Startup Enterprises in Hungary
Hungary provides various elements that can be found helpful to your business. Starting with an ideal location nearby the capitals of Austria and Slovakia, Vienna and Bratislava, continuing with a growing number of startup accelerators, incubators and hubs, and finishing with lovely architecture and kind people. Not excluding the fact that various improvements have been recently imposed by the government, making it easier for startup companies to enter the market and succeed. The costs of living and accommodation could be one of the critical factors as well. Not only because of these factors are more and more foreign entrepreneurs moving to the region of Central and Eastern Europe and especially to Hungary.
Hungarian market lacks in its size and therefore from the very beginning, most of the Hungarian startup companies are focusing mostly on the international market. Hungary provides a couple of venture funds too. Needless to say, that most of the capital is coming from the money of the actual founders or in other cases from the money of their friends, parents, siblings, and other relatives. Only a quarter of its capital is usually coming from the external venture investors. This is the one thing we expect to change in the recent future, also thanks to numerous stimuluses from the European Union and Government. Together with several business angel communities, it makes the basic structure of the startup environment we would expect.
1. A couple of unicorns from Hungary
Some of the Hungarian companies used the right opportunity and became internationally successful through a favorable period of time few years ago. We could mention for instance companies such as NNG, Prezi, Rollet, Ustream or OptiMonk.
Probably the most successful and well-known is startup Prezi. (https://prezi.com/about/) It was founded by Peter Arvai, Péter Halácsy, and Adam Somlai-Fischer in 2009, and has already helped over 100 million users to make over 325 million public presentations. It also naturally became the first unicorn of its country. Over the years, it became an international success residing in Budapest, Hungary and San Francisco, US. Apart from previously mentioned companies, there are also other young and ambitious companies that try to succeed. Many of them reside around the capital city of Hungary, Budapest. It is pretty obvious because every 5th citizen of Hungary lives in its capital and also many startups incubators and accelerators find its place there. Besides that, few interesting startups can be found in two other major cities of Szeged and Debrecen.
We can see the rise of a Hungarian startup community since 2006 when the first startup projects were created. Huge stimulus came in 2010 when various projects took its place and helped the starting community such as, the program JEREMIE (Joint European Resources for Micro to Medium Enterprises) and also help from the European Commission which cooperated with the European Investment Fund. (http://www.eif.europa.eu/what_we_do/resources/jeremie/index.htm)
We were witnesses of different approaches to JEREMIE funds by every single country. Hungary chose to help rising startups mostly by venture capital. Recently, the second round took its place and these JEREMIE funds were reselected to venture capital funds which later on invested the capital into potential startups. Nonetheless, this represents that almost 95 % of the venture capital was coming from the state.
2. Szeged community
Not all startups are focused in Budapest and therefore we can find some in the southern part of Hungary, in the city of Szeged. Szeged is not only the economic and cultural center of the Southern Great Plain region but also the community hub at the junction of the Hungarian, Romanian and Serbian borders. Thanks to the university, young people come from all over the world, it is not only a defining meeting point of cultures but also a melting pot of different disciplines. Szeged, with nearly 25,000 students and 2,500 researchers, is also one of the strongholds of Hungarian higher education. In recent years, the city of Szeged has produced several interesting startups, including for instance Cryptic Consulting (https://www.startupblink.com/startups/szeged+hungary/Cryptic%20Consulting) or Ultimate Hacking Keyboard (https://www.startupblink.com/startups/szeged+hungary/Ultimate%20Hacking%20Keyboard) .
3. Debrecen startups
Another major city of Hungary which contributes to the startup community in Hungary is Debrecen. It is situated in the east of Hungary and provides various opportunities for starting businesses. Starting with the location close to Romanian and Ukrainian borders, continuing with lower costs of living in comparison with the capital city and finishing with beautiful architecture and huge economic potential. Debrecens Startup community provides several interesting events to connect with other potential businesses, such as the Startup Week. Startup Week is definitely worth mentioning because it provides valuable opportunities for local and foreign startups to encounter the most innovative ideas and meet young entrepreneurs on a regular basis. Debrecen has also produced several successful startups, counting Conversific (https://www.startupranking.com/conversific) which is the first Business Intelligence Platform for Shopify that helps you make intelligent decisions to grow your e-commerce site or OptiMonk which provides websites and online stores with onsite retargeting – a powerful new marketing tool for engaging and reengaging their visitors. (https://www.optimonk.com/)
4. Accelerators and Incubators
The recent events connected with COVID-19 pandemic and crisis have inspired several local figures who are importantly involved in the Hungary business market. It calls RESTART2020 and it is a global online event that focuses on the connection of ideas and innovators around the world and in Hungary, together with looking for solutions to reduce the negative effects of the COVID-19 epidemic and crisis. Its message is open and transparent to everyone who presents ideas or projects connected with the mentioned topic. The main goal of the organizers is to inspire the early-stage projects and connect founders with those who are looking for solutions regarding the current situation.
There are also a couple of prosperous startups which are glad to provide services and share experience to those who are new to the scene. As an example, could serve Bridge Budapest — a program that was founded by CEOs of several Hungarian successful startups. The Chairman of the Association is Péter Árvai, CEO and co-founder of previously mentioned company Prezi. (https://bridgebudapest.org/who-we-are/). Another successful accelerator is Colabs Startup Center. (http://www.colabs.hu/#about-us) Colabs Angels are actively looking for the most promising startups and normally invest HUF 5-150 million in companies which are in the early stage. Hand in hand works with the other startup accelerator OXO Labs. runs its startup incubation and acceleration programs both in the area of facilitating and mentoring early stage tech projects in line with lean strategy principles and also by supporting and funding such projects to boost growth and market entrance. They typically select 5 projects and teams per each calendar year. In Budapest, it takes place also the internationally well-known firm Invenshure which resides also in Minneapolis, MN. (https://invenshure.com/about).
In conclusion, we could summarize that Hungary has a lot to offer in terms of setting up a business and its further development. By its process could always arise a lot of questions and problems which are the best to discuss with experienced professional. Especially for the countries coming outside of the European union is highly recommended to consult every step with reliable expert, in order to prevent any future complications.
Questions regarding startup law or startup companies? Contact us!
dr. Dobos István attorney at law / Ján Mrázik – Faculty of Law of Comenius University
Phone / Whatsapp: +36303088151