Bucharest, Romania: Upbeat after tech start-up successes

Population 2m-plus
Corporation tax rate 16 per cent
Time it takes to set up a company 5-8 days

Once known as one of eastern Europe’s most secluded capitals, Bucharest is a lively city with a big pool of engineers, developers and mathematicians.

Romania’s high-quality mathematics education and the presence of several universities and institutes made the city a magnet for IT outsourcing by western businesses in the 2000s. Emboldened by high-profile successes, locals are upbeat about the city’s attractions for start-ups.

The case for: Bucharest has one of the highest number of IT professionals of any capital in Europe; a wellspring of talent makes the city an ideal base for programming and product development. The country’s road infrastructure may be below western standards, but broadband speeds are among the highest in Europe.

The government is promoting access to €40m in EU-funded “Jeremie” financial instruments that use public funds to help new companies access finance.

Costs are low: high quality office space can be found for €15 a square foot.

The case against: Romania’s market is small. If you want to be close to your customers, launch a product for the global market or maximise opportunities for venture capital, you will probably develop and test your product here before following companies such as Brainient to London.

Wages are rising as western companies compete for the best talent. Taxes on labour are among the highest in Europe although the government is working on reforms to address this. “The best strategy is to build, design and develop in Romania. But after that, you may have to look abroad to grow,” says Dragos Stanca, founder of ICEEfest, the city’s biggest digital event.

Getting there: The city has good flight connections in Europe and can be reached from London in three hours and 15 minutes. But direct long-haul flights to the US are few and far between.

Support for start-ups: Innovation Labs helps young teams develop their ideas. For later-stage start-ups, Gemini Solutions Foundry offers mentoring, legal and accounting support and connections to Silicon Valley investors.

Local heroes: BitDefender, an internet security company, makes an anti-malware product used by more than 500m customers. Headquartered in Bucharest, it has opened offices in Europe and the US. Avangate sells software for ecommerce businesses and was acquired by Francisco Partners in 2013 in an equity deal. Founder Radu Georgescu made his name by selling GeCAD, maker of Romanian AntiVirus, to Microsoft in 2004.

Vector Watch has made a stylish smartwatch that promises 30 days of battery life with each charge. The product launches in London in September.

What the locals say: “The government here is in active discussions with investors and business people and there is a real commitment to shaping a pro start-up and investment environment,” says Marius Ghenea, entrepreneur and investor.