Budapest, a magnet for startupsPixabay
In recent years cities like London and Berlin have been the destinations of choice for European entrepreneurs looking to make their mark on the global stage. Now they are being nudged aside by Budapest, the capital city of Hungary.
In a new study by Startups.co.uk, out of 80 key European locations Budapest emerged as the number one city in which to launch a business post-Brexit. The city is already home to a growing number of business accelerators and a wealth of funding sources, with growing interest from international angel and VC investors. The result is a vibrant startup hub with huge appeal for tech entrepreneurs. Steven Tasker, co-founder of two startups in Budapest, outsourced digital marketing agency SuperSize Digital and SaaS SEO marketing tool Polka Dot Tiger, is one of them.
Founded three years ago, SuperSize Digital services in-house marketing teams and agencies all over the world. “We’ve been successful with this so far as we’ve been able to run it at competitive rates and hire highly qualified team members at a lower salary range compared to the UK,” says Tasker. Polka Dot Tiger is a tool that allows users to A/B test metadata for web pages to help with SEO campaigns and is due to be launched this summer.
Tasker’s first visit to Budapest was in 2010, as part of a University Erasmus exchange program. He immediately fell in love with the place and on graduating the following year, headed straight back and started work. “I had caught the Budapest bug,” he says. “The expat community here is relatively small and it’s likely you’ll bump into someone you know in the city center. It makes the city feel like a small friendly community.”
Back in 2011, however, growth in Budapest’s international startup arena was still slow, and that was impacting the SEO agency where Tasker had been working, so he decided to move back to the UK where he quickly worked his way up the SEO career ladder, eventually becoming head of online marketing at one of the UK’s largest advertising agencies. In 2016, he took the plunge and started his own agency.
Working with a long time childhood friend, Tasker set the business up in the UK but within six months it became clear that in the fiercely competitive marketplace a startup agency was going to struggle. They needed a plan B. Recalling his past experiences in Budapest Tasker flew back out for a reconnaissance trip to assess the startup environment and was surprised at what he found.
“The once slow startup scene was now thriving, with startups everywhere,” he says. “Every co-working office hub had a variety of different businesses, including traveling startups; people were actually running online startups whilst on the road.”
This led to the decision to relocate Supersize Digital to Budapest, and by the following year it was thriving. “We had a competitive edge in our cost-effective prices and a highly skilled local workforce who were just as competent if not more skilled than the workforce back home,” he says.
In fact it is the easy access to key skills that Tasker believes gives Budapest the edge over European cities.
“It has a young, highly educated, technically capable workforce who are eager to work, learn and get stuck in, and very rarely need motivating,” he says. “This is a huge plus when you’re just starting a business and need highly skilled team members to help make it a reality.”
Budapest’s flourishing startup scene has also been well supported by the Hungarian government with extremely low corporation taxes at 9%, the lowest in the EU, and the introduction of the ‘early stage’ status, which allows companies to reduce the corporate tax base. A number of business incubators have been established around the city and in its Central European University, nurturing startups and helping new ventures grow and expand across Europe and the world, the likes of Prezi, LogMeIn, and Tresorit bearing testament to that.
“With all these benefits and the backdrop of one of the most beautiful cities in Europe, it’s easy to see why many startups are setting up camp here,” says Tasker.
However, Budapest does have its drawbacks, perhaps the biggest being the rate of inflation. “Living standards in Budapest are rising considerably, which is outmatching Hungarian salaries,” says Tasker. “A lot of Hungarians can’t afford to live in the city and have to relocate to their hometowns. They have a tougher time finding work and often have to move abroad.”
Nevertheless, Tasker insists that when it comes to the best European location for setting up a tech business, with its highly trained workforce and lower operating costs, Budapest is tough to beat. Today his team has eight members, with plans to expand this to 14 by the end of the year.
He says: “If you’re setting up a traditional ‘bricks and mortar’ business there are plenty of startups in the city that can provide some of the key elements of your operations, such as admin, back office, payroll etc., cost-effectively, so Budapest is still well worth exploring.”