The Hungarian startup and technology ecosystem is rapidly growing. There are many matured tech companies, probably the most well-known Hungary-born scale-ups are Prezi, Ustream, and LogMeIn, but there are many more. There is also a growing number of tech companies securing funding from world-class investors or getting acquired by well-known players. Some of the most successful companies raise money and open headquarters in the US, but they keep most of their R&D activities and tech teams in Hungary. In recent years some of the fastest-growing international tech companies such as Cloudera, Tansferwise or Blackrock opened large development offices in Hungary to utilize the great STEM talent pool of Hungary.
While the majority of startup activities has grown out of Budapest, the country has also seen smaller-scale startups scenes emerge in other parts of the country due to a strengthening support network, such as Debrecen, Győr, and Szeged.
According to The State of European Tech 2018 report, Budapest is among Europe’s top 20 most mature tech communities. No wonder that the verticals where Hungary tends to produce most of the success stories lay on advanced technical foundations and breakthrough innovations. Because of the strong STEM education and world-class technical talent pool, we are skilled in deep tech-related verticals such as data analytics and data science, artificial intelligence or cybersecurity. Startups in the field of fintech and blockchain have shown great development over the last years.
There are multiple organizations, both in the private and public sector that actively support startups and the growth of the ecosystem. Design Terminal is a government-backed agency incubating startups and supporting the local scene. The INPUT program is mainly focusing on boosting second-tier cities with its educational programs and mentor networks. NKFIH, the National Research Development and Innovation Office, has recently launched multiple initiatives supporting startups. The ICT Association has an increasing focus on startups besides being an interest representation organization for the whole ICT industry, with some of its key projects (Millenaris Startup Campus, Smart Conference, Open Innovation projects), is one of the most active players the startup ecosystem.
One of the major trends influencing the local startup scene is the growing governmental involvement. During recent years, the role of the government in supportive activities has been increasing rapidly. Hiventures, a government-backed VC firm, was launched 2 years ago. They funded almost 250 startups since then and invested more than 55 million euros. By doing so, they became the most dominant player in the local VC scene. Apart from Hiventures, there are almost a dozen of government-backed incubators (GINOP) supporting startups professionally and with pre-seed funding. New JEREMIE funds are also about to start their operations.
The key stakeholders of the Hungarian startup ecosystem are:
Most successful startups (raised from top VCs or acquired):
· Prezi, Ustream, LogMeIn, Balabit, IND
Upcoming startups with high potential:
· AI Motive, Antavo, Bitrise Turbine.ai, Tresorit
· Hiventures, Jeremie funds, Day One Capital, iEurope
Accelerators and Incubators:
· Corporate accelerators (MKB, OTP, K&H, MVM, NN), Design Terminal
· Bálint Orosz (Distinction),
· Márton Szőke (Index tools)
· Gyula Fehér (Ustream)
· Balogh Peter (NNG)
· Ministry for Innovation and Technology, National Research, Development, and Innovation Office
Universities active in entrepreneurship:
· Budapest University of Technology and Economics, Lóránd Eötvös University, MOME
· ICT Association of Hungary, Bridge Budapest, Design TerminalOne of the major trends influencing the local startup scene is the growing governmental involvement. During recent years, the role of the government in supportive activities has been increasing rapidly. Hiventures, a government-backed VC firm, was launched 2 years ago. They funded almost 250 startups since then and invested more than 55 million euros. By doing so, they became the most dominant player in the local VC scene. Apart from Hiventures, there are almost a dozen of government-backed incubators (GINOP) supporting startups professionally and with pre-seed funding. New JEREMIE funds are also about to start their operations.
Although the number of available fundraising options for startups is high, there is a lack of “smart money” that could help the international growth of these companies. There should be more co-investments with international VCs and the country, and the region should attract Western EU and US investors. One of the largest challenges for startups is to find a skilled workforce as the digital industry is rapidly growing in Hungary. Although one of the main strengths of the ecosystem is the quality of the technical talent, the labor market is limited and approximately 22000 people are missing from the IT industry. Multiple coding schools are popping up, trying to solve this gap. Also, many companies manage to attract people from other countries to relocate to Budapest. Besides the limited number of engineers, the ecosystem lacks marketing and business competencies needed for scale-ups. This is why successful startups started in Hungary are often headquartered in the US.