Lisa-Marie Fassl, Austrian Startup Advisor, and Gerhard Hirczi, CEO of the Vienna Business Agency, talk about business, startups, Vienna and ViennaUP’21.
Mr Hirczi, did Vienna really need a startup festival like the ViennaUP’21 in the middle of a lockdown? And was the event a success?
Our digital ViennaUP’21 is the largest startup event to be held in Europe so far this year, so I think we can safely say that it was a complete success! We reached ten million people around the world, with 25,000 participants from 60 countries attending 100 online events. An event of this magnitude, of course, also benefited the business location Vienna as a whole. Running this event in the middle of a lockdown and a pandemic showcased Vienna’s strong position in terms of business, innovation and startups to the world. Over the next few months, we expect to see some exciting and valuable business ideas coming out of the 5,000 one-on-one meetings held during the event. I am, for my part, delighted that we “took the plunge” as a business location agency. And to be associated with innovation and technology ten million times over – every city needs that.
Ms Fassl, what is your opinion as the new Startup Advisor for Austria and programme partner for this event?
The ViennaUP’21 event attracted a great deal of attention. International stakeholders became more aware of Vienna, and we demonstrated that the city plays a significant role in the world of startups. This event also shone the spotlight on startups in Austria and clearly showed that this is an area with enormous potential! For us as female founders, ViennaUP’21 was a great opportunity to test out a new event concept. The digital format meant we were able to connect female founders and investors from all over Europe. Even though it was a shame not to be able to welcome participants to Vienna in person, it was absolutely vital to go ahead with the event. We did not let the crisis put us off our stride. The city of Vienna made a very courageous decision to make the best of the circumstances.
Vienna is now playing in the “big leagues” of international startup cities. What will it take for Austria to feature on the global startup map?
Fassl: In smaller countries, it is usually cities or closely connected regions that develop into startup hotspots, because those are the places you find the necessary talent, capital and international influences. So it was only to be expected that Vienna would become the startup hub of Austria. Austria’s really desirable advantage is that every state has economic, political or research strengths, which can be very successfully combined with the innovative power of established companies as well as startups. These strengths need to be actively prioritised, financed and pursued, for example by setting new areas of emphasis at universities or developing targeted funding instruments.
Funding – many people see this as a driver of innovation, while others believe it limits innovation by promoting dependence and discouraging initiative. What do you think?
Hirczi: Funding provided by the Vienna Business Agency is designed to trigger dynamic activity. We certainly don’t want to encourage complacency or just provide the cherry on the top of a project. We consider projects very carefully before allocating funding, and monitor their implementation with this in mind! After all, we are working with public funds and we need to make responsible decisions. We provide funding with the intention of getting out more than we put in, in terms of investments and new jobs created. All our funding programmes are designed to address specific objectives, whether they are aimed at large enterprises, SMEs or startups. We are not funding the company, we are supporting the implementation of a project! We help startups with more than just funding, offering a full-service package that includes consulting services, workshops, ongoing training opportunities and more. We facilitate networking between startups and traditional companies or university facilities.
Fassl: Without funding, many successful startups would never have got off the ground. Just a few years ago, there was no alternative to public funding in Austria. Even during the coronavirus crisis, the public purse was a central liquidity source, providing the COVID startup aid fund or acting as a guarantee instrument. Nevertheless, it is important to critically evaluate the current funding landscape. It is not about cutting funding, but distributing it sensibly. Two particular questions are our key considerations: What are the relevant economic and socio-political concerns? Where is there a market failure that could justify public support? Two obvious sectors are deep tech, where the risk is so high that private capital investors are usually reluctant to invest in the early stages, and social businesses, which still generate too little interest from investors.
Does Vienna as a business location benefit from this startup scene, or is it just a kind of expensive hobby for the city?
Hirczi: As a business location, Vienna definitely benefits from young entrepreneurs and innovators. They are an important factor in driving innovative processes and new ideas and promoting entrepreneurial spirit, while simultaneously creating jobs for the future. We are encouraging know-how exchanges and overarching cooperation between traditional Viennese companies, new startups and global players. We are offering opportunities to network and work together to explore new aspects and considerations with a view to stimulating the city’s economy and promoting its interests. That way we can create fertile ground for the ideas that will position Vienna as a preferred and vibrant location for the long term. As for an expensive hobby, if by that you mean it’s enjoyable, then yes! But if you mean a frivolous and amateurish activity, then no! A comprehensive startup ecosystem has evolved in Vienna in recent years. Prominent stakeholders have driven this development and made significant contributions to the professionalisation of the scene, making Vienna a rising star in the European startup firmament.
The lack of growth capital is a recurring theme. Now it appears that 2020 and 2021 have set new records for start-up funding. Were these complaints justified, or was it just that no good projects had come up before?
Fassl: The COVID startup aid package in 2020 led to a significant increase in successful funding rounds and mobilised millions in private capital – which shows how successful this kind of instrument is, and supports many years of arguments in favour of introducing such incentives. At the same time, the pandemic prompted a much more rapid expansion of digitalisation initiatives, and tech startups in many cases were clear winners during the crisis. The situation was equally competitive from a capital investment standpoint, with investors not wanting to miss out on any exciting opportunities. There have always been good projects out there, but there is now significantly more money available to fund them.