Being a startup in Austria
The Austrian startup scene is growing
The entire Austrian startup scene has clearly gained in momentum in recent times, and there are no signs of a slowdown in growth. The public, political decision makers, large multinationals, consultants and funding institutions have focused intensively on the topic of “startups”. They have contributed to improving underlying conditions for young companies in Austria, and particularly in Vienna, which has emerged as a startup hub.
This year’s opening in Vienna of weXelerate, the largest startup center in Central and Eastern Europe, is gratifying news for founders and all those who aim to be. Each year about one hundred startups in the fields of Internet of Things (IoT), FinTech and media are to be admitted to the innovation center located in the Nouvel Tower on the Danube Canal and given support in their efforts to enter the market. An infrastructure designed to promote innovation and consisting of mentors – successful companies, partners in the fields of service, sales and venture capital as well as incubators and investors – will support the development of startups. A second major project, the A1 and Talent Garden Co-Working Campus, underlines the current development path. It offers room for more than 500 workplaces which can be leased for a limited period of time, and is expected to be filled with life this spring thanks to the presence of startups, companies, freelancers, investors and agencies.
Austrian lawmakers focus on startups
In addition, the federal government also wants to do its share, and has passed a Startup Package featuring a volume of EUR 185 million as part of its current government program. The measures are designed to provide impetus for the promotion of startups. In the near future, it will offer numerous incentives to make the Austrian business location even more attractive for startups and thus stimulate investments. In addition to a risk capital premium, the measures primarily entail a reduction in employer contributions to auxiliary wage costs, which end up inhibiting growth on the part of many young entrepreneurs. These costs will be considerably diminished over a period of up to three years for the first three employees of innovative, high-growth startups. This could provide important impetus for the initial growth phase of startups.
The Deregulation Act 2017 should also relieve the burden on companies. It includes an innovation in setting companies which is unique in Austrian history up until now. A “simplified founding” should make it possible for the first time to establish a standard “GmbH” (limited liability company with one managing shareholder) electronically and without a notarial deed. The ultimate objective is to enable the fully electronic implementation of all steps involved in starting a company in one simplified process. Furthermore, cost reductions (e.g. fees for notary services) are foreseen for certain types of startups. Even if the proposed changes mainly target (for the time being) certain forms of startups, there is still a clear overall trend on a legislative level for towards reducing the barriers for founding new companies.
Austria’s investor scene is also growing
Access to capital for young business people has also improved greatly most recently. An important point of contact for startups is Austria Wirtschaftsservice (aws), which focuses on granting and processing company-related funding on a national level and providing other financing and consulting services in the public interest which aim to support the business community. For example, the aws Gründerfonds (aws Founders Fund) offers risk capital to young companies with extensive growth potential to help them quickly turn their ideas into tangible market success. Österreichische Forschungsförderungsgesellschaft - FFG (The Austrian Research Promotion Agency), the national funding agency for business-oriented research in Austria, supports Austrian companies, research institutions and researchers on the basis of a comprehensive offering of funding programs and services.
The national and international success stories of Austrian startups have also intensified the activities of Austrian investors from the private sector (business angels). Slowly but surely the range of venture capital companies in Austria is expanding (e.g. Speedinvest, startup300, pioneers Ventures, APEX Ventures and AC & Friends). In turn, this facilitates access to capital for promising startups.
Austria also attracts international startups
These tailwinds have not only resulted in a strong increase in the number of innovative startups, but the Austrian business location in the heart of Europe also appears to be a promising place in the eyes of foreign founders. In the meantime, there are numerous offerings to support young foreign entrepreneurs to support them in setting up companies in Austria or relocating there. For example, in its role as a single contact point, the Global Incubator Network (GIN), an initiative of the Austrian federal government, facilitates access to the Austrian market, and offers contacts to Austrian experts and investors (business incubators, business angels) and the possible to exchange experiences with peers, amongst other services. The Austrian Business Agency (ABA) is an important point of contact for potential startup immigrants. Foreign founders are given comprehensive information on Austria as a business location (e.g. support measures, funding agencies) and are given support in effectively overcoming administrative obstacles in order to enable them to locate in Austria.
In summary, it can be said that Business Location Austria increasing offers fertile ground for newly established companies and turning innovative ideas into reality, and is thus creating the necessary prerequisites enabling startups to become successful companies.