5 Reasons in Favour of Launching Your Startup in Austria
One might easily be tempted to classify newly founded companies as startups in the digital- and technology-driven 21st century. For this reason, let us first have a look at the typical characteristics of a startup and what distinguishes it from a "traditional" company.
Definition of a Startup
Generally speaking, startups are considered to be young companies which were recently founded (within the last ten years) and which pursue an innovative or highly innovative business idea. Startups are also characterised by the fact that they want to expand strongly and quickly to other markets and have the potential to do so. In order to press ahead with this exponential growth, many startups are dependent upon investments and risk capital. Funding is often derived from business angels and risk friendly investors who believe in the potential of the business idea, as well as via crowdfunding.
Innovation is an important feature of startups. The sectors in which company founders drive their operations forward on the basis of innovations differ extensively. According to the Austrian Startup Monitor 2019, the majority of startups were established in the fields of software (31.2%), hardware and consumer goods (10.1% each sand life sciences (9.2%).
All these characteristics clearly distinguish startups from other companies which are established.
5 reasons for establishing a startup in Austria
Silicon Valley in California is generally considered to be the perfect example of fertile ground for innovation and the entrepreneurial spirit. However, many people are not aware of the fact that Vienna has long overtaken Silicon Valley. According to the Global Talent Competitiveness Index 2019, Vienna is ranked fourth in a global comparison, ahead of San Francisco (12) and Berlin (32). In a country ranking, Vienna is rated 18th out of 125 nations. This takes account of factors such as regulations, competition, openness, sustainability, education, employability and skills.
Less us take a closer look at several of these factors:
1. Location and infrastructure
From a geographical perspective, Austria is located in the heart of Europe, and thus offers a unique starting point for newly established companies. Bordering on the neighbouring countries of the Czech Republic, Slovakia, Hungary and Slovenia, Austria opens up doors to the CEE market. This has not only been a popular approach of corporate business strategies for many years, but it also promises significant potential. GDP growth in Eastern Europe ranging between 2.2 percent and 3.6 percent is substantially higher than the eurozone average of 1.5 percent.
Furthermore, Austria is part of the German-speaking DACH region alongside Germany and Switzerland. It comprises the largest European region with a common language, consisting of close to 100 million inhabitants, and is also a convincing argument due to the per capita purchasing power of € 42,000 in Switzerland and about € 24,000 each in Austria and Germany.
Not to mention the fact that Vienna has been named by Mercer as the most livable city in the world for ten straight years. The unique balance of an outstanding quality of life and affordable prices makes Vienna the city in which people can live and work while enjoying the best conditions. Austria was also rated first in the world for the second year in a row in the ranking of the Economist Intelligence Unit. It scored 99.1 out of 100 points, putting it ahead of Melbourne, Sydney and Osaka.
2. Funding and financing
Even if a steep drop in the number of startup financings is to be expected in 2020, more was invested in Austrian startups in 2019 than ever before. Austria registered an investment volume of € 183 million in 2019 according to the EY Startup Barometer (€ 173 million in 2018). As a result, Austria placed 15th in a European comparison.
The Austrian Research Promotion Agency FFG and the funding bank aws are important funding bodies for startups in Austria. The Vienna Business Agency is a great contact point for startups located in Vienna.
However, the vital startup scene in Austria could also rely on public sector assistance during the coronavirus crisis. The Covid Start-up Aid Fund initiated specifically for this purpose doubled private investments This relief fund is part of the Austrian Startup Package of the Austrian Federal Government.
3. Talents and know-how
If one takes another look at the Global Talent Competitiveness Index 2019, Austria is ranked 17th globally in the category Grow (including Formal Education, Lifelong Learning, Access to Growth Opportunities) and 25th in the world in the category Global Knowledge Skills. Austria even placed an outstanding 9th in the category Vocational and Technical Skills. Moreover, Austria is an attractive country for international students (10th) which correspondingly increases the pool of international know-how.
The standard of education in Austria is also extremely high in a global comparison. The country has a particular need to catch up when it comes to digital professionals, in light of the fact that the level of demand on the labour market is very high at present and will increase in the future. For example, the Talent Garden Innovation School focuses on this very issue. This educational institution has trained more than 3,800 people in the fields of UX Design, Digital Marketing, Digital HR, Business Data Analysis and more since 2015 on the basis of innovative (online) courses. It has also trained an additional 1,900 children in the areas of Coding and Robotics. These measures implemented today already train the talents of tomorrow.
The Startup Visa offered to businesspeople showing great potential is interesting for third-party nationals. This programme is designed to make Austria attractive as a business location, also outside of the EU.
4. Women and gender equality
Austria is a country of female entrepreneurs. Since 2010, more than half of all companies have been founded by women. However, this statistic does not only apply to startups but to all business formations in general. There is still a lot of room for the startup ecosystem in Austria to improve, but the country is moving in the right direction. Within a period of one year, the share of startups established by women has increased from twelve to 18 percent. This means that a woman is behind every fifth startup in Austria. Moreover, every third team of founders includes at least one woman (Austrian Startup Monitor).
However, one should not ignore the fact that Austria still lags behind with respect to many aspects of gender equality (e.g. the large proportion of women working in part-time jobs, and the resulting poverty in old age). Austria is rated 34th out of 153 countries in the Global Gender Gap Index 2020. In particular, Austrian women perform well when it comes to Educational Attainment (1st place). Unfortunately, Austria still receives poor marks in the category Economic Participation and Opportunity (86th). Nevertheless, there are an increasing number of initiatives, especially in the STEM sectors, which are designed to counteract this unfavourable situation.
5. Ecosystem and community
The Austrian startup ecosystem is growing and is one of the most important drivers of digitalisation in Austria. This innovative digital and tech community also needs a home. Many startups find such a place in incubators and coworking spaces, where they meet like-minded people, exchange views and experiences and can find potential cooperation partners. There are relatively few coworking spaces in Austria in comparison to other countries (e.g. Germany and Great Britain). However, this does represent an advantage, because it means that one can confront the "players of tomorrow" at a manageable number of physical locations.
However, it is important that coworking spaces not only provide networking opportunities but also in particular interaction in the international community. The coworking network Talent Garden established in Italy in 2011 is the largest European community of digital and tech professionals today. It has set up 21 coworking spaces in 16 European cities, including its location in Vienna's 9th district. Internal initiatives make it easier to interact with like-minded individuals in Dublin, Barcelona, Milan and Copenhagen.
These and many other factors have transformed Austria into a top spot for startups, both for national as well as international company founders. The following startups, amongst others, show that Austria has considerable potential for highly innovative ideas and international success:
● Robo Wunderkind