Startups aiming for the world
If an idea is global and satisfies a basic need, any startup can make it on the international stage as several companies stemming from Budapest have already shown, speakers at the Budapest Business Journal’s Going Global conference pointed out. That said, Hungarian startups still have a lot to learn.
“Let’s make Budapest the startup capital of Europe,” said Gyula Fehér, co-founder and chief technical officer of the popular video streaming solution Ustream, one of many startups that have overcome the fairly common hurdles that innovative initiatives have to face.
Unlike the common and traditional approach that involves setting up a business that becomes a success locally and then moving forward to make it a similar hit on the international stage, the current age allows and actually requires a different perspective, especially in the case of tech firms.
As such, any startup should start developing its product from the very beginning with the aim of reaching a global audience. Accordingly, as Imre Hild, chief executive of iCatapult stressed, it is essential to develop products in English, since this allows direct access to hundreds of millions of potential users that would otherwise be excluded because of language barriers.
Still hurdles ahead
Innovation is undeniably present in Hungary and new ideas are abundant, but the local environment is still far from optimal. Speakers particularly pointed to Silicon Valley in the United States, an area those thinking of founding a startup are encouraged to visit for a study trip to soak in the environment.
“The ideas aren’t better than here at home, but the opportunities are far better,” said Péter Nagy, co-founder and chief executive of Colabs.
This is a journey that successful Hungarian startups have made and are all the happier for it. They say that the Valley’s openness enables anyone with an idea to meet the right people in the right places, and doing business is easy, especially compared to what is common practice in Hungary.
As Priszcilla Várnagy, chief executive of Be-novative recalls, one of the milestones of her career in a startup was simply joining in a conversation at a San Francisco cafe, which led her to meet senior executives at major firms along the way.
A startup may have the best idea in the world, but that doesn’t necessarily mean the founders possess the necessary presentation and management skills to convince an investor to put up the seed money. But there are now services they can turn to for help.
As Zoltán Varga, chairman of the board at Central Fund Kockázati Tőkealapkezelő explained, the necessary know-how is now widely available through various fund managers. These firms have gathered the experts from industries on the slide like banking or real estate, but who are nonetheless intimately familiar with key aspects of business, like how to manage a project or how to negotiate with investors. This type of international knowledge is all the more important because of the globalized nature of the industry.
“Business plans are the same in Budapest, New York and the Baltics. Profit is international,” added Miklós Fekete, partner at PwC Hungary, which has a service established to provide consultations to smaller Hungarian businesses.
What is the key?
The established companies all seem to lack a magic recipe that could provide success for all startups if replicated. As Sándor Kürti, president of IT company Kürt, made famous for its data recovery services, recalled, the most important thing is to focus the company’s efforts instead of offering a broad range of services, while also making sure to promote itself at every given opportunity abroad.
Sándor Zettwitz, CEO of Elektronika 77, which established itself on the medical supplies market, similarly explained that it took association with a major international company to allow its products to enter the mainstream. As a further imperative, he highlighted innovation, which is still more than achievable in Hungary, since the expertise is available, even if it comes at a fair price.
But once a company has established itself as an international factor, it should also be easily recognized. This is why organic sewage treatment solution provider Organica is striving to make itself and the design of its facilities as recognizable as any household logo, according to the company’s chief financial officer Ákos Berzi.
The most important element is the entrepreneurial spirit and knowing who your competitors are. When advising a company this is one of the key factors to weigh, to see whether there is a risk of an opening being filled with newcomers that could potential bring better solutions to the market, said Iván Németh Gyurácz, partner at M27 ABSOLVO. But although it carries risks, having competition is the essential driver of any business effort.
“An entrepreneur is an athlete who lives to compete,” said Gábor Bojár, chairman of Graphisoft. “If you think you are entering a niche where there is no competition, I say, don’t do it.”
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