Will Greece’s New Entrepreneurs Thrive in a Post-Bailout World?
Stavros Tsompanidis was a teenager at the onset of the global financial crisis in 2009. While he was thinking about college, his homeland of Greece was turning to the International Monetary Fund and EU to borrow 110 billion euros ($146 billion) in order to avoid default.
A few years later, as a condition of the ongoing EU-IMF bailout, Greece’s Parliament approved austerity measures that cut deep, made the job outlook grim, and rocked the country’s business environment. Those early reforms included laying off 25,000 public servants, wage cuts, tax reforms, and other budget cuts.
Tsompanidis is now 25 and a member of the Forbes 30 Under 30 Europe list. The Greek government debt crisis, however, is still ongoing, though Greece could be just weeks away from leaving the bailout program. On August 21, the debt-burdened country is expected to exit its third and final international bailout, marking a symbolic end to the long crisis.
Inspiration in seagrass
Tsompanidis is the founder of two companies and a leader in Greece’s startup movement. He has organized networking events (Pioneers Athens) and start-up competitions (StartupBus, CruiseINN) in an effort to engage his peers in entrepreneurship. He caught the attention of Forbes with his startup PHEE, which recycles the leaves of seagrass (Posidona Oceanica) into useful products like iPhone cases, eyeglasses frames, and gift boxes.
“People came together and put in a lot of individual effort to form a fantastic team. That’s the most important element for any new startup.”– Click to tweet
After graduating from the University of Piraeus, Tsompanidis leveraged his entrepreneurial instinct and environmental conscientiousness to launch PHEE and patent the PHEEboard-making process. Though he credits his team – experts who helped him figure out how to turn the dead leaves of algae, which washes up in huge quantities on the Greek coasts, into a new raw material – for the company’s success.
What enabled this young man – growing up in Europe’s most indebted state – to thrive? “Everything is in our mind,” Tsompanidis says. “You have to act. If [you] don’t act, in the next 5 years, [you’ll] be sitting on your couch saying the same thing. ‘There’s no work, no jobs.’”
And, Tsompanidis says, you have to reach out to others. “People came together and put in a lot of individual effort to form a fantastic team. That’s the most important element for any new startup to achieve its goals and further grow its value chain.”
Entrepreneurs of necessity
In a country where one in five people are unemployed, Tsompanidis represents a new breed of business people. There’s no official database of startups in Greece, but research by Reuters points to private information suggesting the number of startups is between 600 and 1,000. Just eight years ago, the best count Reuters could find was just 16.
“In a country where 1 in 5 people are unemployed, Stavros Tsompanidis represents a new breed of entrepreneurial Greeks.”– Click to tweet
As the Greek economy shrank during the crisis, traditional routes to employment disappeared. That created a new breed of necessity entrepreneurs in Greece. Limited opportunities seem to have kicked in an entrepreneurial spirit. Of course, startups are an attractive career choice for new graduates all over the world. But in Greece, many see it as the only option.
The structure of the country’s economy could change if the number of startups continues to grow, economists say. Greece’s recovery depends not on global politics, but on encouraging entrepreneurs and established firms to thrive and bolster the economy.
Cutting through red tape
That kind of support has not been the norm. Owners of several startups say they are thriving despite the country’s business environment – the red tape, high taxes, and funding constraints that are obstacles to entrepreneurship.
For example, Ex Machina, a software startup which offers predictive analytics for weather-sensitive industries, was founded in the summer of 2015 and quickly brought on several clients, yet it took three months to open a business bank account. One of the founders, 38-year-old Manolis Nikiforakis, said Greek banks were used to more traditional businesses, and afraid to work with the software startup.
“Owners of several Greek startups say they are thriving despite the country’s rocky business environment.”– Click to tweet
Systemic changes that facilitate, rather than stymie, entrepreneurship will be essential to Greece’s continued economic recovery, economists point out. Some changes are in the works. For example, in March this year, a new group of investor funds, EquiFund, was launched to promote entrepreneurship and offer fresh hope for new businesses in Greece.
Stemming the youth ‘brain drain’
Panos Papadopoulos is a partner at Marathon Venture Capital, one of the nine funds backed by EquiFund. A software engineer turned founder turned venture capitalist, Papadopoulos lived in Northern California until recently. He worked for Splunk, the Nasdaq-listed tech giant that in 2013 bought out BugSense, the startup he co-founded.
Marathon’s goal is to help ambitious founders build world-class companies. “Large Greek companies don’t offer progress in skills, salary, or prospects,” Papadopoulos told The Guardian. “Joining a startup is the best career here.”
“I am optimistic about the economy and what we can do when we work hard and work together.”– Click to tweet
PHEE’s Tsompanidis hopes that Greece’s startup ecosystem helps stem the country’s youth “brain drain.” It’s estimated that about 180,000 graduates have left the country in the past eight years. And 75 percent of Greek company founders are residents of other countries.
Marathon Venture Capital is actively working to reverse that “brain drain” and return Greek ex-pats to their homeland. The fund offers investment to Greek founders living overseas – on the condition that they open a subsidiary in Greece.
Turning necessity into opportunity
Still, the outlook is far from rosy. A 2017 report from Foundation for Economic and Industrial Research (IOBE) found that fewer entrepreneurs started businesses last year, apparently due to uncertainty in the Greek market and heavy taxation of the self-employed.
Yet, an in-the-trenches view of the Greek startup ecosystem was more optimistic. Asked how he sees the future of young Greeks, like himself, who have lived through the eight-year debt crisis, Tsompanidis told China’s Xinhua.com, “I am optimistic about the economy and what we can do when we work hard and work together.”