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Vienna’s tech startup ecosystem gathers momentum

After a sustained period of inactivity, Vienna’s startup environment is finally on the rise again

Vienna’s tech startup ecosystem trajectory has been reminiscent of a low-key rollercoaster ride over the past 15 years – an initial rise, followed by an anti-climactic fall, leading into a sustained period of complete inaction as fewer and fewer entrepreneurs looked to join the ride.

However, the city has been sparked into movement over the past five years, with some standout trailblazers and a growing venture capital (VC) community driving the ascent.

One man who has both experienced Vienna’s bumps, and watched from the sidelines, is Oliver Holle, co-founder and managing partner at Speedinvest, an early-stage startup investor that was born in Vienna in 2011 and is now present across Europe and the US.

One of Holle’s initial forays into the tech world was as the chief financial officer of 3United, a company that was later bought by Verisign, but that was supposed to signal a bright future for Vienna’s tech startup fraternity.

“This was between 2004 and 2008, before I moved to the US for three years. When I moved back to Austria, there was a brutal contrast from when I’d left it,” he said. “The first-generation VC funds were barely alive and winding down. The scene was completely negatively biased to venture and the startup pool was running dry as a result.”

By getting the old 3United band back together, Holle looked to revive the community from ground zero. With just one other angel of note, and no seed ecosystem around them, Speedinvest had to think beyond Austria’s borders from day one. But the focus for Holle was always to put Vienna’s tech scene back on an upward trajectory.

Numerous false starts

In comparing Vienna to neighbouring startup scenes in Berlin or the Nordics, Holle alludes to the desire for a similar snowball effect to occur. A lucrative support network and investment community leads to a reduced risk of failure, which leads to more scaleups and, eventually, unicorns. The latter then serve as role models domestically and financial lures globally.

“You need snow for a snowball, though,” Holle reflected. “And back in 2011, because literally none of the VC funds or supporting players had survived, we really did have to start from zero and generate our own momentum.”

A lucrative support network and investment community leads to a reduced risk of failure, which leads to more scaleups and, eventually, unicorns. The latter then serve as role models domestically and financial lures globally

Inevitably, there were many false starts between 2011 and 2015. A lack of trust and confidence in the ecosystem as a whole leant to an unsustainable mindset, even among those creating exciting products and businesses.

Entrepreneurs would go into a venture with the ambition of scaling to the point of a lucrative exit. In doing so, they would leave the ecosystem before they’d had a chance to create a meaningful legacy or blueprint for others to follow.

“The biggest ambition during this period was ‘how can we get a better exit than 3United?’,” said Holle. “That said, this did change around 2015 thanks to two very large exits in the form of Shpock and Runtastic. This was the first real swing of the pendulum.”

Waking up to new ideas

What this moment did, more than anything, is wake up the startup supporting cast. Those investors, angels and venture capital funds that had eased Vienna into an induced coma were now alive to the concept that ideas were yielding returns in the tech sector.

And while the response was initially cautious and slow-paced, it finally laid a foundation for a snowball to form.

A concerted sprinkling of startups followed in 2017, including Refurbed, now the fastest-growing online marketplace for refurbished products in the DACH region (Germany, Austria and Switzerland) and one of Speedinvest’s portfolio companies.

The startup was founded in Vienna in 2017 by Peter Windischhofer, Kilian Kaminski and Jürgen Riedl with the purpose of offering a more affordable and sustainable alternative to new devices, and a safer alternative to used ones.

“When we started, the scene was much smaller and immediately we were the local heroes, which helped a lot in recruiting and PR,” Windischhofer recalled.

Heroes were precisely what Vienna needed, though, and it gave budding entrepreneurs a sense that the city’s startup ecosystem was becoming more fertile.

Indeed, fast-forward another four years, and Austria’s capital has proudly unveiled two unicorns in 2021 alone. One of which is edtech giant, GoStudent – another Speedinvest investment – whose rapid rise to global traction epitomises the overall turnaround of the city.

The company’s co-founder and CEO, Felix Ohswald, said: “Our idea originated six years ago, and back then the ecosystem was really small, maybe one or two conferences every now and then, and nobody to really turn to for advice.

“Investors didn’t understand where we were coming from, as there wasn’t a precedent for tech startup success, let alone in niche spaces like edtech. The likes of Shpock, Runtastic and Refurbed represented the changing of this wave, which we’ve since been able to ride.”

Impactful, sustainable, disruptive

In the city’s long search for a blueprint, and for role models, it now has the likes of Holle, Windischhofer and Ohswald to promote and call upon.

The latter already notes that he’s continually meeting with potential new startup founders with fantastic ideas – people who want to disrupt sectors through tech, and who are now inspired to do so, just as we’ve seen with the likes of Klarna or Spotify in the Nordics.

“I’m seeing growing opportunities in Vienna around deeptech, medtech, B2C-driven solutions and edtech. The city is now full of super-ambitious people ... and a mature community of founders to guide that younger talent”
Oliver Holle, Speedinvest

“There’s a vibe here now – you can feel it even in restaurants and bars, where you meet young people and you overhear that they’re not wanting to work for boring old corporates anymore. And they now have examples that show they don’t have to. Instead, they can come up with something that is impactful, or sustainable, or disruptive, and there is a growing network around to guide them,” said Ohswald.

“I honestly believe that even in the past three years, Vienna has evolved into an ecosystem that can attract international money as easily as Berlin.”

Windischhofer tends to agree: “The innovation-driven culture is very present in the city’s daily life and is very well supported by investors and the startup community. For us, what really made the difference was having the interest of the community members and the support of investors, who really believed in our project from the start.

“The one thing that maybe is still lacking is the need for more tech talent, so I urge anyone to come join us in this beautiful and now-thriving city.”

Positive for the future

Holle is perhaps best placed to acknowledge this turnaround of fortunes, this hopefully now sustained rise on the rollercoaster. Understandably, he is hugely excited about the potential that Vienna offers as a city with all the forward momentum.

“The speed at which people are thinking about growing their businesses could be faster,” he admitted, “but even sharing that concern is a huge sign of progress from where we were in 2011.

“I’m seeing growing opportunities in Vienna around deeptech, medtech, B2C-driven solutions and, of course, edtech. The city is now full of super-ambitious people. And, finally, the moment has come for a mature community of founders to guide that younger talent. The money is here, international investment eyes are on us, and I have every reason to be positive for the future.”

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