With some of the world’s brightest minds in technology - many of whom fled the country to find work and a better life elsewhere during a now nine-year economic crisis - Greece needs to focus on promoting start-ups and attracting more talent, a key venture capitalist has recommended.
Aristos Doxiadis, a partner in Big Pi Ventures, an early-stage technology fund partly financed by EquiFund, wrote in The Financial Times that Greece’s sector, with software and electronics companies having less than 1 percent of the workforce, that they’ve nevertheless grown 50 percent since 2013, despite little government help or incentives.
There are just six or seven homegrown tech companies valued at more than 100 million euros ($112.06 million) but that, “We are yet to see the first Greek unicorn — a tech start-up with a $1billion-plus valuation — or even companies that are halfway there.”
With a clientelist state pushing political favoritism and patronage and even blocking entrepreneurs and holding back people with ideas, more people ironically turned to trying to start companies, giving up on the government.
There have been public funding initiatives, however, with 50 million euros ($56.03 million) in 2012 given to four small venture capital funds that in turn put 73 million euros ($81.81 million) into 63 start-ups. “Without these, some of the success stories would not have happened,” he added.
These are expected to invest a total of 210 million euros ($235.34 million) in 150 venutres, he added. But, he said, “A healthy start-up ecosystem cannot rely on public funding for ever. Will the Greek technology industry attract enough private capital to keep growing? Some doubt it will.”
He said technology businesses are better suited to Greece than many other industries, so comparative advantage will drive more talent and more capital although the usual Greek blockade bureaucracy is making it difficult.
“It is still hard to obtain permits for factories and logistics parks, but easy for offices and laboratories. It is risky to tie up capital in plants and equipment in a country of unpredictable legislation and bureaucracy, but you can build up the human resources of a development team gradually. If the business environment turns bad, the key people can move elsewhere without much cost and continue working for the same employer,” he wrote.
He noted the proliferation of Greek technology and scientific talent making their mark around the world, produced by Greek universities, but said it hasn’t been matched domestically with patents, products or innovations.
The other big Greek roadblock: favoritism, gets in the way too. He said there’s a pool of smart, hardworking people from poor families who get a good education but can’t find jobs because they don’t have social connections.
“Greece is dominated by family companies, where ownership and control are only for relatives. Tech start-ups provide an exception. Driven by the necessity to grow, compete or die, they hire widely, promote the best performers and share ownership. Meritocracy unlocks potential,” he said, but it’s also feared by politicians and business leaders.
“A thriving technology sector also needs multinationals to set up in the country,” he said, although critics say they are blocked by Greece’s reputation for an inefficient bureaucracy, corruption, bribes, a 29 percent corporate tax rate and elements in the ruling Radical Left SYRIZA trying to keep them out.
“A common route is via acquisition. In the few cases so far where local companies were bought by global corporations, they have decided to expand the workforce substantially. This validates the thesis that Greece can be a valuable link in global innovation,” he said.