By Don Grantham
Since the EU working restrictions were lifted for Bulgaria and Romania on January 1st, these countries have captured the interest of international media like never before, but not always for the most flattering reasons. If one digs a bit deeper though, the rise of innovation and entrepreneurialism within the technology sector in Bulgaria and Romania tells a different – yet largely unexplored – story of the region.
Both countries have strong ICT markets, revitalized every year by high numbers of bright, young engineers entering the labour market. With a rich technology talent pool, multi-national tech companies have increased investments in Bulgaria and Romania: for example, Microsoft has been present in Romania since 1996 and we opened our Global Business Support Center there over five years ago, where more than 300 technology professionals work today. In Bulgaria, we have worked with more than 900 local companies since setting up our local office in 1999 and have invested more than $2 million to support Bulgarian education over the last decade.
Furthermore, Sofia and Bucharest are two of the most promising start-up hubs in Eastern Europe. These capitals are developing vibrant start-up ecosystems with a growing number of organisations providing financial support and affordable working space for aspiring entrepreneurs. Two of these companies are LAUNCHub and Eleven, seed funds based in Sofia, that offer investments varying up to 200,000 euros, networking opportunities, peer support and mentorship for a new generation of leaders in Bulgaria as well as other parts of South and Eastern Europe. We recently teamed up with both of them to bring our global Microsoft Ventures program to Bulgaria with the aim of providing tools, expertise and routes to market for start-ups through partnerships.
Despite encouraging developments in the tech space, the broader economic and labour market related issues these countries face cannot be ignored. Both markets have high levels of youth unemployment, with 28.1 percent of young people out of work in Bulgaria and 22.7 percent in Romania, according to Eurostat. Moreover, they also have some of the lowest GDP per capita ratios across the EU. And small businesses and start-ups are also challenged by lack of private funding, with Bulgaria and Romania both showing the lowest levels of venture capital funding across Europe, according to the Wall Street Journal. Many socio-economic variables play a role here, with many Bulgarians and Romanians acknowledging that bureaucracy and the uncertain economic landscape are deterring foreign investors from supporting local projects.
To address these issues, the private sector must play its part by offering opportunities for talented ICT professionals and business people to ensure entrepreneurial success in these countries. Through Microsoft’s student technology competition Imagine Cup and the BizSpark program (which supports over 5,000 start-ups across Central and Eastern Europe), we are cooperating with some of the brightest local talent.Dimitar Georgiev represents one of these success stories: the Bulgarian entrepreneur behind GymRealm, a free platform which allows fitness aficionados to better organize and share their activities on social networks, has recently acquired funding from Germany-based venture capitalists, and aims to bring his solution to further markets as far as Asia. Dimitar is now one of the ambassadors for the Microsoft BizSpark program, providing guidance to other aspiring entrepreneurs.
Nimero team at Sofia University
Another successful business endeavour emerging from Bulgaria is Nimero, with its solution designed to support teachers and spur student participation in the classroom. Founded after winning the Imagine Cup local finals in 2009, Nimero’s education system Envision has been used by more than 20,000 students in approximately 220 schools internationally including in the US and Spain. In Romania, a group of computer science graduates developed MIRA, a physiotherapy application using Kinect technology. After receiving funding from several accelerators, the team have turned their idea into a business that is proving highly successful in speeding the recovery time for physiotherapy patients. The young entrepreneurs are now looking to deploy their solution into further European markets.
These start-ups not only demonstrate the strong backbone of entrepreneurship in both countries, but also illustrate technology’s transformative power in all facets of our lives such as education and healthcare.
Team MIRA at an event in London
If Bulgaria and Romania follow the lead of their Northern neighbour, and earlier EU entrant, Poland, then the future seems very bright indeed. Poland has been one of the strongest economies in Europe for the past five years and – despite its signs of slowing down in 2013 – is expected to grow faster than most of its European counterparts this year according to the World Bank. The rise of the Polish economy is a great example of the long-term, positive change taking place across Central and Eastern Europe driven by investment in high quality education and local innovation. These are certainly investments that Romania and Bulgaria are pursuing as well.
While the Bulgarian and Romanian economies remain challenged, with so much potential we look forward to seeing further growth in the coming years. This positive momentum can only take place with the collaboration of the public and private sectors to empower local businesses. Private sector initiatives such as BizSpark together with EU available funds, such as JEREMIE (Joint European Resources for Micro to Medium Enterprises), are already extending their reach to Southeastern Europe. But as importantly, with the working restrictions lifted, the local entrepreneurs can more easily tap into the wide range of seed funds across the biggest tech hubs in Europe, while contributing to their local economies.
Entrepreneurship is at the forefront of igniting economic growth across Central and Eastern Europe and is fuelling tech innovation that will change the way we work and play. With this new wave of entrepreneurs, ideas and solutions from Bulgaria and Romania, spurred by the increasing flow of public and private investment, we are optimistic about what’s next for these two countries and proud to play a part in their start-up evolution.