Developing Markets In Romania & How They Shape Start-Up Culture Through Local Communities

This summer I wanted to get closer to the local communities of Romanian entrepreneurs, so I decided to visit three places in Romania where economic development has been the fastest over the last few years. These places were Iași, Oradea and Timișoara. What I discovered there were gems of talent, innovation, and tenacity, and, perhaps more importantly, the desire to grow and impact. Let’s take them one by one:

Iași. Iași is a springboard for global expansion, where the excellent technical skills (some of the best Romanian programmers are educated in Iași) are intertwined with the kindness of the people and their focus on solving problems. The city is home to two fast growing startups – Digitail (a vertical SaaS vet clinics CRM, which closed a $10m Series A at the end of last year) and Nestor (a T&D enterprise platform and Y Combinator alumni) and to a large cluster of earlier stage ventures ranging from areas such as HR digitalization, health-tech and business processes automation.

While the emergence of so many (and so diverse) start-ups is a local phenomenon, Amazon’s investment in local tech talent over the last 15 years has amplified the development, by putting the city on one of the best global knowledge and money motorways. These days, Amazon hires around 2,500 from Iași only and, due to the company’s decentralized modus operandi, the city hosts many tech teams from all over the world. The cross-pollination effects of seeding the young local educated community with international talent are already visible, but in a few years, they will be huge!

Iași is a vibrant ecosystem in which accomplished entrepreneurs as well as amazing newcomers work together to drive change. The network effects are substantial – people are driven by the credo that the success of one business should also grow the level of the whole community. I met a few young professionals who, after years of living and learning abroad, decided to come back to create and build. This is probably the trait that impressed me the most and one of the major catalysts of change: using the experience and knowledge gained abroad, to pay it forward to the local communities.

Oradea. I was impressed to find out that in Oradea, there are local entrepreneurs who have made several (and meaningful) exits already and who continue to build new business.

Bootstrapping to exit or to a very last maturity stage seems to be one of the features of the most successful local entrepreneurs. While the proximity of the central and western European markets gave founders an advantage in spotting opportunities early, the size of the local market was not particularly supportive of external funding. So, bootstrapping was a natural way to build companies. This led to slower, but more grounded, sustainable, and resilient growth.

But, if bootstrapping is a local phenomenon, for their approach to scale, the local entrepreneurs used a more international model: start from tech services, then migrate to products, which scale faster. Providing services allowed entrepreneurs to have access to clients, and their exponential growth started when they began building products for their already paying customers.

Oradea is also a place where public-private partnerships worked incredibly well in building entrepreneurship support structures. The lessons are probably applicable to most smaller cities, where private funding is more difficult to mobilize to kickstart an ecosystem and where the smart way of using public money can be used as a booster. In Oradea, privately funded non-profits work closely with the city hall, aligning micro and macro development objectives. This, in turn, crowds in funding and commercial interest from private players.

Timișoara. Always ahead of its time, Timișoara – also by virtue of its position on the map, at the intersection between east and west – has welcomed early significant FDI. Corporations found here a lot of young talent coming out of good schools and doubled down by investing in its development. In time, FDI built a strong middle class, exposed to Western corporate values and operating well in various cultures.

This impacted the local startup ecosystem by allowing entrepreneurial ventures to spring from very diverse sectors, from healthcare to sustainability, to e-commerce, smart cities, and satellites. It also puts them in a better position regarding the mindset to expansion: local entrepreneurs start their companies eyeing regional or global expansion (it helps that there are five other countries within a 400 kms radius).

Last, but not least, the local presence of multinationals helped B2B startups figure out early their go-to-market strategy, because a lot of entrepreneurs have had experience with how corporations operate and make decisions. In B2C, geography helped once again, because one can test ideas early in at least 2-3 markets and get quick feedback from clients.

But, of course, the biggest takeaway from my 1500 kms trip across Romania this summer was that none of these amazing impressions would have been possible without a small group of enthusiastic people who have dreamed beyond their most immediate needs and priorities and who have focused on seeding the local communities with their expertise, knowledge and funding, in an admirable display of paying it forward.