Despite challenging economic climate, Greek startups continue to grow

Startup teams listen to a presentation in the conference room in Ok!Thess, an incubator in Thessaloniki.
Photo by Bridget Peery

Story by Bridget Peery ·

Chatter echoes through the two-story, open working space of Ok!Thess, an incubator in Thessaloniki nearly a year old. In the conference area, more than a dozen people listen to an instructor give her slideshow presentation. In the seminar space, just around the corner, another speaker commands the room. On the second-floor balcony, people sit hunched over computers, quietly at work, intent on their screens.

“This place works from 10 to 10,” said Simon Bensasson, city council member and president of Ok!Thess. “We cater to early startups for [the] idea stage. It’s why we call ourselves a pre-incubator. We’re trying to increase the population who is interested in starting a business and has a good idea to do that.”

Despite the country’s recent economic downturn, the Greek startup scene is expanding. There has been a rise in aspiring entrepreneurs and an uptick of hopeful investors. From 2014 to 2015, Greece was one of the top 10 countries to make the greatest gains in the Global Entrepreneurship Index, which measures the activity and dynamics of entrepreneurship ecosystems at a national and regional level.

Many of these startups seek to offer innovative services in the information technology, web and biotech sectors and are typically based in either Athens, the capital city with a population of around 3 million people, or Thessaloniki, the second largest city in Greece with close to 1 million people.

Depending on what stage startups are in, they may turn to an incubator or an accelerator for help in order to gain traction. In Thessaloniki, Ok!Thess is one incubator that has partnered with the city to offer an array of services to startup entrepreneurs who have an idea but lack the business knowledge to get off the ground. Bensasson was appointed by the mayor to oversee the program which currently has 10 teams of two to 12 members.

“What we’re trying to do is increase the number of people with credible ideas,” Bensasson explained. The program addresses this in three phases: holding interactive seminars on negotiation tactics and basic business disciplines; offering coaching assistance to help a startup stay on target, and; connecting startups to specialized mentoring for specific industries. After about a year, startups are referred to accelerators, other incubators or investors to secure funding.

Simon Bensasson, city council member and president of Ok!Thess, an incubator in Thessaloniki.
Photo by Bridget Peery

i4G, Incubation4Growth, is another example in Thessaloniki. As the first privately owned incubator in Greece, i4G has invested approximately 2.5 million euros (more than $2.8 million) in 14 companies in its 15 years of operation. The incubation period lasts between 4 and 7 years, explained executive vice president, Sotiris Siagas, and i4G has had a 100-percent occupancy rate since 2006.

“Our idea is to help and fund new companies to start with a good product or service and then expand,” Siagas said. i4G has 125 employees working in the company and currently has 25 companies incubated.

“There is a very active student community in Thessaloniki,” Siagas said, noting that one of the region’s biggest advantages is having the largest school in the country, Aristotle University, which has an enrollment of around 100,000. “There is a very vibrant community. There is a lot of research and a lot of very good projects.”

Collaboration between academia and the startup industry is becoming common in Greece. The Athens Center for Entrepreneurship and Innovation was founded three and a half years ago through Athens University of Economics and Business after receiving funds through the municipality of Athens. While studying for her Ph.D. at the university, Dora Trachana, along with Katerina Pramatari, associate professor and scientific coordinator at the incubator, sensed a growing interest in entrepreneurship.

“[Younger people] are not able to find a job in the industry or in the public sector,” said Trachana, the international collaborations manager at the center.

“They turn their minds into more entrepreneurial things and they are trying to become entrepreneurs themselves and be self employed. Most people are searching for new ideas. We were seeing that the interest was increasing,” Trachana said. “The need, it was clear to us.”

The center is open to any startup that applies seeking support, not just student-only teams, and provides them with access to meeting spaces as well as a network of 100 industry professionals such as lawyers, marketing experts and Ph.D.s specific to their start-up idea. Additionally, the center offers seed funding to the teams, typically in amounts of 1,000 to 3,000 euros, for approved purchases such as advertising or tech infrastructure. The center currently has 25 startups and has mentored around 100 since opening.

Startups that have moved beyond the idea phase with a prototype or mature business plan tend to seek investments from angel investors or venture capitalist funds.

Apostolos Apostolakis is a cofounder and partner of VentureFriends, a private VC fund based in Athens which has independently raised 20 million euros, or about $22 million, since launching in February 2016. In that time, it has made investments in 20 companies, 15 of which are located in Greece. Having started out as an entrepreneur himself in the early 2000s, Apostolakis has seen firsthand how the market has changed over the last decade.

Apostolos Apostolakis, a cofounder and partner of VentureFriends, a private VC fund based in Athens.
Photo by Bridget Peery

“Prior to 2010 there was not much startup activity. Then this wave of startups started happening,” he said. “[The] crisis has certainly played a positive role in the development of the Greek startup ecosystem. The reason is that talent who wanted to stay in Greece had less option in the shrinking private sector that did not create many new high-paid jobs.”

Prior to VentureFriends, Apostolakis had been involved with a number of well-known startups, including co-founding food delivery marketplace e-FOOD and being among the first angel investors of Taxibeat.

A mobile app launched in 2011, Taxibeat connects taxi cabs with riders via users’ phones, similar to the Uber model. It facilitates 600,000 rides a month in Greece and 2 million rides a month in Peru, where there is a satellite office in Lima. Earlier this year, Taxibeat sold for approximately $43 million euros (or close to $48 million) to automotive company Daimler.

e-FOOD is a web-based platform that offers customers online delivery options from 4,000 stores in 50 cities throughout Greece. In 2015, it was bought by German company Delivery Hero for an undisclosed amount.

“[It] gave the signal that… international companies can buy Greek companies. So this further inspired people to try and start up,” Apostolakis said. “We went through the startup ourselves. So we know how difficult it is and how you need to have this sense of urgency about moving forward quickly.”

This boost in activity in tech industry sectors, and additional job opportunities at new companies, bodes well for Greece, a country that is still experiencing the highest unemployment rate in the European Union at 23.2 percent as of February 2017, according to Eurostat.

Despite this, startups remain positive in the challenging environment. John Katsiotis, with cofounder Kostas Arkadas, three years ago launched ParkAround, an app designed to tackle the parking problems in city centers and airports, during what he considers to be the lowest point in the economic crisis. However, he has seen this as an advantage.

“It kind of helped us starting in a tough market because that meant that [our partners] had less business and they were looking for alternative ways to drive revenue and to drive customers into the car park,” Katsiotis said.

To date, ParkAround has 150,000 users, operating in five airports in Greece, 11 airports in Spain and a number of other major cities. The team has more than doubled since its launch, consisting of nine employees. As Katsiotis explains, ParkAround is exiting the startup phase and is starting to grow revenues. However, there is still a need to be economically prudent.

“We have raised so far about a half a million euros (about $559,560),” Katsiotis said. “We are trying to be very sensible on how we manage our time and trying to be extremely productive.”  

As the market slowly begins to improve and international investments increase, the entrepreneurial spirit in Greece remains strong. Still, locating financing continues to be difficult. One solution for some startups has been to submit their company and business proposal for an award.

The Hellenic Entrepreneurship Award was founded in 2012. Each year, a panel of judges selects up to five startups to receive the award for best entrepreneurship. This year, 1,250 applicant teams from all over Greece were narrowed to 10 finalists vying for $1.2 million euros, or about $1.34 million, in prize money. The winners will also be connected to business support services through HEA and its network of sponsors and partners.

“The most significant capital of Greece is human capital,” said Alexandros Nousias, director of the Hellenic Entrepreneurship Award, noting the wealth in startup talent in the country. “It is very important to be close to them and help them. Not only [with] financial support but also mentoring. We try to make it as holistic as possible.”

George Loudos, co-founder and scientific advisor of BETsolutions, explains how the molecular imaging system operates in their lab, located in Athens.
Photo by Bridget Peery

BETsolutions, a biomedical engineering startup founded in 2013, was one of the 10 finalists this year. For the last 10 years, BETsolutions has been developing portable molecular imaging equipment for clinical research of biotechnology drugs to potentially treat a number of illnesses, including cancer and cardiovascular diseases. Their goal is to facilitate accelerated research outcomes while decreasing costs and increasing accuracy.

“We don’t have an independent premises. We have a bottleneck,” said George Loudos, scientific advisor and co-founder of BETsolutions, explaining that due to the lack of space, the company is not able to take on additional projects.

“We have the people. We know what to buy. We know where to buy that but we need the initial capital to do that. Otherwise, it’s very risky to use the money from projects to do that,” Loudos said.

The company didn’t win, losing out to five other startups that cover tech, education and cuisine sectors. Nevertheless, Loudos said he appreciated the chance to network and show off what his new company does.

In a market that is slowly beginning to improve, Greek entrepreneurs have prospered, inspiring a new wave of forward-thinkers to enter the field.

“It’s two things I’ve experienced. The first one is fear. You have to stop being afraid. In our case, we quit our jobs… to start doing something we really wanted,” Katsiotis said. “The second thing is to be focused on one thing at a time.”


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