The startup ecosystem in Austria is heating up. According to Austrian Startup Monitor, entrepreneurs have founded more than 2,600 startups in the country since 2009.
In August, Vienna-based crypto trading platform Bitpanda raised a monster $263m funding round at a $4.1bn valuation — making it Austria’s first unicorn and most valuable tech startup. Logistics and warehousing platform Storebox also raised €52m in July.
“Vienna has a very vibrant and dynamic startup ecosystem. Sitting close to 2m inhabitants, it’s the second-largest German speaking city, right after Berlin,” says Birgit Reiter-Braunwieser, director of startups for the Austrian Business Agency, the country’s national investment promotion company and “one-stop-shop” for international companies establishing business in Austria. “It’s a very international hub, for doing business and also for entrepreneurial ideas and innovation.”
While most investment into Austrian startups still comes from outside the country, and some say Vienna is lagging behind, Reiter-Braunwieser thinks differently. Here’s why founders should think twice about sleeping on Vienna.
VCs love Vienna
While some of Europe’s bigger startup hubs like London and Berlin are attracting more capital, the VC and business angel scene in Vienna has developed and matured quickly — and it will only keep growing.
One of Europe’s most active VCs, Speedinvest, is headquartered in Austrian capital. Starting with just one fund 10 years ago, it’s now expanded its fund offering; last week it launched an €80m Climate & Industry Opportunity fund, and a €50m fintech growth capital fund launched in partnership with Raiffeisen, one of the largest Austrian banks, in 2018.
Aws Gründerfonds is another local VC firm investing in high-potential later seed and Series A startups. So far, it's invested more than €436m in 39 companies, with several successful exits such as TourRadar, an online marketplace for travellers to book tours, vaccine developer Themis Bioscience and Smashcast, a gaming livestream platform.
Reiter-Braunwieser says this slew of recent success stories is helping the ecosystem mature quickly.
“All the successful exits that we’ve seen, these founders then join the business angel scene and bring their existing connections and networks to the table, not just their money,” she says. “That’s benefiting Austria’s maturing ecosystem.”
Accessible hands-on support
A major benefit for Austria-based founders, Reiter-Braunwieser says, is the country's “highly developed support system” and resources for early-stage startups.
“You have all the ingredients for a well-functioning startup ecosystem, such as incubators, accelerators,” she says. “And Austria, in general, has a very good subsidy system for research and development projects.” For example, Austria offers companies of all sizes a tax grant of 14% of their R&D expenses.
Vienna Business Agency is also now offering a stipend to selected startup founders to develop their business over six months.
All the successful exits that we’ve seen, these founders then join the business angel scene and bring their existing connections and networks to the table, not just their money. That’s benefiting Austria’s maturing ecosystem
For international founders, Reiter-Braunwieser says organisations like the Austrian Business Agency can help entrepreneurs relocate to the country, and are often the first point of contact for businesses aiming to expand into the Austrian market.
“We offer cost-free support throughout the whole process,” she says. “We also closely co-operate with our colleagues in the regional economic development agencies, like Vienna Business Agency and Salzburg Agency.”
A vibrant student community means untapped talent
For Reiter-Braunwieser, one of the biggest benefits Vienna holds for startup founders is the “vibrant and dynamic student community” of more than 190,000 domestic and international students.
“That's part of why Vienna is a very strong startup city, because out of those 190,000 students you have 30% international students,” she says. “It brings in even more talent.”
TTTech is one such example of a tech company driven by local education; headquartered in Vienna, TTTech started as a spinoff of Vienna University of Technology (TU Wien) and developed into a global operator that received €75m of investment from Samsung.
Reiter-Braunwieser says the company benefited from the talent base and strong connection to the university — something that founders can readily capitalise on.
It’s not just Vienna
While Vienna is heating up fast, the rest of Austria has also seen an inflow of startups and talent.
Cloud software company Dynatrace is now listed on Nasdaq but was founded in one of the main economic centres in upper Austria, Linz. Also in Linz is AI startup Robart, which has raised more than $11.4m to build home robots.
In Graz, there’s healthtech Insta Communications, a counselling platform looking for seed funding, and USound, a music tech startup in its Series C.
Reiter-Braunwieser says Austria’s appeal as a whole is its high quality of life, something startup founders and workers are increasingly lusting after. She particularly cites the country’s healthy work-life balance — making it the “whole package” for founders.
Learn more about the Austrian startup ecosystem.