With a broken economy and country in turmoil, can Greece’s startups rise through the cracks? Geektime talks to Greek entrepreneurs to get the full story
It is news to almost no one that Greece is undergoing a financial crisis. The country’s 320 billion euros in debt begs the question: What in the Helen of Troy are they putting in the tzatziki that makes entrepreneurs actually want to start up in Greece?
While the country faces a national dilemma of whether Greece will remain a part of the European Union, Greek entrepreneurs face a dilemma of their own – whether they can keep their businesses and the country’s startup ecosystem alive.
Born and raised in crisis
Many of Greece’s startups emerged in the last five years, a period of time that coincided with the nation’s reeling towards debt. In fact, the number of Greek startups has doubled each year since 2010.
Georgios Gatos, co-founder and COO of boating platform Incrediblue, says, “Startups always face challenges. As a company we were born and raised during the crisis (in 2012) and we learned how to move forward. What has happened in Greece with capital controls and the referendum was a strong shock for all of us, but we are prepared.”
For Incrediblue and other Greek startups, being prepared has in part meant seeking foreign investors. In its most recent funding round, Incrediblue raised $1.8 million from London’s Connect Ventures. Referring to this funding, Gatos said, “This has worked for us under these unfortunate times.”
Beyond looking for financial footing elsewhere, Greek startups look for physical footing beyond its borders to maintain stability.
Though he lives in Athens, Evan Varsamis decided to base his startup, The Gadget Flow, in Delaware. He used to run a marketing company that was completely based in Athens, but he started to look west after frustration over inefficiencies in Greece’s bureaucratic system.
Varsamis recalls to Geektime, “In Greece, we had to wait [at the pension office] for six hours just to file some document. In the U.S., you do it all online, which saves you six hours to do your job.” He goes so far as to advise, “Opening your startup in Greece would be a hill. I would recommend that if your product doesn’t have anything to do with Greece – work in tourism, for example – you should definitely look to open somewhere else.”
The uphill battle
Given its current financial standing, it comes as hardly a surprise that the Greek government is not investing huge time nor attention to its startup scene. Although the EuroSummit seems to have reached a deal to resolve the debt crisis, the IMF is not happy about the bailout terms. Short-term progress, let alone long-term plans, remains unclear.
George Spanoudakis, another Greek entrepreneur, tells Geektime, “They managed to come to an agreement, but I don’t know how fast or when it will take place. We don’t have any expectations of the Greek government. We know they have much more serious issues than helping startups.”
Spanoudakis’ startup, Pinnatta, is a mobile app for interactive messages and greetings that has garnered two million users in its four years. Only the app’s marketing takes place in the U.S., while the entire production, including development, engineering, and graphic design, is located in Greece. Of the 23 employees on the team, 20 are in Greece. The team has raised $3.5 million from Greek investors along with U.S., Chinese, and Japanese angels. Recently, Pinnatta also made a deal with Facebook Messenger.
But even a company as successful as Pinnatta was hit these past few weeks.
According to CEO Spanoudakis, two team members chose to quit their jobs at Pinnatta and leave the country in search of more stable opportunities. Fundraising has also been difficult, as the startup is in the middle of a new funding round led by Greek investors.
“Greek investors were very scared about the situation and what’s going to happen,” Spanoudakis explains to Geektime. “Our financing round is in huge danger.”
Along with a lack of governmental support, Spanoudakis cites “the lack of experience” as “one of the huge problems in the Greek ecosystem.” He continues, “Of course, the situation doesn’t help at all. Friends of mine who don’t have bank accounts or credit cards outside Greece face danger, since Greek accounts can’t pay for services outside the country.”
Startups are sprinting to survive. But it seems their Achilles’ heel is this lack of experience, and it weakens their momentum. This explains why entrepreneurs might look abroad for funds, real estate, and general know-how.
“It’s a learning process here. We’re trying to look at other ecosystems. We fly to places like the Silicon Valley, London, and Israel to understand how things work there, gather some know-how, come back to Greece, and adapt that know-how here.”
Greece’s own green pastures
The grass is always greener – and the money abroad might be greener, too. But the Greek startup ecosystem’s early stage also indicates its potential for growth.
For one thing, the country’s physical landscape outshines any pasture. Tourism accounts for a quarter of the economy in Greece, and the country ranks as the seventh most popular destination in the world. Just last year, a record 24 million people visited Greece.
Unfortunately, the recent crisis has led to worried tourists, and some startups like Incrediblue have seen a “major drop in last minute bookings,” as Gatos tells TechCrunch. Yet other tourism-related startups are still floating on without disruption. Alexandros Trimis says that his chauffeur service Welcome Pickups has not seen a drop in users.
In spite of sunshine in Mykonos, the future understandably does not look completely sunny from the entrepreneur’s perspective.
“Seeing your country in disarray doesn’t really help you start the day full of optimism,” Argiris Bendilas, co-founder of gaming company Total Eclipse, laments. “Our startup scene’s foundations have been shaken very badly and restoring them will require a lot of time, peace, strong will, and hard work.”
Spanoudakis has his own idea of how to bolster the startup scene’s foundations. In typical Greek fashion, his idea centers on family. He sees similarities between Greece’s traditional, small family businesses and the average startup: Both begin with a handful of people, involve strong relationships between family members or business partners, and start with an initial investment.
“This can become the new backbone of the country: converting [the mentality] of small family businesses to startups. The difference is family businesses have very local scopes, while startups aim very globally. If local companies aim for high results, there can be huge outcomes in the Greek economy.”
So, can Greek startups survive?
Varsamis has one answer: “They can definitely survive, but why struggle if you have another option? The Greek bureaucracy, increased taxes, and the current financial situation may damage your business and slow you down significantly.”
He feels the country needs to eliminate bureaucracy, lower corporate taxes for a few years, host more events, and generally embrace startups for the ecosystem to do well.
But Spanoudakis has more faith in Greece: “In the end, startups will not only survive, but thrive. We can learn from other ecosystems and, because of the crisis, we can inspire people to do something and get over our present situation.”
The two views represent the looming debate over the future of Greece’s startups. However, it does not sound like Greek entrepreneurs are willing to submit easily. Let’s just hope they plan ahead better than their politicians.
Featured Image Credit: Per Bengtsson / Shutterstock