Making the Greek Startup Ecosystem Happen - Now Presentation on SEV Conference: Designing the Future with Investments APRIL 2018
1 Copyright 2017 by The Boston Consulting Group, Inc. All rights reserved.
International best practices Boosting collaboration & innovation Innovation District $180M to redevelop former industrial district Production centers, social housing, facilities and urban open spaces Anchor tenants: Indra, Schneider, UB, UPC Independent Innovation Research Fund Membership consists of 3,000 German companies $40-50M grants annually Funding, advisory, several programs & initiatives Attract anchor tenants - R&D Centers Provided tax benefits and other incentives to attract more than 300 R&D centers across major cities (incl. Tel Aviv & Herzliya) Anchor tenants: Apple, ebay, Google, HP, IBM, Intel and Microsoft 2
Incentives for Startups Special 24-month corporate income tax rate for startups Total tax exemption for first 12 months, 50% exemption for subsequent 12 months International best practices Supporting startups & attracting talent Exemption from employers' social security contribution For R&D related employees for the first 7 years of business operation Tax breaks for IP revenue UK Patent Box Scheme 10% corporate tax rate for profits attributed to the exploitation of patents domestically and 0% internationally Attracting and developing talent Tax exemption for expats returning to home country: Tax exemption of 20% of remuneration or 8,550 (whichever is the lower) for 5 years for income earned in Cyprus; applies for expatriates returning to Cyprus Subsidies for training and development of staff particularly new hires 3
Drive transition to an economy focused on innovation (e.g. Silicon Valley's ecosystem has a GDP of $264B, 12% of California's GDP) Why Startups Startups can unlock potential for sustainable growth in Greece Attract foreign investment through equity funding (e.g. In Israel, Intel purchased Mobileye for $15B in August 2017) Promote export-oriented growth during scale-up phase (e.g. US technology companies account for 46% of foreign earnings) Provide employment opportunities for skilled talent (e.g. specialized software engineering, IP legal support) Boost global competitiveness of the local ecosystem (Tech M&A, and particularly through startups, is one of the most common ways to gain competitive advantage in Western economies) Source: BCG 4
In 2018 the Greek startup ecosystem is still quite young 5
500+ Startups 1 ~10 Venture Funds UniFund AKES ~20 Incubators & Accelerators UniFund AKES 1. List encompasses startups at all stage of lifecycle, from pre-seed to acquired (i.e. Workable) Note: Images not exhaustive Source: BCG Analysis, Crunchbase, Desktop research 6
Approximate total investments in Greek Startups ( M) But, Greek startup investment on the rise ~40 CAGR ~100% ~50 ~70-80 ~85-90 ~5 2012 2013 2014 2015 2016 Note: Approx. values on investments as various sources available, partly with strongly deviating numbers Source: Starttech Ventures, Marathon Ventures, OECD, ECVA, InvestEurope, BCG analysis 7
Ask not what your country can do for you, but what you can do for your country 8
Corporations and startups have complementary skills Successfully scale operations and services Successfully give birth to new products & services Mostly focus on growing what is already successful Have established networks for sales and distribution Corporations Startups Focus on creating value from new ideas while achieving product-market fit Agilely adapt strategy to changing market conditions Maintain strong credibility through marketing, public relations, and branding Are passionate and incentivized to go the extra mile Source: BCG 9
14 pain points affecting the Greek startup ecosystem 1 Inadequate supply of skilled workforce in high demand fields Talent 2 Lack of core management skills in the startup lifecycle To accelerate growth, a number of pain points should be addressed Innovation Market Structure 3 4 5 6 7 8 9 10 11 Lack of robust mentorship network Limited collaboration between startups, corporations, and universities Greek universities focus on theoretical research, instead of applied R&D Low R&D investment in the Greek economy Fear of failure inhibits entrepreneurial activity Infant startup ecosystem limits international interest Low economic openness & weak integration with the EU Restrictive product and service market regulation Weak value proposition to startup investors disincentivizes investment Institutional & Regulatory Environment 12 13 Weak value proposition to startup talent challenges attraction & retention efforts High corporate taxation and lack of incentives reduces materialization of ideas into startups Source: Expert interviews; Desktop Research; BCG analysis 14 High costs and complicated procedures involved in starting, running, and closing a startup 10
We are now faced with the fact, my friends, that tomorrow is today. We are confronted with the fierce urgency of now 11
Equifund provides an opportunity to accelerate the Greek startup ecosystem's growth, by addressing the funding needs Institutions have committed about 260 million to fund startups across industries ~ 1 billion Projected fund size ~ 260 million ~ 1 billion 60 60 200 EIB EIF NSRF Investment commitments Sources: European Investment Bank (EIB); European Investment Fund (EIF); BCG analysis. Note: NSRF = National Strategic Reference Framework. 12
Our Vision HostUp Greece An ecosystem to host and grow Greek and international startups 13
Our Aspiration The Value Proposition of HostUp Greece centered on 4 key dimensions Source: BCG Innovation network Integrated research and collaboration network with academic institutions and corporations Affordable best-in-class infrastructure and services for startups Business environment Incentives for founders, investors, and talent Attractive regulatory and institutional environment Easy access to $20 trillion EU & ME market Talent World-class educated talent, aligned to market needs Excellent quality of living and global connectivity Funding Availability of funding across industries and the startup lifecycle 14
The initial impact of recommendations on government revenue will turn positive by 2021 Projected Annual Government Revenue from Startups ( M) Business Environment ( M) 150 Status Quo Recommendations Implemented 110 100 84 +30 50-10 0 26 16 32 25 40 40 2018 2019 2020 2021 2022 2023 60 51 65 Government revenue in 2023-3x higher than losses in 2018 80 # of Startups 628 1,015 1,618 1,765 1,907 2,090 Source: BCG Analysis 15
A Host-Up Greece organization can nurture and support the ecosystem Startups Venture funds Government Universities Corporations Accelerators/ Incubators Drive Initiatives Shape, drive, and monitor initiatives that deliver the changes required for the ecosystem's growth Coordinate Networking Activities Orchestrate networking activities that bring together key actors in the ecosystem (including startups, corporations, mentors, talent, and investors) Promote the Ecosystem Develop and run campaigns and activities that promote the Ecosystem in Greece and Internationally Source: BCG 16
Startup Delta PPP 1 that brings together startup community, government, corporations to promote joint vision of Dutch startup ecosystem Contributed to 2017 record-high in funding of EUR 442M European peers have already launched similar initiatives with resounding success Startup Portugal PPP organization responsible for identifying and driving initiatives to promote a thriving local startup ecosystem Contributed to creation of 584 new startups in past 12 months Startup Estonia Government initiative to supercharge and promote the Estonian startup ecosystem, termed the Estonian Mafia family Contributing to increasing ICT exports to 20% of total exports Swiss Entrepreneurs Foundation Private initiative started by politicians and businesspeople to improve the framework conditions for startups in Switzerland Aims to raise EUR 420M (CHF 500M) to support local startups 1. Public Private Partnership Source: StartupDelta website, Startup Estonia website, Startups.ch, BCG analysis 17
Herzliya, Israel 18
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