The third post of the blog-series by TheVentury Intern Sean Moakley, comparing his time working for Startups in Silicon Valley & Vienna.
We know how vital funding is to every startup. As a developing market, it seems that Vienna is actually the perfect launch point for younger, seed-stage startups
Vienna – from a startup village to an early-stage empire!
Recently, TheVentury moved into its new office at weXelerate, the newest and biggest startup hub in Europe.
So far, I like this place a lot. It checks all the right “entrepreneur” boxes: high and unfinished ceilings, well lit, startup ads everywhere, table games, and about three different open spots where you can grab a coffee. Not to mention the escalators make me feel like I’m in Tron.
From the smaller, cozier office we used to occupy, we’ve moved into the largest hub in the city. If it looks like Silicon Valley and it feels like Silicon Valley, well, maybe we’re on our way…but I won’t get carried away.
TheVentury’s beautiful new home, the weXelerate coworking spaceA startup’s ability to gain funding is absolutely vital at some stage in its existence. In Vienna, there are plenty of VC funds and angels looking for new opportunities, but it wouldn’t be the right place to look for late-stage capital. The largest VC in the country has a fund of about $100 million. While this is certainly a large pile of cash, it wouldn’t be able to support something like Snap’s series C of $50 million without a lot of help.
Seed round funding usually falls pretty close to $1 million, however, and many are below. There would certainly be enough capital here to support a number of seed stage startups.
I think it’s a good sign that a leading VC focuses the majority of its funds on seed investments. It shows that they are looking for the highest potential companies that also show rapid growth, that they’re turning over new stones instead of admiring the old.
The Austrian government is beginning to notice entrepreneurial growth as well: in 2015, they granted $325 million to 3,715 startups. In this narrative, it seems, the government executives are the good guys. Imagine that you have a revolutionary idea, and you just moved to Vienna. You have a few friends interested in getting involved, but they insist that if you’re going to sell your soul to this idea, you should get started somewhere else. Why?
Venture capital has a much bigger presence in Silicon Valley. There is so much capital available that a $100 million fund is not uncommon, maybe even scoffed at by some of the giants on Sand Hill Road.
But let’s look at some of the seed investments coming from Sand Hill: Redpoint Ventures, $2.3 million to Lilt Inc. in October 2016; Andreessen Horowitz, $3.2 million to OpenInvest in May 2017; Greylock Partners, $1 million to Mira in September 2017. Now let’s check out here: Speedinvest, $1.9 million to ClauseMatch in June 2017, and $3.9 million to Inkitt in September 2017.
Even though Redpoint has had ten funds ranging from $180 million to $750 million, they’re putting up the same amount of capital as Vienna-based funds for seed-stage investments.
So why, again, would you need to relocate? Vienna is the perfect market for early- and seed-stage companies. There might be less competition for funding and you can still get the capital you need.
And when it’s time to go for a series A, you’ll already have expanded beyond the borders of Austria and into other markets—more and more VCs will have noticed you.
In my opinion, seeing the Austrian government free up so much funding specifically for entrepreneurs is the clearest indicator of progress to come. Despite the youth of the entrepreneurial scene here, more and more students and workers will decide to make the leap when they know they can get financial backing.
So, what is the advantage of starting a business in Vienna? Over the past few years, it’s gone from a startup village to an early-stage empire, the ideal platform to really get started and grow from the actual epicenter of Europe. Once you have established yourself comfortably with the couple hundred million euros accessible here, every other European market is your friendly neighbor.