The Ecosystem: East-west pairing of entrepreneurs helps founders from Widening countries discover their blind spots

06 Sep 2023 | News

Erasmus for Young Entrepreneurs participants from Poland, Slovenia and Hungary learned much from their mentors. Now they want to see the EU work experience programme do more to help them make wider connections

Erasmus for Young Entrepreneurs provides a valuable source of hands-on experience for young founders from central and eastern Europe, and a chance to see how things are done in other ecosystems. But the experience of participants suggests that the scheme is under-resourced, and could do more to connect them beyond their host companies.

Where the Erasmus student mobility scheme offers study abroad, Erasmus for Young Entrepreneurs sends new or aspiring company founders abroad to work with an established entrepreneur. They learn from their host and experience working in a new context, while the host gets a fresh perspective on their business, or at least an additional pair of hands.

The stay abroad varies between one and six months for placements in Europe, and up to three months for destinations further afield. In theory, neither side pays to participate in the scheme, with the EU making a contribution to the visitor’s travel and subsistence costs while abroad, with levels set according to the destination country.

This was not enough for Matevž Cimermančič, who spent two months working in Copenhagen. “Copenhagen is a really expensive city, so in the end I had more expenses than income,” he said. The same was true for Csongor Melegh, who had to fall back on his own resources during a five-month stay in Cyprus. “I also spent more than I got,” he said.

Living expenses are also an issue in the Erasmus for Young Entrepreneurs Global programme, which takes in destinations such as the US, South Korea and Canada. In Singapore for three months, Ilona Nawrot found the level of funding was inadequate, given the high cost of living in the city state. “The support provided is not enough, especially for women," she said. "Men can economise by using shared apartments or shared rooms, but that’s not so safe for women.”

This is not just an issue for participants from central and eastern Europe, who may feel stretched because of low salaries at home. Nawrot has heard similar concerns from young Italian and Spanish entrepreneurs who were thinking of following her to Singapore. "My financial situation was alright, so I treated it as an investment, but that won’t work for everybody," she said.

Experiencing advanced ecosystems

Nawrot applied to the Erasmus Young Entrepreneur programme towards the end of her PhD in machine learning at Poznań University of Economics. Her idea was to offer companies custom-made machine learning and data analytics solutions, plus more general consulting on digital transformation.

“I applied to the programme to deepen my expertise in machine learning and data analytics and to gain insights into how larger companies in this field operate,” she said. Then the COVID-19 pandemic struck, and a period when she struggled with health problems of her own. The difficulties she experienced getting care in the health system in Poland inspired her to think of another start-up, deploying digital solutions to support people with chronic diseases.

She had practically forgotten her Erasmus application, when entrepreneur Ali Hasnain contacted her from Singapore. “He said that I had a very interesting skills set and perhaps we could collaborate and learn a lot from one another.”

Hasnain was a co-founder of a virtual reality headset specialist Lemnis Technologies, which was bought by Meta in 2020. He went on to found Curium, a company providing calibration services for autonomous cars. This resonated with Nawrot's new direction. "I was particularly focused on deepening my knowledge in the deployment, monitoring, and maintenance of safety critical systems, a matter of utmost significance within the digital health sector,” she said.

In addition to gaining this experience, she worked on the feasibility of her business idea with Hasnain's mentorship. “Ali asked me difficult questions, and helped me find my blind spots,” Nawrot said.

The Erasmus entrepreneur programme gave her experience of more advanced ecosystems. “While the Polish government is investing in entrepreneurship and education, we have yet to attain a leading position in certain cutting edge technologies,” she said. “Participating in Erasmus provided me the opportunity to visit a country that excels in these domains and to explore its ecosystem and culture.”

Together with two co-founders, she is now further refining her health product before going public with the start-up. Funding is coming from friends and family. While aware that the digital health market is already attracting a lot of attention, particularly from tech giants, Nawrot believes that there is still room for companies that prioritise privacy and data security as their core focus.

"While time to market is important, start-ups should prioritise building trust and customer satisfaction above all else. What truly matters is crafting what I like to call the 'minimum loveable product’,” she said.

The Erasmus experience will undoubtedly benefit her start-up and may also contribute to local growth, but Nawrot believes it could be improved. In particular, she would like to see the programme do more to help young entrepreneurs make connections in the host's ecosystem.

“It would be great for innovation if the programme helped connect participants with local groups such as incubators, accelerators and universities, just to broaden the pool of people that they interact with,” she said.

Business experience

Cimermančič came to a similar conclusion during his placement in Copenhagen. At the time, he was a co-founder of Reusable Technologies, a Slovenian start-up developing techniques for recycling electronic waste, a project he pursued while working on a master's degree in energy engineering at the University of Ljubljana.

What he wanted from the programme was broad business experience. "I’d studied mechanical engineering, so I knew how to develop a product, but managing a company is something else,” he said.

Denmark was a draw because of its advanced attitude to ecofriendly technologies. As a host he chose Martin Cernic, founder of Blue Marine (since renamed Move Marine), a company that produces spare parts for yachts. Cimermančič brought expertise in 3D modelling and printing to the business. "Meanwhile, Martin offered me a huge insight into how to set up a company, how to manage it, and how to talk with customers,” he said.

He was only able to stay for two months, fitting the placement in between semesters, but the opportunity to gain international experience was invaluable. “In Slovenia, the market is really small, so in order to grow and succeed you really have to expand your connections,” he said.

While the placement worked in this respect, Cimermančič’s efforts to reach out to other companies in and around Copenhagen and to connect with the academic ecosystem, were less successful. While some people were happy to help, most were reluctant to engage.

“The first thing they wanted to know was: are you going to stay here or not? And they were only eager to help if I was going to stay in Denmark,” he said. “They didn’t see an opportunity in making a connection with Slovenia.”

More networking support from the Erasmus programme would be welcome. “I think that both sides could benefit, not just one, and we should push more for that,” he said.

Meanwhile, Reusable Technologies has continued to develop and is already generating revenue. However, this summer Cimermančič decided to sell his stake in the company in order to focus on a PhD, this time working on high temperature heat pumps.

The Erasmus experience will not go to waste, however. “I have an idea for a technology, and I will try to turn that into a start-up when I finish my PhD,” he said.

Social start-up

In addition to looking for international experience, Melegh turned to Erasmus for an answer to a specific business problem: how to build a digital network from scratch. He had worked on a social start-up project at the Central European University InnovationsLab in Budapest. The idea was to provide a digital space where people could ask a question about a particular place, which would then be answered by locals or the location's owners. The problem was attracting enough people to the network to make it work.

The team decided to pivot and start by building an application that would draw businesses to the network. Called NeerY, this is a no-code platform that allows restaurants to organise and personalise their digital offer to customers, and to monitor and manage interactions. But overcoming the network effect was still a concern.

“First of all, I was looking for founders who had experience with this kind of network effect problem,” Melegh said. “And I also wanted to see different markets abroad and what they might need.”

This was not something he'd been able to get through the Central European University incubator, or Wise Guys, a pre-accelerator programme, which NeerY had also completed. “That was really helpful, but it was more like a class at school," Melegh said. "I wanted more detail and a hands on-experience working with an entrepreneur.”

He chose Christis Plastiras, a serial entrepreneur and e-commerce specialist based in Cyprus. A particular attraction was that Plastiras had previously started and sold an online job-seeking business. “This has the same network effect that I was looking for,” Melegh said.

The fact that Cyprus is not a start-up hotspot was unimportant. “The entrepreneur was the main thing, and the location was secondary,” he said.

Melegh spent five months working with Plastiras, longer than initially foreseen. “I was mainly focused on business development and it was really helpful to use the tools they were working with,” he said. “That was something I could implement easily with our workflow.”

It was also useful to see how Plastiras talked with other businesses and went about creating value for partners. “It was useful to think about that before we started reaching out to our own potential partners and customers,” Melegh said.

Along the way, he created a restaurant site as a side business for Plastiras, which is still running. "It was helpful to see this market from the restaurant perspective, and how we could build a site from zero and attract traffic.”

Since then, NeerY has completed a first investment round from angel investors and attracted its first paying customers. While these are limited to Hungary, the company has international ambitions, which might well include Cyprus. “The travel and hospitality industry in Cyprus is big, and accelerating, so it could also be a good opportunity for us in future,” Melegh said.

Elsewhere in the Ecosystem…

  • Dutch quantum chip testing start-up Orange QS raised €1.5 million in pre-seed funding. This will support its transition to supporting the emerging quantum industry after three years building tools for the R&D market. The round was co-led by QDNL Participations and Cottonwood Technology Fund, and builds on a recent European Innovation Council Accelerator grant.
  • The European Investment Fund is putting €50 million into Infinity Recycling's Circular Plastics Fund, which invests in companies developing new processes for the advanced recycling of plastics. The fund is particularly interested in chemical processes that enable the full recycling of end-of-life plastic waste, producing new plastics with virgin-equivalent properties. “While these technologies are often viable, many companies lack the specialised financial structuring and business development skills required to scale up production, source high quality inputs and establish supply agreements,” said Jeroen Kelder, managing partner at Infinity Recycling. The fund has a target size of €150 million.
  • Swedish fusion energy start-up Novatron Fusion Group has closed a €5 million seed round. The money will be used to continue work on a novel reactor design for stable magnetic plasma confinement. This is taking place at the company’s lab at the KTH Royal Institute of Technology in Stockholm. The funding round was led by Climentum Capital with Industrifonden, Santander InnoEnergy Climate Fund. Existing investors KTH Holding and EIT InnoEnergy followed on.

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