Foreign Investment Summit 2021: The road to a sustainable economy must be paved with capital

The 8th edition of Business Review’s Foreign Investors Summit brought together representatives of large companies, consultants, legal advisors, and strategic investors on the Romanian market to debate key topics related to foreign investments and discuss the top concerns of people who do business in Romania.

By Aurel Constantin

The pandemic wiped out most of 2020’s global economic growth. And even though Romania was also hit hard by covid-19, the local economy performed better than its European peers last year and is expected to also outperform them in 2021, with an estimated growth of around 7 percent. Naturally, foreign direct investment (FDI) levels, which had already been stalling for several years, hit a record low, but as the new normal took over, we saw a steep growth of FDI in the first five months of 2021, of 320 percent.

The fiscal and monetary measures adopted by Romanian authorities to help businesses cope with the effects of the pandemic have certainly helped the recovery, and it seems that the local economy can still offer good opportunities for foreign investors. There are plenty of factors that make Romania an attractive destination for FDIs – consumption is on the rise, real estate yields are still good, and the local share trading market is growing. At the same time, we cannot overlook warning signs like the shortage of qualified workforce, rising energy prices, public debates over suspending fiscal facilities for key industries or even the everlasting political crisis.

All these things are having an impact on Romania’s competitiveness, one of the most important aspects that have to do with the attraction of foreign investors. In order to improve the country’s competitiveness, we must take a good look at the challenges and opportunities in front of us today, as Bogdan Ion, Country Managing Partner at EY Romania & Moldova and COO of EY South-East & Central Europe and Central Asia, noted in his opening statement at FIS 2021.

Romania’s present situation is far from ideal: we are simultaneously dealing with the critical issue of high mortality rates due to covid-19, a political crisis, and record-high energy prices. But regardless of today’s difficulties, we must still take a long-term view. One of the key questions is, how do we see ourselves competing as a country and what are the key drivers of growth? Should our growth model be primarily based on manufacturing or rather on services?

Romania seems to be expanding in both directions, just like Poland, which is a really positive development. Another good aspect is the high share of IT in our value-adding output, an area where we rank well. Romania’s competitive approach has mainly been based on cheap labour and technology adoption supported by foreign direct investments. In the context of economic convergence and increasing labour costs, these growth drivers are slowly being wiped out. Therefore, Romania needs to compete more on quality and less on low costs. Raising labour productivity is crucial, and this requires major improvements in the areas of education and healthcare. And we also know that more foreign direct investments could be attracted provided that the country’s institutional framework and infrastructure are improved.

DIGITALIZATION

Addressing the four areas where our country significantly underperforms would most likely lead to better technological absorption and generate further domestic investment and innovation, where we also score very low. According to the European Innovation Index, Romania is the least innovative EU country. We are lagging well behind the EU average in the vast majority of indicators, other than internet access, venture capital, medium and high tech exports, and sales of innovative products.

“Demography is also a huge long-term challenge. According to Eurostat, we might record a 37 percent drop in active population by 2060. We are placed towards the extreme end of this spectrum,” says Bogdan Ion.

Bogdan Ion, EY Romania & Moldova: Romania needs to compete more on quality and less on low costs. Raising labour productivity is also crucial, and this requires major improvements in the areas of education and healthcare. Cristian Secosan, Foreign Investment Council: The unprecedentedly high prices on the energy market are caused by the lack of investment in the sector and the country’s inefficient production capacities. There are also factors that are out of Romania’s control, but there are still plenty of internal issues that we ought to address.

Ramona Chiriac, European Commission: Romania’s economic growth this year is estimated by the EU at 7.4 percent, outperforming other countries. For the growth to remain sustainable, it is important to ensure that it is supported by investments and reforms made through the Recovery and Resilience Plan.

Ileana Gutu, EY Romania: Romania has a great capacity to absorb investments, and I would say it's extremely competitive in terms of its overall tax rate, at 20 percent of the total profit, which is far lower than the rates of the other countries in the region.

Cristian Ilie, InvestRomania: We need a proactive approach in promoting Romania as an investment destination and we need to establish what the country needs and what it can offer, and then promote it intensively in order to build a sustainable economy.

Lara Tassan Zanin, European Investment Bank: Romania must decide what it wants to look like in the future, what it can do to strengthen its economy, what types of investments it wants to attract in order to have a greener and more sustainable economy, and how it should try to obtain those investments.

Antoniu Panat, Vastint: There is a direct link between rent levels and market investment levels. If rents are low, then profit margins are also modest, which leads developers to cancel or postpone investments in new buildings.

Patricia Wruuck, European Investment Bank: We can see a difference in development among EU municipalities with large income gaps. This can be seen in housing conditions, but also in healthcare, and it can be addressed through investments.

Laura Stefan, Mastercard Romania: HoReCa Together is an educational platform that provided all kinds of information, from global education tools to local best practices, and taught entrepreneurs how to digitalize their business and make sure that they can get through this period.

Achieving a higher GDP per capita level based on a decreasing population is not something we want. Romania has a 44 percent gap with the EU in GDP per capita. “At the end of the day, this translates into significant potential for our country, especially if we look at the last 10 years, when we have consistently exceeded the EU’s average GDP economic growth rate,” said Ileana Gutu, Associate Partner for Economics and State Aid Services at EY Romania.

What Romania needs is sustainable growth, which may come through European funds, and we also have the capacity to absorb private investments, thanks to an extremely competitive overall tax rate. “Investors should be aware of the available state aid schemes and of those that might come next. And we can refer to two such schemes that are working very well already: one for major investments of over EUR 1,000,000 and another related to job creation, which is applicable when creating more than 100 jobs. I think they are very relevant and have already been proven to work,” Gutu added.

THE GREEN DEAL

According to Ramona Chiriac, Head of the European Commission Representation in Romania, foreign investors are important in generating robust growth for the Romanian economy. As this year’s summit was focused on better understanding where foreign direct investment stands and on addressing investors’ hopes and concerns, the EU-funded Recovery and Resilience Plan came up often as one of the biggest sources of hope. “Romania’s economic growth this year is estimated by the EU at 7.4 percent, outperforming other countries. For the growth to remain sustainable, it is important to ensure that it is supported by investments and reforms. The EU has made the necessary steps to disburse a total amount of EUR 29.2 billion to Romania by 2026, of which EUR 3.8 billion will be released in the pre-financing stage of the plan,” said Ramona Chiriac.

The plan is built on six pillars, from the green transition and digital transformation to economic, social, and territorial cohesion, health and institutional resilience, and policies for the next generation. The Green Deal can have a huge contribution to reaching the set targets of reducing 55 percent of greenhouse gas emissions by 2030 and reaching carbon neutrality by 2050. This creates a huge need for investment, and 41 percent of the investments laid out in Romania’s plan will be going towards green projects. EUR 1.8 billion will go to urban mobility for green transportation, while EUR 855 million will be allocated to renewable energy production.

The EU and the European Investment Bank may provide financial assistance and advisory services, but it remains Romania’s job to design its own future. “Romania must decide what it wants to look like in the future, what it can do to strengthen its economy, what types of investments it wants to attract in order to have a greener and more sustainable economy, and how it should try to obtain those investments,” said Lara Tassin Zanin, the Head of the European Investment Bank.

Romania also has plenty of opportunities related to the available transition and structural funds, and all of these should be used more in order to generate added value in the economy, which means that authorities must have a medium- and long-term vision in place.

Confidence in the economy

Poland and Hungary have so far been better than Romania at attracting foreign investments, therefore our country must develop a solid strategy. Various initiatives and projects are being carried out by different institutions, but a common vision is still missing. “We need a proactive approach in promoting

Lucian Enaru, Schneider Electric: Over the past few years, we’ve seen significant investments in hospitals, especially in the private sector, which has been providing high quality services. Recent investments have addressed critical aspects such as power availability and digital infrastructures.

Romania as an investment destination and we need to establish what Romania needs and what it can offer, and then promote it intensively in order to build a sustainable economy,” said Cristian Ilie, General Director at InvestRomania.

Since 2014, the Foreign Investment Council has been releasing reports about investors’ confidence in the economy. The latest one, from September 2021, showed that the economy seemed to be performing well overall, but there were three areas where things were not looking so good, Foreign Investment Council President Cristian Secosan explained. The first was the pandemic crisis, where the situation remains critical as the measures taken by the authorities came too late. As a result, many companies have postponed or cancelled development plans. The second was the political crisis, which seemed to have no end in sight. And the third was the energy crisis, as prices have risen to unprecedented levels. One of the causes of the rising prices is the lack of investment in the sector and the country’s inefficient production capacities. There are also factors that are out of Romania’s control, but there are still plenty of internal issues that we ought to address. Under these circumstances, confidence in the Romanian economy is currently at low levels.

MUNICIPAL INVESTMENTS

Investments at the municipal level are just as important as national ones, as the development the cities can significantly improve citizens’ lives. An EIB report found that local investments have started to pick up the pace since 2017, with northern Europe recording higher levels than the southern parts of the continent. Before the covid crisis, EU municipalities made more investments in digital and social infrastructures and in climate change mitigation. But, as EIB Economist Patricia Wruuck pointed out, municipalities find that important gaps have remained, notably in terms of urban transport and digital infrastructures, as well as in the area of climate change mitigation and adaptation.

One area worth a closer look is the social infrastructure; about a third of municipalities are recording an investment gap in this area. Social housing, healthcare for children and the elderly, and the education system all need to be addressed in a more comprehensive manner. “Digging a bit deeper, we can see a difference in development among EU municipalities with large income gaps. This can be seen in housing conditions, but also in healthcare,” said Patricia Wruuck. After the pandemic hit, more local investments went towards digitalization and social infrastructure. But municipalities in the lesser developed regions tended to retain a greater focus on basic needs, such as urban infrastructure and utilities.

The European Union’s financial support helps address issues of access to finance, but governmental capacity remains key in making the most of these opportunities. Authorities must address regulatory barriers to investment, including those existing at the local level, in order to unlock economic transformation opportunities.

Education platform for entrepreneurs

In the last year and a half, digitalization has been visibly speeding up in the real estate sector. Buildings can now be controlled by computers and smartphones. Energy efficiency and health measures are also more important than ever inside buildings, whether we’re talking about offices or residential compounds. “The notion of a safe building acquired a new meaning once the covid-19 pandemic hit,” said Antoniu Vastint, Managing Director at Vastint Romania.

Digitalization is on the agenda of every company, including that of Mastercard, which is not just a payment provider, but a

Oswald Kolb, Continental Sibiu: Last year, many automotive factories closed, even in Germany and other developed countries. But with the help of state aid programmes, we’ve managed to keep our workforce intact. Diana Buzoianu, Member of Parliament: A digital nomad is someone who wants to visit new and different places and still be able to work while they do so. We must change our legislation to implement the nomad visa, just as countries like Greece or Estonia have done.

Manuel Fernande Amezaga, Sodexo BRS Romania: Trust, freedom of choice, and compensation are the most important things for the new generation of employees. They want to have flexibility and to be able to balance work with their personal lives. Employers can see an increase in employee productivity when these criteria are met.

Ana Visian, BestJobs: The young generation is digitally native and whatever they do, they look at it through a screen. Companies need to open up more entry level positions and internships for young people.

Loreda Dragomir, Adecco: Education is the key to the future and the solution for today’s workforce-related problems. There are many private initiatives, vocational programmes, and even coaching programmes for school leaders, all of which can improve the education system.

H.E Mrs. Laurence Auer, French Republic Ambassador: Romania is the best member state in the EU in terms of sustainable economic transformation because it has received the green light for all its mechanisms and policies. Financing is available through the PNRR and EU structural funds.

Jan Demeyere, Speedwell: We have our own internal procurement team. We take into account the sustainability of every material we use in our developments, and we also try to buy local products and develop projects with local teams.

Anna Cohen Hagag Development Europe: Investors, municipalities, and governments should work towards making cities more sustainable. The real estate industry also has a crucial role in providing durable solutions and it should try to integrate as many green elements as possible.

Alex Souras, Alenosor: We should be focusing on building communities, because the carbon footprint of traffic and of the materials used in construction is huge. All stakeholders – local authorities, governments, EU institutions, financial institutions – should work together and learn how to do things properly. global technology company. Digitalization has a major impact on our lives, and that is why we need better IT&C education in schools. And the economic importance of digitalization was confirmed – albeit in an unfortunate manner – by the pandemic, as we experienced an urgent need for a shift between the offline and online modes. With the pandemic having strongly hit the hospitality sector, Mastercard has created a programme to help these businesses, called HoReCa Together. “It is an educational platform that provided all kinds of information, from global education tools to local best practices, and taught entrepreneurs how to digitalize their business and make sure that they can get through this period,” said Laura Stefan, Business Development Director at Mastercard Romania.

Healthcare – and hospitals more specifically – have naturally also attracted a lot of interest during the pandemic period. Over the past few years, there have been significant investments in the private healthcare sector, with many hospitals providing high quality services.

One critical aspect for a hospital is its power availability, and electrical systems in old hospital buildings are struggling to keep up with demand, which also generates major fire risks there have been significant investments in the private healthcare sector, with many hospitals providing high quality services.

Tivadar Runtag, Chimcomplex: Whenever we talk about investors, they always want a good return at a relatively low risk. You cannot go wrong with sustainability; it might not provide the fastest returns, but it’s definitely the best long-term investment.

Iulian Sorescu, Noerr: Romania offers some of the best conditions and incentives for investors, thanks to its low taxes and high yields, and projects that foster sustainability and green development will receive significant support through a variety of state aid schemes for many years to come. THE WORKFORCE IS STILL TROUBLED

When the pandemic hit and the economy virtually shut down for several months, many companies may have struggled to survive and keep their workforce, but they received the support they needed through state aid programmes. Being able to retain employees turned out to be very important, as when pandemic restrictions eased, the difficulties of finding new workers returned – and big investments are not possible without an adequate workforce.

A stable workforce is one of the pillars of a sustainable economy, and sustainability is on everyone’s minds today. For Romania, achieving economic sustainability is made possible by the funds available through the Recovery and Resilience Plan and the other EU structural funds. Sustainability plays a big part in the private sector as well, influencing the way companies choose their suppliers and partners. The guiding principle here is to prioritise local products.

Sustainability can also represent an opportunity for foreign investors, as it promotes a circular economy, which recycles and repurposes materials used in manufacturing processes. But there are many things that still need to be done in order to achieve sustainability in all economic sectors, and this translates to a great number of opportunities for investors.

Romania offers some of the best conditions and incentives for investors, thanks to its low taxes and high yields, and projects that foster sustainability and green development will receive significant support through a variety of state aid schemes for many years to come.

Valter Laurentiu Carp, General Manager of Technoelectric

Technoelectric - a company with Romanian capital that produces automation systems in refrigeration installations - is in the 13th place in the Top 100 companies in Romania, a ranking based on the CANE code, in which it rose one step compared to 2020. Remarkably, Technoelectric is the only company out of the 13 evaluated with very low risk on all four indicators: financial, trend, P&L, and benchmark.

Regarding the size of the company benchmarks: turnover, assets, profit, and equity, the company obtained a high score. The indicators about the company's evolution, namely the dynamics of turnover, assets, profit, and equity, have a high score of up to 100%, like profitability indicators.

Our company obtained a P&L A FT Benchmark score of 1.5, higher than 72.43% of the companies in the industry, which is the equivalent of a risk class A, meaning a very low risk. The indicators' comparative evolution followed by the top makers places us, in recent years, above the industry average, which makes us happy and obliges us to maintain the same standard of excellence in the coming years, says Valter Laurentiu Carp, General Manager Technoelectric.

To these performances are added in 2021 the national and international projects in which Technoelectric was involved. Internationally, it is worth mentioning that at the beginning of the year, the Technoelectric team provided an automation system for the Omran Jameel brewery in Iraq. Simultaneously, the team together with Daikin Middle East and Daikin Africa teams carried out two large-scale projects in the United Arab Emirates and Saudi Arabia. 2021 is the year in which the company acheived another major success namely the largest refrigeration project to date in terms of the size of the refrigeration plant - 17 MW - for AbuDhabi Ports, which totals a total area of 100,000 m2 of storage. This project’s system installation included seven ammonia compressors for the KIZAD logistics warehouse. The automation incorporates many energysaving elements, such as the efficiency of the refrigeration installation, the control of the coolers, and the optimizations obtained from the equipment coordination. One of the main benefits brought to the customer by the mixed inter-departmental team of Technoelectric is translated by the reduced operating costs generated by the integrated energy-saving solutions.

In addition to the projects carried out, the company implemented this year an Employer Branding campaign that concluded the vision over the company’s development chapter. The #PeopleOfTechnoelectric campaign aims to consolidate the company's presence on the Romanian market in a different way than before, to highlight the people who are part of the team. I am convinced that through all the activities we have been involved in this year, like complex projects or campaigns that show another dimension of the company, we consolidated our successes and built an organizational culture in which people can communicate effectively, and find the support they need to evolve professionally. Only together will we grow in the same way in the coming years, making Technoelectric a reference company in the industry at a national and international level, says Valter Laurentiu Carp, General Manager of Technoelectric.

Technoelectric is a Romanian capital company founded in 1994 that produces electrical panels and integrates systems for automation in refrigeration installations. Since 2010 began the process of internationalization through complex automation projects implemented in the Middle East (Lebanon, Qatar, United Arab Emirates, Saudi Arabia), the former Soviet Union (Russia, Belarus, Ukraine), and Western European countries (Italy, France, The Netherlands, and the United Kingdom).

How can the chemical industry apply the concept of sustainability and what are its implications?

It is clear today that activities that harm the environment cannot be successful in the long run. The common practice is to interpret sustainability in its narrow ecological sense, but for us in the chemical industry it means much more than that. Yes, we have to increase energy efficiency, reduce the use of fossil fuels, and minimise waste. But additionally, as President of the Romanian Chemical Producers’ and Distributors’ Association (APDCR), I can tell you that the chemical industry is the only industry that can be an integral part of the circle. Through chemical recycling, the collected waste can be “broken down” into molecules and re-built into new materials. So, for us, the concept of sustainability is an ecological commitment, a business imperative, and an exciting challenge.

In what ways is sustainability an opportunity for the circular economy?

The European Green Deal is based on three key commitments: climate neutrality, zero pollution, and the circular economy, which simply means collecting products at the end of their lifecycles and using them as feedstock in a new process. With this, we can reduce the demand for limited raw materials and utilities, and at the same time we reduce the amount of polluting waste. The circular economy is no longer science fiction. There are many new technologies and developments, several of which have already been applied, either in test mode or at full scale. But such technologies are not cheap. They must be applied along the entire value-chain and are mostly beyond the capabilities of any single company. Therefore, sustainability goals set by politicians must be coupled with commitments by governments to allocate investment funds. For Chimcomplex CEO Tivadar Runtag, sustainable development is a mission, not a source of income. However, he tells Business Review that he is aware that it must also be economically attractive. His company’s goal around sustainability is to be recognised for innovative solutions, processes, applications, and for a focus on environmental protection.

By Anda Sebesi

We know that waste collection, as a part of the circular economy, requires large investments. What can you tell us about the role central funds play in this process?

Waste is at the end of a linear economy – and in the middle of a circular one. Selective waste collection is a decision that requires not just money, but also good will and proper planning. Cleaning up our surroundings costs a lot more than keeping it clean to begin with. Central funds have an important role in stimulating the circular economy. Dedicated funds raise the attention of governments, companies, and entrepreneurs. When they make decisions about strategic investments, the availability of special “sustainability” aid, loans can push them towards choosing ecological solutions. For me personally, sustainable development is a mission, not a source of income – but I am well aware that it must also be economically attractive.

What does Chimcomplex intend to do in order to access such funds?

Chimcomplex is in a unique position to build its Green Strategy. Financially strong, with a long tradition in chemistry (the foundation of chem-cycling), and an enthusiastic team. We have drawn up a very exciting scheme of “renewable energy + recycled raw materials + zero pollution technology = green products.” At this moment, we are working on the technical and economic details, which will be presented as part of our strategy to relevant stakeholders in Romania and the EU. Most of these developments are eligible for central funding, as they will result in increased energy efficiency and hydrogen production capacity, investments in a photovoltaic park, and chem-cycling of PET waste.

What is the company’s sustainability strategy?

Our aim is to be recognised for innovative solutions, processes, and applications and for our focus on environmental protection, as well to be a safe working place and a learning organisation. Investing in green technologies can help safeguard existing assets and the business value of our main products. For us sustainability is not an option, but our decided way to act.

Most people could name some or all of the benefits of being physically fit. Some of which are to avoid illness, disease and injury, look better and have more energy. Not to mention proper weight management, stabilized blood pressure, protection against many chronic diseases such as obesity, diabetes and cardiovascular conditions. But there are some additional benefits as well!

1. EXERCISE CAN HELP STRESS CONTROL

Some chemicals called neurotransmitters, produced in the brain, are stimulated during exercise. These neurotransmitters mediate our moods and emotions, so they can make us feel better and less stressed.

2. AND THERE IS MORE TO IT

Exercise can keep your immune system STRONG. Research has shown that during moderate exercise, several positive changes occur in the immune system. Various immune cells circulate through the body more quickly, and are better able to kill bacteria and viruses.

3. THE BEST BENEFIT FOR THE PERIOD WE ARE LIVING IN: EXERCISE STRENGTHENS YOUR LUNGS TO FIGHT COVID-19!

To get your lungs into better shape, top criticalcare pulmonologists agree that the best option, hands down, is regular old physical activity, the kind that gets your heart rate up. Over time, the muscles that support your breathing become weaker, lung tissue loses elasticity and the air sacs inside your lungs become baggier. Studies show exercise can slow that decline and boost lung function. Aerobic activity also helps air get into the deepest parts of your lungs that you don't use when you are sedentary.

4. EXERCISE MAKES US A LOT MORE PRODUCTIVE IN ALL ASPECTS OF OUR LIFE!

A study published in the Scientific Journal of Workplace Health Management showed that workday exercise, not only improves well-being but participants noted a 72 percent improvement in time management and workload completed on days when they exercised!

There you have it. All the reasons that you need to set a reminder on your telephone and schedule at least 30 minutes of moderate-tointensive physical exercise daily. The official recommendation has changed! 300 minutes of exercise a week, not 150! Are there enough reasons to make a change also? The COVID-19 pandemic could be another serious reason. The World Health Organization also states that exercise is extremely important in the fight against COVID-19. Moreover, during this period, the WHO doubled the daily period of recommended moderate exercise each week, from 150 minutes to 300 minutes! Put your health where it belongs, on your daily list of priorities. When you realize the amazing changes that exercise brings to your life, it will be the time when you make the best decision for health, immunity, and longevity: transforming movement into a lifestyle.

Medical studies show that regular swimming reduces stress, anxiety and depression and improves sleep quality. Along with muscle relaxation comes mental relaxation. In addition, working out in a different environment, free of external distractions, will help you completely relax and forget about everyday worries. Then, we can talk about increasing confidence and self-esteem, which comes from the figure transformation that you will go through. Do not forget that physical fitness is to our body what fine tuning is to an engine. It enables us to perform up to our potential. Fitness is actually a condition that helps us look, feel and do our best. Are you still home on the couch? Time to get up and pick your most comfortable sports equipment and nothing else. For long-lasting results, you can rely on the strongest team of health & fitness experts in Romania, waiting for you in all World Class clubs throughout the country.

Group fitness, cycling, personal training and gym classes are all at your disposal, together we take our daily dose of health and good mood training.

Fist step: download the World Class app from Google Play or AppStore, sign up and discover the group fitness schedule at the nearest Wold Class club to your home or workplace. When you need to stay home, you can enjoy the online training platform provided by World Class. And don’t forget: #BeHealthy is a lifestyle and Exercise is Medicine!

With the increasing presence of international funds, internationalisation is easier than ever before

One of the most exciting phenomena is the fact that a third (31 percent) of Central and Eastern European (CEE) unicorns were bootstrapped, compared to just 7 percent across the rest of Europe, according to a Dealroom study. This confirms that available capital has been scarce and that the region has solid entrepreneurial fundamentals, creating sustainable and scalable businesses.

Titled “Coming of age: Central and Eastern European startups,” the report by Google and Dealroom looks back at the expansion of startups in the region over the last 11 years. During this time, the CEE region has seen the value of firms soar from around EUR 10 billion in 2010 to EUR 186 billion this year. According to the study, this year’s IPO of Romania-founded UiPath on the NYSE, at a valuation of over USD 30 billion, was a landmark transaction for the region. As a result, we’re also seeing CEE getting more attention from western investors.

“Unlike in the 1990s and 2000s, founders now think internationally from day one. The biggest challenge for startups in the region has been growing internationally. There have been several reasons for that, but recently there has been marked improvement in these areas,” says Maciej Cwikiewicz, the CEO of PFR Ventures.

Access to money has been a hurdle in the past, with a funding gap that was particularly noticeable at later stages. Still, there has also been a lack of skills and capabilities which are necessary to grow.

This is changing. With the increasing presence of international funds, which provide capital, know-how, and network, internationalisation is easier than ever before. But Startup founders have become more ambitious lately, many of them creating regional or global businesses from the start instead of strictly targeting local markets. Repeat founders have also become more prevalent, but what is the best way to grow? Should you seek an investor or go with bootstrapping, which means completely self-funding your development?

By Claudiu Vrinceanu

local funds are also increasingly building global connections and experience in foreign expansion very quickly.

The region has created tremendous success stories, especially in enterprise software, thanks to some of the best tech developers in the world. However, many of these successes have been bootstrapped for a long time, and the region still lacks an intense VC scene, especially at later stages, beyond series A.

Estonia, Romania, and Poland have created the most startup value since 2000, though UiPath predominantly drives Romania’s ecosystem. Scaling is accelerating in CEE: in the last ten years, startups have taken almost a third of the time to hit unicorn status compared to the first generation. Romania’s list includes UiPath, eMag, FintechOS, Bitdefender, TypingDNA, DCS+, and Elefant.

The quoted report shows another recordbreaking year for the region. Companies founded in CEE now have a combined enterprise value of over EUR 186 billion (up 19x since 2010), VC investment soared to EUR 4 billion in the first nine months of 2021, projected EUR 5.4 billion by the end of the year, and the number of CEE-born unicorns has reached 34.

L to R: Tyler, Michael, Ashton and Michael IV

Michael Topolinski made his first Real Estate investment in Romania in 2006. What was initially just business eventually became the milestone for a new life for himself, his children - 29-year-old Michael IV, Ashton (25) and Tyler (27), and his mother Edith (79), the latest from the family to move to Romania.

“I’ve been truly fascinated by Romania since my early days,” says Michael Topolinski, “and I managed to instill this same feeling to my children who joined me after gaining business experience in Toronto. For more than a decade, we have been an active developer and investor in local real estate, witnessing its step-by-step transformation and contributing to the steady upgrading of quality standards and market expectations.” 15 years later, the family business - InteRo Property Development – manages a solid and diversified portfolio in Bucharest and the surrounding areas and is now looking to expand to Brasov. Moreover, the company has launched an investment arm addressing potential partners from all over the world who seek premium opportunities in dynamic markets.

“Having global investors on board for our Romanian projects was a first,” Michael added. “But huge interest from investors in North America, Asia, and nearby countries clearly validated the country’s long term potential. 2021 has been extremely busy and we are looking at an even more exciting 2022.”

Having assets of over EUR 120 million and debt of only EUR 7 million, InteRo Group is positioned for long term low-risk growth.

For the Topolinski children, there has hardly been a dull moment since coming to Romania. While enrolling in an intensive program to learn the language and integrate the community, they are also entrusted with major projects, as each of them plays a key role in the management team.

“Being part of an investors’ family comes with great effort and responsibility,” says Michael Topolinski IV. “We dream big and work hard for every breakthrough. Our goals are focused on impact and legacy, with an aim to become the most accomplished private family real estate business in Romania.”

Michael IV is the project manager of InteRo’s premium development NorthLight Residence in North-East Bucharest. Spanning 13,000 sqm, it provides the 110 apartments with an exceptional view of the lake, 4,000-sqm of green spaces, playgrounds, and a 320-sqm pool.

His brother Tyler manages InteRo’s most recent project – New Confort City, a residential complex in Popesti Leordeni with 280 apartments.

“We took over an unfinished project that was causing discomfort to the neighborhood, resumed construction works and committed an important budget for landscaping and design so as to create a unique, much-needed green area for the community. This has given us great satisfaction since we feel that we bring unprecedented value and enthusiasm to current and future residents,” Tyler says.

With the operational side running at fast speed in an increasingly competitive market, Ashton’s job in aligning communication and marketing to the business strategy is essential.

“Our approach to business is deeply rooted into our core family values – independence, unity, uncompromising commitment to upmost standards, design and innovation that create wellness communities. This is The Family Difference, the core unit behind a solid and responsible business structure.”

The Topolinskis believe that nothing forges a character better than challenging oneself and having a greater purpose; hence civic responsibility is a constant in their lives. In the past year, they have donated NGOs a total of 2,245,500 medical masks and 310,000 RON. Ashton volunteered for United Way’s Reading Club dedicated to children in educational centers. The family supports the Kola Kariola Association and dog shelter, having funded most of the cost for a new sterilization center.

In addition to takeovers by private equity funds and founders exiting to make way for international strategic investors, a new positive trend is emerging on the mergers and acquisitions (M&A) market: transactions between Romanian entrepreneurs. It is a sign of maturity of the local business environment.

By Claudiu Vrinceanu

One recent example was the move made by the Scandia Food group, led by entrepreneurs Gaspar and Crestin, which took over sausage producer Agra’s from Alba County from founders Dan Sarmasan and Ligia Sanda Stincel. The transaction had a value of over 10 million euros.

Present circumstances are favourable for M&A and investments. The total value of transactions concluded in Romania in the first nine months of 2021 reached USD 3.8 billion, increasing by 58 percent compared to the same period of last year. Of the 105 deals, just six transactions accounted for two thirds of the total value, according to EY Romania data on the mergers and acquisitions market.

Elsewhere, the Agroland store network, owned by entrepreneur Horia Cardos from Timisoara, took over the the Avicola Mihailesti platform, a producer of consumer eggs and day-old chicks, which includes six farms located on a 30-hectare area in Giurgiu County.

The trend is also visible in the IT sector. Dendrio Solutions, part of the Romanian IT group Bittnet Systems, sold its Autodesk division to local topography engineering company Graphein for RON 2.2 million. The agreement provides for the transfer to Graphein of all operations related to the relationship with American technology seller Present circumstances are favourable for M&A and investments

Autodesk, ongoing contracts with clients, relevant certifications, including the Autodesk Gold Partner status, as well as all the knowhow. Graphein will pay the RON 2.2 million to Dendrio in cash in four instalments until September 2023. The resulting capital will be reinvested to develop Dendrio’s strategic business lines – cloud and security – as well as to potentially fuel future M&A transactions in these areas.

“The main objective of our expansion through mergers and acquisitions is to become an integrator of services and products that will facilitate the digitalization of the Romanian construction sector. Next, we aim to acquire Proptech companies that can bring innovation in the way people rent, buy, sell or manage a property,” said Graphein CEO and co-founder Eugen Ursu.

Other similar transactions include a number of takeovers and investments in the medical services industry. For example, the Dent Estet group, which is part of MedLife, took over 60 percent of the shares of the Somestet clinic in Cluj-Napoca. The clinic was founded in 2001 by doctors Smaranda Buduru and Rares Buduru.

Based on these moves, we can conclude that 2021 looks promising in terms of M&A activity, given the interest in the local business environment.

M&A markets have been ruled by confidence, despite the fact that the covid-19 pandemic has had an extraordinary impact on people and businesses. The influx of liquidity from markets and the pressure on capital allocation strategies are factors that favour a dynamic trading situation.

What do Elon Musk, Kings of Leon, Lil Baby, Aphex Twin, MF Doom, Gucci, Delia or Stefan Popa Popa’s have in common? When art and digital meet technology and blockchain we get NFTs (non-fungible tokens), the latest buzz in the artistic world. Most NFTs are part of the Ethereum blockchain. Any piece of digital content can be minted into an NFT, from songs, photographs, and works of digital art to tweets, memes, published articles, and podcasts.

By Romanita Oprea

When someone “mints” an NFT, they create a file that lives on the blockchain, which means it cannot be copy and pasted, edited, deleted or otherwise manipulated. Each NFT can be bought and sold, just like physical assets, but the blockchain allows for the ownership and validity of each asset to be tracked. It has also led to an additional source of income for many creators.

Interest in NFTs, or nonfungible tokens, surged this year, reaching USD 2.5 billion in sales by July 2021, compared to “just” USD 13.7 million in the first half of 2020.

MEANWHILE, IN ROMANIA

In March, the first new media art gallery in Romania, One Night Gallery, launched its first unique works of art on blockchain, created in virtual reality by artists Raluca Bararu and Victor Fota. The works were auctioned on the withfoundation and OpenSea platforms and could be bought with the Ethereum cryptocurrency. The two collaborative projects were 360° immersive scenes, mulled fully in VR over 10 sessions each, then postprocessed and animated by Mihai Cojocaru from One Night Gallery.

In June, WWF’s innovation division WWF Panda Labs and Carbonbase launched a pilot project that combined digital art and blockchain technology in order to provide direct financing to nature preservation projects in Romania. The NFTs can be bought on the Project Ark platform. The first piece in the collection was created by Topher Sipes and Allauras and titled “Woolly Ridges.” It uses topological data from the Carpathians in order to 3D sculpt the bust of a wisent. The embedded satellite images have the role of highlighting the relationship between wildlife, ecosystems, and geography. The NFT is available for 68 buyers, exactly the number of the free wisents in Magura Zimbrilor.

But the most anticipated were the limited edition “NFT eggs” which are available in four options: bronze, silver, gold, and platinum. Half of the sales went to projects by WWF Panda Labs Romania, and the rest went to the artists and Carbonbase. As the funds are spent, NFT users will receive reports about the land conservation project’s evolution and results. What’s more, in the case of the digital eggs, once the goal is reached, the egg hatches and makes chicken, so that the person who bought it may receive another surprise NFT, through Chainlink. The pilot project aims to be a first step towards forming a direct connection between preservation teams in the field and financers and artists worldwide, through different digital and

play elements. In the meantime, the goal is to create dynamic NFTs whose value will grow or drop depending on the success of the preservation project.

Furthermore, WWF Panda Labs and Carbonbase want to set higher sustainability standards throughout the entire digital art market that uses the blockchain system. All the NFTs in the project are released through the Polygon network, a Proof-of-Stake-type blockchain which is able to eliminate 99.8

percent of the carbon dioxide emissions associated with NFTs.

In July, A10 by Artmark hosted the first auction to include digital art created by Romanian contemporary artists in the NFT format, also accepting cryptocurrency payments. The moment marked a historic first, and not just for Romania, as A10 by Artmark became the first Eastern European Auction House to include a section dedicated to NFT digital art. The auction also presented the first NFT-based church art works, created by painter Daniel Codrescu, the National Cathedral’s iconographer.

Leilei Gallery presented a multi-layered exhibition in July and August, split into 4 chapters where time, as a force that enhances and weakens, is the arch concept that interrogates the artworks’ materiality and digitalization. “This will age really well!” set out to explore the different performative becomings of materials and embodied practices by mirroring them in the digital ecosystem, where their ethereal bodies remain fixed while they go through other sorts of convergences. This dualist approach between an ever-degrading materiality and an immutable digital counterpart was examined through physical works in the exhibition space and NFT works. The latter were both offered as giveaways on-site (limited pieces) and made available for purchase (through various e-wallet solutions). Leilei Gallery’s mission is to support young contemporary artists during the pandemic period, which has obviously impacted the art market significantly and has severely limited artists’ ability to make a living through their work. “We looked at the NFT framework as a positive, alternative way for artists to boost their incomes. So, the “This aged really well!” exhibition worked as a starter, a booster if you like, for artists to look into this trend and learn how they can use it for their benefit, in an ethical manner. Moreover, it served as a flagship project targeting the general public, sparking local conversations around NFTs and the associated opportunities (such as collecting these virtual assets to potentially sell them in the future) and threats (their ecological footprint),” said Raluca Turcanasu, communicator & member of the curatorial team.

For her part, Ioana Marsic, the executive director of Leilei Gallery, noted that it wasn’t an easy project to work on and it did feel quite intimidating in the beginning. But, even though it was difficult at the outset, it brought many pleasant surprises and a lot of satisfaction.

BEST FEATURES

What are the main characteristics of NTFs? According to Raluca Turcanasu, they work as double-edged swords, in the sense that certain features may be advantageous for a certain group, but not so much for another. She would say they are quite democratic, as anyone could virtually jump on the NFT wagon, but looking at it more closely, one understands that this “anyone” in fact translates to “anyone within our expanded bubble:” people who own smartphones, people who are digitally savvy enough to install a crypto wallet and mint or buy NFTs, and people with enough disposable income to afford investing.

“I think their main quality is the fact that they offer novel financial possibilities for young artists, who can thus elude the art collectors & institutional buyers format and still earn from their work. Their non-fungibility, namely the fact that they cannot be split into smaller units, translates into only one owner per artwork, which I reckon is also a positive aspect, avoiding potential complications. Their most important advantage is probably the fact that they help monetise digital assets that have an inherent high social value (in the digital realm) but could not have been assigned a financial value prior to the development of NFTs. I am of course talking about famous memes, such as Bad Luck Brian or Nyan cat, which have been traded at ridiculous amounts,” Leilei Gallery’s communicator remarked.

In her turn, Anca Poterasu, the owner of the gallery with the same name, said that traditionally, ownership of an artwork has been linked to its medium. You own the painting, you own the artwork. In digital art, it is hard to overcome the need to physically “own” the piece. “NFTs are a big step forward in solving this problem, as it unequivocally decouples ownership from medium, and I hope this will pave the way to an exciting new wave of digital artists. I also believe that the smart contract feature of NFTs is especially advantageous for artists who can receive a traceable share of every transaction carried out with their work, so there are many aspects feeding

back into the practice of a global, decentralised art market,” she stated.

In Poterasu’s opinion, just as the internet came close to being taken over by dotcom neoliberalism, and just as social media underwent its Social Dilemma, the cryptorelated danger for art is being limited to recirculating influencer brands, to the mere regurgitation of name value-spreading, while making art is forgotten. Outlining an aesthetic depends on how artists respond to

relaunching a Tactical Media manifest, occupying the medium with their own messages. And who is more suited for the blockchain occupy movement than street-artists, who are themselves shaped by the guerrilla-fight against the normalisation the public space? It is within this context that Anca Poterasu Gallery launched a unique NFT collection gathering the most important Romanian graffiti artists and muralists: ACVM/Tudor Chiliman, Ada Musat, Aeul, Alex Baciu, ATOMA, ERPS, HOMEBOY LDJ, Irlo, Kero Zen, Lucian Sandu Milea, Obie Platon, Ortaku, Pisica Patrata, Pandele, robert OBERT, SeReBe.

The purpose of the collection was to infuse NFT platforms with a critical discourse regarding various technological, political or biological control strategies. To this end, they were debating how technology impacts various degrees of individual freedom, which is already conditioned by a mediatic society that facilitates the dissolution of the self and authenticity. The NFT collection was launched on Blockchain.art (BCA).

Designed by art world professionals for art world professionals, BCA is a database+marketplace for digital art forms that applies a dedicated blockchain infrastructure to the art market. “Occupy the blockchain” featured a special live sound

performance by dyslex, invited through the AFCN project eART35.

“It was an amazing opportunity to work with the best Romanian street-artists in dialogue with kinema ikon – the internationally-acclaimed experimental multimedia group. Their work speaks volumes on the rapid changes and the need to have a more decentralised view on the art system. I am hopeful that we’ll see fewer boundaries and a welcome destabilisation of the status-quo, and I am happy to be part of the change.

Digital art is a radical form of democracy, as it knows no borders or class hierarchies. The NFT is based on an amazing technology, but it’s only the tip of the iceberg when it comes to digitalization. End-consumers are now ready to own digital properties in virtual worlds, leading the real and the ineffable to overlap,” said Anca Poterasu.

“We see an exquisite value in the time capsule moments the artist captured through his fine art. The NFT validates the uniqueness of the moment. We feel privileged to work with Popa’s and digitalize his most valuable collections, starting with Leaders Of The World – a collection of 100 world leaders the artist has met in different historical circumstances, whom he painted in his unique style, and to whom he eventually offered their own portraits back as gifts. We are helping others NFTise their products or services as well. It's the natural evolution of this sector, going along with the trend. If you are thinking two or three steps ahead, there is always an indefinite time that you need to wait for things to develop and deploy. For example, we had been waiting for the NFT hype and mainstream adoption since 2017-2018,” said Lucian Stefan Rosu, the representative of Ptarth Timisoara.

The PTARTH Network focuses on digitalization and blockchain transformation. Its goals are to offer quality and expertise as B2B services to other companies or startups that are looking to integrate blockchain technology into their operations or services. Between October 15th and November 10th they hosted an exhibition of the “Leaders of the world seen by POPA’S” collection at the Banat National Museum in Timisoara. The project aims to be a time capsule that marks historic moments, as well as to create a direct connection between the world leaders and the art collectors who buy the NFTs. Through PTARTH, Stefan Popa POPA’S also created a 3D gallery of the world’s biggest visual art event – the 2021 International Salon of Press Cartoons and Satirical Visual Arts.

“NFTs can help you raise interest in your brand and product, encourage interaction, and even increase your conversion rate and profit. Think of it this way: anyone can have a copy of a painting, but only one person can have the original. For the first time in the history of the internet (the last 30 years), any artist, brand, company or individual can upload any pack of data on the internet and make sure it’s validated as being their own, and that it cannot be edited nor deleted. It's a ‘notary’ digital contract whose unique ID is written into the blockchain,” added Lucian Stefan Rosu.

Diversity. Autheticity. Simplicity. Environmentally-friendly. Those are not just empty words, but key points on every marketing specialist’s agenda, in 2021 and beyond. Consumers can no longer be fooled by simple statements, and statistics are proving this: for example, 63 percent of Americans believe that brands that issue a statement in support of racial equity need to follow up with concrete action.

By Romanita Oprea

Roxana Dinescu, Betano Raluca Mihaila, Utopic Brain

According to Mathew Sweezey, partner at Salesforce Futures LAB, in 2020, the Salesforce State of Marketing report found marketers’ number one focus last year was innovation. All brands had to pivot as a result of covid-19 forcing a transformation timeline that many had not planned on executing so soon. Brands were forced to accelerate adoption of many elements of marketing transformation, and that is a trend that will certainly continue in the years to come. “Many brands have had to embrace agile methods replacing long build cycles with a test and learn approach. This move is a core tenet of marketing transformation as agile provides brands with a method of creating better results faster,” Sweezey noted. last two years on the Romanian marketing scene? According to Roxana Dinescu, marketing manager - brand and communication at Betano, marketing is turning into a mirror of what is happening in society, and thus it changes along with the society and its needs. “Just like food turned into fast food, like fashion started to set trends in fast fashion, for some time now we’ve been seeing fast marketing that is reacting, responding, and constantly adapting to the customer’s needs.

Romanian marketing is very much connected not only to the trends of the local market, but also to global trends,” Roxana Dinescu said.

The Betano representative is very proud that many Romanian marketing projects have won or been nominated for prestigious International Marketing Awards, which has positioned our country as one of the most creative markets in Eastern Europe. And this phenomenon is still on the rise as we see more companies starting to drop convenient and comfortable communication to switch to a bolder type of marketing.

Gabriel Eremia, marketing & product management director at Arctic, says that the last two years have brought many changes to the industry and have had a major impact on digital marketing. Consumer behaviour has changed significantly, and brands and companies are doing extensive research to better understand how this period has changed customers and the industry in general. “Marketers are using and will continue to use these insights to tailor their strategies and messages. Brands have turned to digital channels even more and have invested significant budgets in various platforms, in e-commerce, chatbots, applications, AI, VR. I believe that brands that use emerging technologies will become leaders in their industries,” Eremia argued.

He has seen a shift in focus towards social responsibility, ethics, and ecology, and many companies and brands are making major efforts to refine their business practices and content strategies to meet their commitments to sustainability. “We will increasingly see a sort of anti-consumerism approach, especially during the holidays. This period has also had a major effect on mobile devices. It has accelerated changes in user behaviour, including increased video streaming and mobile shopping. In this context, many strategies have been rewritten with a much better omnichannel approach,” Eremia added.

AI IS THE GAME CHANGER

“Seeing marketing change in real time based on behaviour is closer than we might think, mainly due to the rising technology stars of this decade, namely machine learning and

artificial intelligence,” said the Betano representative, pointing to one of the most important trends – AI. As chatbots are becoming a customer service standard, in many cases replacing live agents altogether, as machine learning algorithms are growing increasingly complex and emulating human beings with almost spooky accuracy, we may find that the future we used to think about is already here. Marketing is becoming more conversational and personalised, with chatbots enabling business owners to take advantage of this

trend without additional strain on manpower and resources.

And AI doesn’t stop there, of course. Google is already running AI-powered ads to optimise campaigns by identifying the best-performing ad designs and copy and automatically adjusting based on user engagement.

“I am happy to say that we have already started building a path towards this future at Kaizen Gaming, where the company has already developed an Artificial Intelligence Detection System for Responsible Gaming which is able to more quickly and accurately identify possible patterns of members who may be at risk, then allow its training RG agents to support them in the best possible way. This innovation was awarded at the EGR Marketing & Innovation Awards in 2020 and I am sure that this is only the beginning,” Dinescu added.

According to Raluca Mihaila, Markendipity Architect & Managing Owner at Utopic Brain, the future of marketing, data-wise, will be an intersection between the main principles of the cool “disciplines” marketers often use today: behavioural economics (because we need to understand consumer triggers in behaviour and how the mind and emotions work; it’s an absolute necessity for a marketer to have knowledge of psychology and address market needs through those lenses), agile methodology (adaptation is very important, just like the scrum pillars are very important: have a clear focus on where’re you’re headed with your brand, commitment towards you goals and team, courage to take bold decisions and understand your relevance, respect for clients, diversity, solutions, and openness to learn, grow, and adapt), design thinking (empathy in prototyping gives makes the human-centred approach a top priority), lean Six Sigma (improve results through cost optimisation), and foresight (use the present to explain the past and see into the future). “The salt and pepper of this pragmatic mix comes from the growing mindset of a CEO who’s willing to contribute and add genuine value to their customers’ lives. Turnover and an obsessive need for growth is not enough to build a sustainable brand,” Mihaila added.

In addition, Mihaila noted that in terms of value-added communication, the humancentric approach is better than product-oriented sales campaigns. She believes that we need leaders to make bold decisions and that products should be promoted for how they benefit our lives and not through perhaps convincing, but contentless campaigns. For instance, IKEA’s gesture to refund the government with all the subsidies it received to support employment costs during the pandemic was a unique and unexpected gesture that impressed their loyal customers and certainly attracted new ones.

“In terms of sustainability, ethical marketing, transparency, responsibility, communicating value instead of scarcity (FOMO-driven advertising) will be more in focus. What consumers are experiencing today by being forced to pay to not see commercials is an example of an unethical model of marketing,” Mihaila conclued.

From a consciousness point of view, we are living in an age in which consumers are more careful regarding their acquisitions, and they value ethical and purpose-driven brands that take sustainable actions. In fact, sustainability is becoming the new digital, as the pandemic has also brought the heavy environmental and social issues we are facing to our attention.

“When it comes to sustainability, our mission – for all three brands in our portfolio – is to educate consumers to act, as each of us has the power to be part of the change. We support our consumers throughout this journey, right from the beginning – through our eco-friendly products for a healthy planet (to name a few: washing machines and washer-dryers with EcoTub made of recycled materials, BioCycle Refrigerators whose durable components are made from eggshell waste and bioplastics or dishwashers with AutoDosing systems that dispense just the right amount of detergent, avoiding waste) and through our actions and initiatives,” the Arctic representative explained.

Still, according to Eremia, the next shift will be to the widespread adoption of artificial intelligence, both at home and at work, not to mention in services. In a not-so-distant future, homes will operate in smart ways that minimise energy consumption. Voice search and voice marketing are on the rise too, and the marketing world is looking into these powerful tools that create a personal connection between brands and prospective customers.

“The marketing of the future will also have to deal with the fact that consumer purchasing decisions are becoming more and more complex and harder to pinpoint. As more accurate metrics will continue to emerge, customisation gains ground as well. Integration is key in this context, and so is the holistic approach. Inside our marketing department, we are working in squads – this means that each project has a core team from all areas of marketing, collaborating and finding synergies, bringing their core expertise to the table to generate the best results every time,” Gabriel Eremia said.