Can Venture Capital really end the Greek brain drain? The short answer, in our humble opinion, is yes.
Basically this belief is one of the central axes to the launch of our new fund, Starttech2, which is planned for later this year. More on that later. For now, let’s take a quick look at the state of play concerning the Greek brain drain. And how the exciting, new influxes of Venture Capital, both early stage, large and small, can bring the talent back.
The Greek brain drain: state of play
Let’s not sugar coat this. Since Greece teetered on the brink of bankruptcy back in 2010, an estimated 200,000 graduates have left the country to look for work elsewhere. Why? Put simply, life has been pretty tough for the country’s young professionals. Yes, eight years on, the end of the bailout programme may be in sight. But, unemployment for the under-25s is still estimated above 40%.
And for those “lucky” enough to find a job, salaries are so low that it’s impossible to sustain a decent living. Average salaries are around €700 per month. Add to that that it is one of the most expensive, not to mention difficult, places to start a business in the EU. And this is where Venture Capital comes in.
A thriving entrepreneurial ecosystem
As this blog is always at pains to point out, there’s never been a better time to invest in Greece. Because in spite of the problems, as it has been well documented, a thriving startup scene and entrepreneurial ecosystem continues to rise.
Born out of the financial crisis (who knows, it may never have came about if not for such problems), Greece is getting a growing reputation. And rightly so. The evidence? Look no further than 2017’ highlights from Found.ation’s comprehensive report on Greek startups. The two largest exits in Greek startup history, that of Taxibeat by Intelligent Apps of the German Daimler Group for 40.48 million EUR, and Innoetics by Samsung for an estimated 30-40 million EUR.
And the beat goes on, so to speak.
What Venture Capital is coming
So, what’s on the horizon in terms of Venture Capital and investment. And is it enough to reverse the Greek brain drain? We believe it can go a long way. Here’s the breakdown of what’s coming.
On April 10 the EU announced VentureEU, a €2.1 billion fund to boost venture capital investment in Europe’s innovative start-ups. Created by the European Commission and the European Investment Fund (EIF), this is a Pan-European Venture Capital Funds-of-Funds programme.
This fund is additional to the Equifund project, for which there was a launch event for the Athens edition last month too.
Equifund as a marker
Make no mistake, Equifund is the marker in the effort to bring Greece’s talent back home. It means a great deal to Greece and in fact the Eastern Mediterranean region at large (with the exception of Israel). Why? Because for entrepreneurs and investors – especially US-based investors, they will want to “follow the money”.
More than putting Athens back on the investment map, it propels our historic and vibrant city to the epicenter of the regional investment and entrepreneurship ecosystem.
For us here at Starttech, our US-based investors will quite rightly look to the Equifund as a marker. A sign of having confidence in our region. They will know now that they are not taking any huge risks here, because they are following a sizable private institutional investor such as the EIF.
You only have to look at the numbers to get an idea of the impact Equifund Athens 2018 can make. This brief summary below just about sums it up.
- A total of 260 million euros is coming “our” way to establish new companies, as well as support existing investment firms.
- The scouting for new talent and experienced entrepreneurs ready to scale their businesses has already been set in motion.
- EquiFund is bigger than the total cash invested in Greek startups in the past seven years, according to a recent report from Found.ation.
- And the above does not include the private capital that will be raised and deployed by fund managers in addition.
- Generally, the anticipation is that around 400 million euros will be injected into the Greek tech scene over the next few years.
Not bad at all, right?
First step to reversing the Greek brain drain
We like to think of Equifund as a vital first step in helping to bring Greece’s talent back home. In addition to Equifund and Venture EU, however, there are a plethora of smaller early stage investors like ourselves. And one thing we are very proud of is our supporting role in trying to reverse the talent loss tide.
Important questions still need answering. And we – the entrepreneurial community in Greece – must help provide the answers over the next 5-7 years.
- Are there sufficient emerging founders with ideas good (or great) enough with healthy doses of work ethic and ambition to match. Will the pipeline fill up with sustainable startups?
- Does the country have sufficient intelligent investors to act as fund managers? People capable of building a track record that’s strong enough to ensure a follow-up of private and/or public capital injections?
- Finally, is throwing money at the Athens’ and Greece’s systemic challenges enough in order to sidestep them?
The jury remains out. And, as is usually the case, time will provide all the answers. Getting it right will mean not just a new wave of innovative, healthy and sustainable startups, but the return of a large chunk of those 200,000 Greeks who took their brains elsewhere.
