Opportunities in

Opportunities in Romanian entrepreneurship after a pandemic year

Even though more than half of Romanian companies are exposed to the crisis generated by the pandemic, we should be optimistic and see what opportunities there may be in the entrepreneurial ecosystem in the coming period. We highlight five reasons for optimism transposed into strong points that can stimulate Romanian entrepreneurship.

By Claudiu Vrinceanu

Most early-stage startups are looking to join external incubators and accelerator programmes

IT TALENT POOL Romania has long been known as home to a large pool of great developer talent – the second largest in Central and Eastern Europe (CEE) – with more developers than countries like the Czech Republic and Hungary. Data published by the National Institute of Statistics (INS) indicated a number of 140,000 employees in the IT industry in Romania, most of them located in Bucharest (46 percent), Cluj (12 percent), Timisoara (9 percent), and Iasi (6 percent).

GROWING NUMBER OF ACCELERATORS More than 20 accelerators are now operating in Romania, involving more than 300 startups. This also represents a strength for future founders. According to studies conducted in Romania, successful entrepreneurs tend to launch their startups after the age of 40. Studies show that the success rate of startups founded by people under 30 is half that of startups founded by people in the 50-60 age group (which in the collective perception tend to not be associated with the idea of a startup or with entrepreneurship, although they are actually successful businesses in the field of high technologies). Moreover, in the context of the COVID-19 crisis, the number of professionals with business experience who could become founders will increase as a result of turnarounds and restructuring processes.

HIGH INTENTION FOR YOUTH ENTREPRENEURSHIP The appetite for entrepreneurship is growing among young people in Romania, with half of them saying that they want to be entrepreneurs according to an Insights study. Their chosen fields also mark an increased interest in entrepreneurship and management, which rank first among young people’s preferences. In this context, a success could come next year from the Innotech Student funding programme, through which undergraduate and postgraduate students who want to launch a business in Romania can obtain funding of up to EUR 100,000 from European funds.

A MORE DIVERSIFIED STARTUP FUNDING SYSTEM The funding of Romanian startups has become more sustainable and diversified in recent years. The number of investors in Romanian startups and scaleups reached 97 in 2020. The pipeline of local and international ventures is no longer driven by a few small companies in e-commerce and marketplaces, but is rather showing a balanced mix of innovative ideas in FinTech, Biometrics, Blockchain, Robotic Process Automation and HR-related solutions. Bucharest is the main hub in Romania, driven by its strong digital workforce and diversity.

Top funding is driven by international investors with only a few local funds being able to participate in Series A+ rounds. Besides the local funds investing in the ecosystem, we are also seeing a growing number of international players scouting the Romanian tech market for investment opportunities. Due to the lack of locally-grown venture capital (VC) funds, most early-stage startups are looking to join external incubators and accelerator programmes.

MORE EU FINANCING PROGRAMMES The number and value of EU programmes and sources of finance that can benefit Romanian SMEs is always growing, and they can help narrow the innovation and technology gaps that exist between firms in Romania and other EU countries. In this sense, over EUR 313 million are available for startups and SMEs.