Home to spectacular alpine scenery and swish ski resorts, Austria has long been one of Europe’s top destinations for tourists, but more recently its lure has been proving irresistible to entrepreneurs.
The country is enjoying something of an entrepreneurial renaissance, driven largely by the return of some highly successful founders whose presence has awoken its capital Vienna from a start-up winter sleep.
Someone who has witnessed this transformation first hand is Florian Dorfbauer, CEO and co founder of Austrian website feedback start-up Usersnap. The reasons for it, he says, are a combination of good access to tech talent, generous government subsidies, and the return of some of Austria’s hottest entrepreneurial talent.
He says: “Interestingly, in a small environment, a handful of people really can make a big impact. I’m talking about people like Oliver Holle who started his first early-stage investment fund Speedinvest and Hansi Hansmann who is now considered a ‘super-angel’ in Austria. We also have the Pioneers who have worked so hard to create an active start-up community, from which has emerged some big success stories.”
These include the likes of Dynatrace, founded in Linz, Austria and acquired by Compuware in 2011
“They are currently re-inventing APM (application performance monitoring), and are a true hidden champion in Austria,” says Dorfbauer.
Other notable brands include fitness app ecosystem Runtastic, which has had 100 million downloads in the last five years, and Wikidocs a real time web page collaboration business, recently acquired by Atlassian.
Many notable Austrian start-ups, such as Crate, Sclable, Blossom, Codeship, and Usersnap, were founded by experienced entrepreneurs and people who were active in their respective communities.
“Our founding team of Usersnap had known each other for 10 years, and had worked together on a number of medium to large commissioned web-applications,’ recalls Dorfbauer. “We realized that reporting and reproducing reported bugs takes a big chunk of our time, so we started to think about the root causes. One problem we identified was that people always describe an experienced problem or a software bug differently since people have different backgrounds.”
They decided to
“We gave our customers and QA-engineers familiar tools, such as virtual sticky notes, a virtual pen tool and a highlighter tool to annotate and illustrate what they wanted to tell us and we received a screenshot of this situation. Shortly after we finished our first prototype, we realized that this idea can be a business in it’s own, and today it looks as though we were right,” he says.
Crate’s Christian Lutz was co-founder and COO of the Impossible Project, which bought the last factory in the world that manufactured Polaroid film, while Crate’s Jodok Batlogg was a former CTO of VZnet, the company behind schuelerVZ and studiVZ.
It isn’t only the fortuitous return of seasoned start-up founders that has ignited Austria’s entrepreneurial spark. There are other significant factors, for example, access to talent is considerably easier here than in other start-up hotspots in Europe and US, and still comparably affordable.
“Since the quality of living is high - Vienna consistently ranks number one in the Mercer's ‘Quality of Living Survey’ - there is no real reason for 'brain drain' in Austria,” says Dorfbauer.
Then there are the public subsidies. The Austria Wirtschaftsservice Gesellschaft mbH, the Austrian federal promotional bank, helps companies to implement their innovative projects by granting loans, awarding subsidies and issuing bank guarantees. A range of R&D grants are also available to help high-tech companies.
And in the last seven years or so, it is the widespread availability of cloud services like AWS and
But starting a business in Austria is not without challenges. It is still quite costly and to a degree, start-up-unfriendly; although there are some political initiatives to adapt current law to modern day requirements, the wheels of Viennese bureaucracy turn slowly. Labour costs are also high, due to payroll-taxes and health insurance costs, but perhaps the biggest issue for entrepreneurs is a lack of real tax incentives for start-ups and start-up investors.
While activity in the Austrian start-up scene is being watched with interest by US investors, early-stage investments in European-founded companies through US investors remain sparse.
“In Austria, at least, the lack of follow-up rounds is currently being tackled by Oliver Holle with his Speedinvest II fund, which is the best thing that could happen for the country,” adds Dorfbauer.
And on Vienna’s stake in the European start up hub rankings, he has no doubts.
He says: “I expect that Vienna will be the number one start-up hub of Central and Eastern Europe (CEE) – other CEE capitals like Budapest or Bratislava are within a few hours’ travel time - and I expect the dogma ‘Move to Silicon Valley or Die’ to shift towards ‘move some people to Silicon Valley and keep the core-team in Austria’, as there is little reason to expose an early- to mid stage start-up to Silicon Valley cost structures.
“And of course I expect a string of successes from my fellow start-up colleagues, so yes, I am feeling very optimistic about Vienna.”
