Múvelódesi Szint – aka Müszi – is a community space and co-working initiative right in the heart of Budapest, Hungary’s capital. In it, young tech innovators sit back in reclaimed furniture, drink mug upon mug of coffee and lead a revolution in the city’s economy. It might sound like your everyday afternoon in, say, Berlin or London. But in Hungary, where the economy has still struggled to recover from the 2008 crash, spaces like Müszi are still rather new.
Hungary has a population of 9.94m people and sits in the centre of Europe flanked by seven states – one of which is Austria, with which it jointly held an empire for 51 years until the end of World War I. Invaded by the Nazis in 1944, the country was soon taken by Soviet forces, under whose control Hungary remained until the fall of communism in 1989. Today it is an industrially-advanced nation, with mining and metallurgy its main exports.
Prime Minister Viktor Orbán’s populist government has come under criticism for perceived autocratic activity. Meanwhile far-right party Jobbik has displayed vitriolic racism and there are fears it may command Parliament seats come April’s general election. Despite that, Budapest, a city of around 2 million, is one of Europe’s most beautiful capitals and a leading tourist destination.
And its tech community is booming. There’s a thrilling batch of tech businesses – presentation firm Prezi and Palo Alto-headquartered LogMeIn are two big success stories – helped along with state funding.
Initiatives led by the country’s National Innovation Office (NIO) include a task force, Budapest Hub, which aims to define what the Hungarian startup ecosystem needs from the government. There’s a tax-breaks committee, and three groups for education in entrepreneurship. “Compared to five or six years ago, when there were practically no startup companies here, we have information for over 400 startup companies,” says the office’s László Korányi. “Probably the number is at least 50 per cent higher than that.”
The NIO has also been closely involved with the EU’s Horizon 2020 initiative, which is pumping $110bn into scientific research ($34 billion), industrial innovation ($25 billion, which includes investment in key technology and capital for SMEs), and ‘major concerns’ ($44 billion, including climate change and transport.)
But to qualify for NIO funding, entrepreneurs must have money and experience abroad. And with a stuttering economy and low average salary, those are things many young Hungarians simply cannot afford. In addition many new companies complain of being mired in red tape and taxes, while cronyism and corruption remain big problems.
“There are a lot of inspiring stories and many many great ideas around,” says Olga Irimas, 33, an art programmer who helps run Müszi. “But the environment makes it difficult or impossible. Especially if you are trying to stay ethical: not exploit your employees, not cheat on taxes.
“You can get a normal job easily if you accept to be incredibly underpaid,” adds Irimas. “Meaning 500 Euros ($688; the national average) per month as a young professional: hardly enough to make a living. For everything else, you need connections.” Unemployment in Hungary remains high at around 11 per cent. GDP, which had been shrinking until 2012, is now turning a corner. According to the country’s economy minister Mihaly Varga, it grew 1 percent last year, and is expected to rise by another two in 2014.
Thankfully the need to know folks in high places is scant in a city where initial overheads for startups are so small. Entire buildings in the historic center still lay unoccupied, and rents hover below the $300-a-month mark. For this reason other ‘on-the-fly’ ventures such as cafés, room escape games and, famously, the city’s many ‘ruins pubs’, are popping up, making Budapest an attractive place to set up shop. “Budapest is a very beautiful city, and recently there has been a burgeoning bar scene with a very special atmosphere,” says Korányi. “Maybe the only comparable city in this aspect is Berlin.”
“The high creativity of young entrepreneurs is a good basis for a rapidly-growing industry,” says Péter Drajkó, a tourism official. Visitor numbers are growing year-on-year, pumping more cash into the city’s coffers. Gentrification also looms large over the costs of smaller ventures. But Budapest has a history of innovation – from the ballpoint pen to the Rubik’s Cube. And few generations have promised the facelift that this one, armed with little more than rent checks and a big slice of creativity, is already beginning to deliver.