Just 10 tech startups were reported in Budapest in 2016. Now there are hundreds and the city’s startup ecosystem is developing rapidly. The number of accelerators is on the up, as is international investor interest. The capital is also attracting established businesses with its low living costs, an extensive public transport network and reliable high-speed broadband. And, having hosted our first AllStartup Weekend last June, the Demium incubation programme is now in full swing.
Once two separate cities, Buda and Pest (or West and East) were united in 1873, after 150 years under the Ottoman Empire, to form the economic capital of Hungary. Today it continues to cash in on its rich cultural and historical offerings. The west side plays host to UNESCO World Heritage Sites such as Buda Castle, the neo-gothic architecture of Fisherman’s Bastion viewpoint and vast woodland of Budakeszi Wildlife Park.
Over in the east you’ll find the lively Jewish Quarter and museums dedicated to fascinating snapshots of the past, including the secret police (House of Terror) and pinball (Flippermúzeum). And let’s not forget ‘ruin bars’. These popular hangouts are a trademark of the capital, grown from the innovation of various individuals who had the foresight to see potential in the city’s abandoned spaces. In fact, it’s this kind of visionary thinking that has put Budapest on the startup map.
In a recent study by Startups.co.uk, about the top European cities in which to launch a startup post-Brexit, Budapest ranked number one of 80. Owing in part to its heritage and quality of life, but also to its government-led incentives for business owners. The capital has a 9% corporation tax rate, which is the lowest of all 80 cities on the Startups.co.uk list and a whopping 10% less than the UK rate. Plus, with ‘early stage status’, companies can reduce their tax base.
The Hungarian Business Angel Network (HUNBAN), of which Demium is a member, was introduced in 2017 to welcome angels interested in investment opportunities on local and regional levels, and to integrate Hungary into the international circuit. The EU’s JEREMIE (Joint European Resources for Micro to Medium Enterprises) initiative is a draw too, allowing EU member states to finance small and medium-sized enterprises via holding funds. In any case, the country is doing something right, because in 2018 BlackRock, the biggest investment manager in the world opened an office in Budapest.
Startups looking to scale will undoubtedly be attracted by the free, efficient exports (often arrangeable within an hour) and major trade routes down the Danube. English is widely spoken and there are almost 50 universities and colleges providing a well of highly educated young professionals just waiting to be tapped. And, rather interestingly, the country has the second largest number of female founders at 23.7%, compared to the European average of 15.6%. This is according to the EU Startup Monitor report, which also classes Hungary with the highest portion of startups in very early stages at 39.5%, compared to the 13.2% EU average.
To ensure all this talent has room to grow, Budapest presents a number of tech and startup events each year, from global gatherings at Brain Bar in late May to a focus on local business life at Budapest Startup Safari in April, and major regional networking events like the Startup and Innovation Day in November. Elsewhere during the year you’ll find software development and data engineering conferences, as well as think.BDPST, which takes a regional look at future technologies.
Ultimately, the best way to judge the mettle of Budapest’s startup ecosystem is to look at the proof. Numerous startups that were born in Budapest have gone on to enjoy great success. Like Prezi, a cloud-based presentation platform, which managed to raise over $72m of funding from its base in the city. Remote access software LogMeIn started trading on Nasdaq in 2009, and Ustream, the video conferencing solution was snapped up by IBM for a cool £130m in 2016. For a city that has a population just a fifth the size of London’s, that’s not too shabby at all.
Having opened our incubator in June, we’ve currently got 25 talented entrepreneurs in our startup incubation programme, working on 8 exciting projects. Want to get involved? Our next AllStartup Weekend kicks off on Friday 29 November. We are currently accepting applications, so get yours in today!