Small business in Greece may be suffering, but start-ups are booming

Low initial cost and skilled workforce draw investment.

In contrast to established SMEs in Greece, the country’s start-up sector has gone from strength to strength as unemployed youth, finding it impossible to secure a job, venture into their own businesses.

Workable.com, Taxibeat and Upstream are some of the start-ups that have turned into glittering success stories and attracted round after round of international funding.

Another such company is incrediblue.com, the yacht rental start-up that tapped into the lack of innovation in the country’s vital tourism industry and created a business that has been dubbed the Airbnb of boats.

“Greece is a great place to start a start-up company, as initial costs can be kept low and the opportunity cost is low as well,” says the company’s founder and chief executive Antonios Fiorakis.

Since launching in 2013, the company has grown to 14 employees and has secured about US$2 million in investor funding.

“A start-up’s lifeblood is its people, and Greece is home to very talented and well-educated people,” says Mr Fiorakis.

“Thus Greek start-ups tend to have very strong teams that, in general, focus on foreign markets.

“Having a start-up’s operations in a country such as Greece can offer you a long runway compared to having operations in the United Kingdom, Germany or the United States.”

While Mr Fiorakis says that the problems he encountered in setting up were not insurmountable, he does suggest that the Greek government lower social security costs for the first three years of a start-up’s life to allow the company to hire talent with fair wages, generate more revenue and pay taxes faster.

Still, even though liquidity is a major problem and setting up a new business in Greece is laborious – it entails 39 different official steps – that has not put off the country’s new breed of young entrepreneurs.

A survey this month of more than 2,000 university students in Greece by Endeavor, a non-profit entrepreneurship support organisation, showed that 81 per cent had a positive view of entrepreneurship, with 77 per cent saying they already participated in at least one entrepreneurship activity. The survey also highlighted their concerns about doing business, with their main issue being the amount of bureaucracy in starting a new business and the need for an improved institutional framework to support start-ups. One of the main advantages start-ups have over long-established SMEs, apart from a young workforce with new skills and exposure to new ways of doing business, is their drive to expand online.

According to statistics from Endeavor, start-up activity has increased 12-fold since 2010.

Stavros Messinis, the chief executive and founder of The Cube, which helps other start-ups by providing networking, events and advice, says incentives need to be put in place to keep the country’s start-up scene growing to become the new breed of Greek SMEs.

“We have a strong skill set and the conditions are right. The challenges are bureaucracy and excessively high taxation,” he says. “This means that companies start here, get their first investments and actually move away.”

One of the ideas he proposes is tax incentives for backing start-ups financially, which would encourage investment. “Barriers need to be taken down. We need more stability, which we don’t have right now, and a tax regime that’s easily understood and doesn’t change every few months, like it does now,” Mr Messinis says. “Investors don’t like instability.”

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