When you talk about the most exciting startup scenes across Europe, the cities of London, Berlin and Stockholm are usually on the tips of most tongues while Hungary and its capital Budapest aren’t traditionally associated with the startup community. Better know for its hot springs and the Chain Bridge that links the two separate areas of Buda and Pest, the city has often been overlooked as place to open a new business. But there are signs that things are starting to change.
Historically it hasn’t always been easy to form new company in Hungary, but initiatives from both the public and private sector have given young entrepreneurs serious food for thought, resulting in a surge of new startups over the past 18 months.
It could be easy to offer the relatively cheap standard of living as the main attraction for opening a new business in Budapest. Yes the price of property and rent is considerably cheaper than London (where isn’t?) but the emerging start-up accelerators, funding sources and a highly educated workforce have all contributed to building the city as an exciting location for entrepreneurs.
With a third of all business across the country carried out in Budapest, the capital is at the forefront of these exciting developments and nowhere reflects this changing of the tide more than the headquarters of Prezi; the undisputed poster boy of Budapest.
Founded in Budapest in 2009, the decision to base their headquarters in the city went against the trend and was seen as a bold move to the more traditional locations of London and San Francisco. Over the last few years their cloud based presentation platform has been gradually eating away at the market share of Microsoft’s Powerpoint software, and – with $57m in funding – the success of Prezi looks set to continue. Initially thought of as a niche product, the software has surpassed expectations and today has over 50 million users throughout the world.
Their growth has in large part been made possible by building a team in cheap but talent-packed Budapest. With a workforce of 180 employees, the beauty of the city proved to be a welcomed attraction for foreign talent, and the hassle free process of acquiring work permits has helped the company put together a diverse team in the heart of Europe.
Other industries, notably manufacturing, services and logistics, are capitalising on Budapest’s geographical position, allowing firms to expand and build their operations within Europe’s huge consumer market. 250 million people are within a 1,000km of Hungary, with a further 500 million within the EU common market. The country’s excellent infrastructure is also helping to drive these industries forward.
To ensure growth continues across this wide range of businesses, the Hungarian government is using 60% of EU funds to support investments by private businesses. SMEs will receive around five times more support with investments than in the last funding period.
Hungary’s corporate income tax regime also remains among the most attractive in Europe with a rate of only 10% and changes to company formation processes now enables new businesses to be up and running, with a VAT number, in just 72 hours.
The government has also pledged to lower the banking tax in the coming years, part of a wider effort to encourage lending to SME’s. With 168 startups located in Budapest, supported by 4,646 Budapest angel investors, these new measures are already having an effect.
Budapest has changed dramatically in recent years and now boasts a vibrant startup scene, plenty of young talent with great ideas, and mentors to support the flourishing startup community. While the hot springs will continue to attract tourism, this historic and beautiful city is starting to appeal to a wider audience who are hoping to emulate the success of Prezi.
This sponsored post was written by European company formation agent Euro Start Enterprises. The company helps young businesses and entrepreneurs with company formation and incorporation in Hungary, UK, Europe, US and the Emirates.