On Sunday Syriza, a far-left party, won snap elections in Greece. The party, whose name stands for ‘Coalition of the Radical Left’, has vowed to end austerity measures put in place since a €240 billion ($268 billion) bailout loan was given Greece by the ‘troika’ of the International Monetary Fund, the European Commission and the European Central Bank.
The government’s work begins right away. The country faces a €2.3 billion funding shortfall in 2015, and unemployment stands at 25.7%, the highest in the E.U. Spain comes in second and its own Podemos (‘We Can’) party has surged in recent polls, running on a similar anti-austerity ticket as Syriza.
Syriza’s leader, 40-year-old Alexis Tsipras, has already joined a coalition with the centre-right Independent Greeks party. And his fierce rhetoric about loan repayments has already softened, calming indexes across Europe. The Euro, however, was brought to an eleven-year low on Tsipras’ victory.
On the ground, the situation is bad, but perhaps not as bad as numerous apocalyptic reports suggest. It is true that more young Greeks are out of work than are employed. But GDP per capita is still around $22,000 according to the World Bank, which places it higher than around a dozen other European nations.
Greece has also become a promising place for technology startups. According to Endeavor Greece, a nonprofit, there were 144 startups in Greece in 2013, up from just 16 in 2010. The money that has been invested in them in 2013 reached €42 million ($57 million), compared to just €500,000 ($568,000) three years prior.
Shared workspaces, too, have become a fixture of the scene. Opencoffee Greece is a popular brand that is now present in six Greek cities. The Cube, an Athens-based coworking space, is the country’s biggest. Its founder, Stavros Messinis, admits that job creation in tech has been pegged until now to the high hundreds. But there is plenty to be hopeful for.
“Much of what is reported, that Greece is going through a major humanitarian crisis, is exaggerated,” he says. “Manufacturing and agriculture have been hit hard – especially in the shipyards. But talking about startups, the upward trend is very much continuing. People have seen entrepreneurship as an alternative. The talent coming out of university is good.”
Messinis points to success stories such as recruitment software firm Workable, and automated copywriting outfit Persado – which last week secured $21m of Series B funding – as evidence there is an active, if nascent, scene in Greece. Others, such as B&B app Discoveroom, IoT expert Sensorflare and coders Resin, have managed to get off the ground despite Greece’s economic woes.
That is largely due to the emergence of a core of venture funds: Openfund, Odyssey, First Athens and PJ Tech Catalyst. The former, led by George Tziralis, has kicked on from €500,000 ($568,000) of investment between 2009 and 2011, to almost €12 million ($13.6 million) today.
“The scene is rather small; we are talking about a few hundreds of innovative technology companies, employing a few thousands of people, and getting funded by a few dozens of investors, mostly angels,” says Tziralis. “That being said, most of these were not in place a few years ago, and the ecosystem matures quite fast every day that passes by.
“The interesting thing with the startup scene is that it has not very much to do with the local economic context, in terms of consumption at least,” he adds. “The local market – during the crisis or not – is rather small, thus new technology companies have no option but to go after international markets from very early on.”
Tziralis is keen to add that now is a good time to be an entrepreneur in Greece. Taxes, certainly, are not an issue, being levied only on profits. Messinis agrees: “The big challenge in Greece has been more cultural than anything else. There was a time when money wasn’t here. That’s changed. Some of the previous government did collaborations with private groups.”
But what of Syriza? Few entrepreneurs enjoy a hard-left ruling party. And there are worries in the tech crowd that Tsipras could roll back progress made in the past handful of years, to add more jobs in government. Bureaucracy is also an issue, and social insurance can be prohibitively expensive.
Asteris Masouras is a local technology journalist. He disagrees that Syriza is hostile towards entrepreneurialism, pointing to a recent quote where the new PM “wants a new balance between state and market, with the simplification of business licensing and the taxation system, by channeling funds in the real economy, and strengthening competition”.
“The focus is mostly on eliminating preferential treatment of state contractors, a chronic plight in procurements, especially in the IT sector,” says Masouras. “Despite the outgoing (Antonis) Samaras government’s growth and investment rhetoric, tangible improvements for SMEs and startups did not materialize, clientelism continues to plague vibrant sectors and heavy taxation on freelancers exacerbated the brain drain abroad.”
It is true that many young Greeks are heading abroad from college, where they can often make more money, with lower risk, than at home. But hope for tech professionals may have come yesterday in the appointment of economics professor Yanis Varouflakis as finance minister, who for years consulted for US gaming giant Valve.
And despite death knells for Greece being rung out from conservative corners across Europe, most analysts appear to be upbeat about Syriza’s anti-austerity path. “In calling for a major change, Mr. Tsipras is being far more realistic than officials who want the beatings to continue until morale improves,” writes the New York Times’ Paul Krugman. “The rest of Europe should give him a chance to end his country’s nightmare.”
The Euro will not be dropped any time soon despite suggestions otherwise. And the construction of what could be the world’s largest gas pipeline through Greece from Cyprus and Israel, for which talks are already in place, could inject much-needed cash and jobs into the market.
“Anti-austerity views in Greece are strong across the political spectrum, which is why Syriza’s support has ballooned in the space of less than a decade – enough to propel the party to power, despite wide reservations,” adds Masouras.
Messinis worries that Syriza will want to run the economy more centrally, removing incentives for Greece’s entrepreneurs to kick on from a promising start. “We need to give them some time,” he says. “But I’m not sure we have it. But because the market is in such a difficult state, people are literally on the edge, and when you startup in a business environment like this, you learn quickly. Costs are also lower.
“I’d like to offer them a hand of help. Isn’t that what collaboration is all about?”