to take part in many international competitions.

We also presented two such companies in the lead of this conversation. Before we talk about this particular competition, and it is very important, we must definitely talk about the fact that businesses do not apply to win, but it is an actual competition. We’ll talk about the details soon. A question about what you said about good startups just came to my mind. Is the opinion I read on the internet true that one, maximum two can be successful from every 10 startups today. What does their success depend on?

Well, the numbers may be even worse. If you read other materials, they say that only one becomes successful from every 100 ideas. But, I think you shouldn’t be concerned about what happens with the other nine or the other eight, but it’s worth focusing on those that find their market and that can get to the market.

What can find a market?

According to international experts’ opinions, innovation is very good in Hungary. Our startups have very good ideas. Startups should be further strengthened, and this is what we want to do, to find their ways to the market. So, it is important that these young people have good market orientation, market knowledge, entrepreneurial knowledge, and skills. As the previous two speakers said, they are no longer focusing on the idea, but rather on how they can grow very quickly in the market.

I have two related questions. First, what is the economic and social weight of startups, and, second, can we keep pace with the international competition?

The startup world has been developing recently. Ten years ago, very few people knew there was such a thing as a startup, but maybe I should say that our first startups were born ten years ago. If someone hears the word startup in Hungary, they are surely thinking of Prezi or Ustream.

Well, those were big deals back then.

Yes, but after that we know less about the subsequent teams. And, I feel that this next generation, the generation after the giants, the number of them is now starting to grow really large. We, the Budapest Enterprise Agency, took the very first delegation in September 2015 to Tel Aviv, because Budapest is its twin city and we received an invitation. Since then, we have organized 32 delegations and more than 100 startups have been abroad. Today, we are able to present valuable teams similar to those of Rendi and Blinkee in such big numbers.

Does this new form of enterprise have a demonstrably stimulating effect on economic actors or even on the development of an entrepreneurial mindset, either at home or abroad?

In Hungary, it is often said that SMEs, but sometimes even the old big businesses, are not active in business innovation. We should be more active to make the country more competitive, but it is also true for the region, as the competitiveness of the region should be increased as well. These startups can definitely increase the business innovation by example, with the very simple idea that they can turn into a popular service for many. So, with their ideas and examples, we now have a restaurant in Józsefváros or in Győr where robots are serving the food, for example. We wouldn’t have thought before that it would be possible.

We started this conversation by saying that the Visegrád countries are successful not only in terms of political cooperation, but also in this area. In fact, I would even say that the results might be more tangible, more visible here than in politics, or faster, since speed is obviously a trait in this form of entrepreneurship. So, what is the most visible and most tangible cooperation between the four Visegrád countries in the startup field?

I think that the ones we have shown are really good examples. A Hungarian company opened an office in Warsaw. A Warsaw-based startup opened a business in Budapest. Another Hungarian company in Budapest opened offices in western German cities. I’m thinking of BeeRides, which operates car-sharing systems near airports. It has an office not only near Ferihegy, but also in Dortmund, Düsseldorf, and many other cities. The headquarters of these companies stay here in Hungary, but they get into European circulation. And, we know about many of these. I’ll tell you another one. Route4U has made maps of the pavement systems of many cities in Europe so that wheelchair users and mothers pushing strollers can see where to go in order not to collide with stairs.

Do people use these applications? Do you make follow-ups? Or, in what form can it be measured at all?

Yes, evidently. These services are all available as an application or online. Nowadays, more and more people, and not only young people, but statistics show that in Hungary people over 50 or sometimes even the 65–74 generations, use these applications in a very large number in comparison to in other European countries, and they are very well involved in the online world. So, there is a need for these services.

Regional cooperation must be obviously also facilitated by the fact that, as we already said in the discussion, these are innovative, early-stage enterprises, whose products or services do not have geographical or linguistic barriers.

Correct. These applications, for example, an English-language teaching application teaches the same English in relation to any other language and may not translate into Hungarian. This is also a very good Hungarian application. The online page of Rendi is now available in several languages, or there is a Budapest-based hotel whose application is now available in Portuguese. The distance is irrelevant. We at home, too, when we go on holiday, we can find and book a lot of things online in advance.

How are employment rates affected by the startup world? Is there measurable or detectable data both in the private and public sectors?

These businesses belong usually to the private sector, as they are micro-enterprises or small businesses. They normally start as micro-businesses, and we have see many examples that cross the 10-person limit within a year, so they grow to 15–20 or more. Each business employs IT professionals as well. In Hungary, the ratio of those businesses that employ IT professionals is the third largest in the European Union, and this is also true for SMEs. Only in Ireland and Belgium can we find IT professionals in businesses in such large proportions. So, well-trained professionals are very quickly absorbed by this market. And, in Hungary, higher education pays close attention to train professionals who can be the engines of innovation, not just engineers, but also economists, doctors—I’m thinking of Semmelweis University—and many other professions.

One last thing we should finally talk about is the attractiveness of Budapest. According to the Economist, Budapest became first in the Central Eastern European region in the global livability ranking. In addition to our geographic location, what can be attractive to the international market and international businesses?

I could talk about a lot of economic indicators. The price-value ratio is very good for maintaining a business here. In fact, the workforce is very affordable, and the offices are also very affordable. And, the technical indicators are very good too: our 4G internet is the third fastest in the world. Whether one is sitting in an office here or in a different office in a much more expensive city, it doesn’t matter in terms of physical accessibility. But, in terms of economic and other indicators, it is better to sit in an office here in Budapest. And, for young people, Budapest is not only interesting from business perspective, but from the after work, leisure time, and private life perspectives too.

It has become an attractive metropolis and attractive in Europe in terms of security as well. And, of course, it is beautiful. Piroska Szalai, thank you very much for accepting our invitation.

Thank you.

Dear viewers, you have just watched V4 – The Future of Europe. We will be back with fresh news in a week. Goodbye.



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