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Austria's startup ecosystem has gained increasing recognition, with six cities from the DACH region making it to the top 20 European tech hubs by capital invested. Vienna, in particular, stands out as a vibrant and thriving hub for innovation and entrepreneurship.
Let’s look at Austria's thriving startup ecosystem, analyze key funding trends, and uncover the unique ingredients contributing to its success—beyond its renowned culinary prowess.
In a period fraught with uncertainties and economic challenges, the Austrian startup ecosystem showcased its resilience and potential, defying expectations and attracting significant investment.
Despite the disruptive impact of the Covid-19 pandemic, startup investments in Austria soared to new heights, solidifying its position as a thriving hub within the DACH region of Germany, Austria, and Switzerland.
Austria's startup ecosystem has witnessed remarkable growth, positioning itself as a vibrant hub for innovation and entrepreneurship. The country has also established strong pillars that support entrepreneurship and startup funding, fostering a conducive environment for innovation and business growth.
These pillars are vital in driving the success and sustainability of the Austrian startup ecosystem. Here are a few ones that got our attention:
Supportive Government Initiatives
The Austrian government has implemented various programs and initiatives to support entrepreneurship and startup funding. It includes providing financial support, grants, and tax incentives to startups.
The government also actively promotes innovation and collaboration through initiatives that encourage research and development, technology transfer, and international partnerships.
Vienna Business Agency has been making a name for itself in Europe through the annual startup festival, ViennaUP, Vienna Startup Package, and other initiatives, especially for ex-pats looking to build a company there.
Strong Academic and Research Institutions
This country is home to prestigious academic and research institutions contributing to the entrepreneurial ecosystem. These institutions foster innovation and provide a nurturing environment for startups to emerge.
Vienna's research and development (R&D) focus makes it an attractive destination for startups. The city has witnessed a significant increase in R&D spending over the years, with extensive research facilities and a 14% R&D tax grant available to companies of all sizes.
Strong Network and Collaboration Culture
Austria's startup community thrives on collaboration, knowledge sharing, and networking. Various events, conferences, and meetups bring together entrepreneurs, investors, and industry experts, fostering connections and opportunities for collaboration.
This collaborative culture enables startups to access valuable insights, form strategic partnerships, and expand their network within and beyond Austria.
The Austrian Startup Monitor reveals that over 3,300 startups have been founded in Austria since 2011, with approximately half located in Vienna. The city is Europe's seventh fastest-growing tech community, the 15th most trusted among 64 startup hubs, and boasts more women founders than other major cities.
Austria's startup scene has experienced a significant surge in investment activity, making it into the top 10 European countries for venture capital (VC) investment. In the first half of 2022, the Austrian startup ecosystem grew three times as much as the previous year, showcasing its rapid expansion and potential.
The country's VC investment ranking places it just behind Ireland and Finland, demonstrating the increasing confidence of investors in Austria's startup potential.
Source: Small but mighty: How Austria’s startup ecosystem is growing
Vienna, in particular, has become an attractive destination for VCs, attracting a wave of investments worldwide. This influx of funding has energized the local ecosystem, providing startups with the necessary resources to scale and thrive.
As Austria continues to embrace its role as a flourishing startup ecosystem, the funding landscape remains robust and promising.
Source: Small but mighty: How Austria’s startup ecosystem is growing
However, investors should also remember that Austria didn’t escape the downturn wave that hit Europe and has recently experienced a decline in VC investments.
Vienna, known as the “City of Music” and for its music heritage, is emerging as Europe's fastest-growing tech ecosystem.
While entrepreneurship faced challenges in the past due to bureaucracy and risk aversion, the city now possesses winning factors that contribute to startup success. Vienna consistently ranks as the best place to live globally, offering stability, healthcare, culture, environment, and infrastructure. It has a low cost of living, efficient public transport, and captivating architecture.
With a population of around two million, Vienna is the second-largest city in the German-speaking region and a popular destination for students. Its universities are renowned for world-leading research in deep learning, biotech, and medicine. Generous public grants support innovators across various sectors.
Austria's startup ecosystem has experienced significant growth, with three times the expansion in the first half of 2022 compared to the same period in 2021. The country ranks among the top 10 in Europe for venture capital investment, trailing just behind Ireland and Finland.
To understand the key pillars contributing to the growth of the local ecosystem, How to Web launched a great guide with Vienna Business Agency on how to launch your startup in Vienna.
Foreign entrepreneurs are increasingly choosing Vienna as a destination to launch their businesses, drawn by several compelling factors. Firstly, Vienna offers generous public grants and funding opportunities, making it easier for startups to secure non-dilutive grants and early-stage investments.
The city provides access to numerous city, regional, federal, and European grants, allowing entrepreneurs to kickstart their ventures with financial support. Vienna's low living costs also contribute to a favorable environment for startups, offering entrepreneurs a cost-effective place to establish and grow their businesses.
Austria has transformed its position from the bottom of European countries in venture capital and DeepTech rankings to a destination with unicorns. Vienna is a viable location for tech innovation and startup growth.
The city's well-known research institutions, particularly in deep learning, biotech, and medicine, catalyze entrepreneurial growth. With a strong focus on technology transfer into the industry, universities actively contribute to transforming academic knowledge into marketable solutions.
A recent study conducted by N26, a leading mobile bank, reveals that Austrian women are the highest investors in Europe. The study found that Austrian women invest an average of €1,680 annually, surpassing their European counterparts.
This finding highlights the solid financial literacy and investment culture among Austrian women, positioning them as key players in the country's investment landscape.
Source: Women and investing: Closing the gender gap - N26
The study also highlights the factors driving Austrian women's investment habits. It suggests that long-term financial goals, such as retirement planning and wealth accumulation, influence investment decisions.
Austrian women prefer conservative investment strategies, focusing on low-risk options like savings accounts and real estate.
Austria's vibrant startup ecosystem is driven by a diverse range of venture capital (VC) funds that actively invest in promising entrepreneurial ventures.
From early-stage funding to later-stage investments, these VC funds demonstrate a strong commitment to fostering entrepreneurial talent and propelling Austria's startup ecosystem to new heights.
The acquisition of Shpock, an online marketplace, sparked startup activity in Vienna, followed by notable success stories.
Some of the most important ones are the EdTech company GoStudent and cryptocurrency exchange Bitpanda, both becoming high-profile unicorns. Numerous "soonicorns" are anticipated soon.
Austria's startup scene is brimming with promising ventures that have the potential to become unicorns, capturing global attention and achieving valuations exceeding $1 billion.
Here, we highlight three Austrian startups identified as up-and-coming players to watch in 2022 and beyond.
HelloBello
HelloBello, a pet-tech startup, is at the forefront of a new trend in the pet food industry. They are revolutionizing the market by offering freshly cooked food-grade dog food customized to meet each dog's unique nutritional requirements.
Through collaboration with expert veterinarians, HelloBello creates personalized meals free from any by-products and precisely portioned, packaged, and conveniently delivered directly to pet owners.
Enspired
Enspired, a Vienna-based AI energy tech firm, was established in 2020 to tackle energy transition challenges by enhancing power grid flexibility.
The startup has gained recognition for its innovative solutions that effectively balance supply and demand, facilitating a smoother transition to renewable resources. In 2021, inspired received a significant boost of €7.5 million to develop their offerings further.
“Austria offers a highly compelling opportunity for venture investments, as evidenced by the success of our portfolio companies such as Bitpanda and Byrd.
The combination of an established venture capital ecosystem, a diverse pool of top talent from Central and Eastern Europe, and robust government support creates a thriving environment for innovation.”
Says Albert Mikushnica, Investment Associate at UNIQA Ventures
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