Where Is That?
Wait, what? Startups in Moldova?
In the past, startups mainly situated themselves in Silicon Valley, but today, with inexpensive hardware, sophisticated remote collaboration tools, and a globally interconnected economy, launching a startup is easier than ever. Chisinau, Moldova, might just be the next hot place to do that.
It was part of the former Soviet Union.
Before you launch Google Maps to see where Moldova is located, here’s the answer: It’s in Eastern Europe, between Romania and Ukraine. It’s small, about the same size as Belgium or the U.S. State of Maryland. Foreigners who visit Moldova typically note it's delicious wine, warm hospitality and beautiful mix of people.
Moldova even has the world’s largest underground wine cellar (sorry France).
How does an ex-Soviet economy historically based on agriculture even dream of developing a budding startup ecosystem? Actually, it’s an idea that can work, as we have begun to see here. I spend my own time in both Silicon Valley and Europe.
To me, the differences between the Valley and the rest of the world are obvious. The talent, environment, capital, and knowledge that exist in Silicon Valley are second to none. It is the epicenter of innovation and startups in this universe, at least until we colonize Mars.
Moldova’s capital, Chisinau, is among many cities around the world that aspire to develop a startup scene of their own. To be sure, no one will mistake it yet for Silicon Valley, much less Boston, Paris or Shanghai. Yet its entrepreneurial scene has quietly begun to emerge over the past couple of years, and it’s been exciting to watch.
Something Important Is Happening In This Unlikely Place.
1. Being Small - Thinking Big
“Silicon Valley is not a place, it is a mindset.”
In a country such as Moldova, which has only about 3 million people, entrepreneurs have to be international from Day One because the country’s market is too small to sustain a valuable company by itself.
With more than 3.3 billion internet users globally, Moldova’s population is one-thousandth the size of the world’s online marketplace. Except for certain local or niche products, it doesn’t make much sense to focus domestically.
It’s better to address a universal problem, test quickly and grow globally. But, is this not true everywhere?
2. It is Damn Hard
“The stronger the wind the stronger the tree.”
Moldova has limited resources. You need to get real here. There are even more than the usual number of entrepreneurial hurdles to overcome, assuming you even make it as far as the initial "trough of sorrow."
Imagine running your first marathon, finishing and then someone saying you have to run again. That’s how it can feel to launch a startup in Moldova. There is little capital or positive motivation like you find in Silicon Valley. Yes, there is corruption, a military conflict zone, widespread migration to other countries, a devalued currency and a sense of defeatism among many people. You need to be humble, hard-working, and crazy -- really crazy -- to survive.
Yet even in the face of all this, I am working every day with dozens of young Moldovans who are excited, passionate and determined to make a difference in their own lives and for the country as a whole. The fact that their situation is hard also gives it a special value, which they embrace.
What people say here is that if a startup can succeed in Moldova -- and it can -- it can do it anywhere.
3. Costs and the Internet
Moldova has advantages, too. It is among the cheapest places in Europe, so you don’t need to raise much money to get a startup off the ground. You will find lower wages, cheaper housing and services, and even really good organic food.
The internet is fast and cheap, and it’s available in most public places. In San Francisco or London, good engineers cost five to seven times more than similarly talented and experienced people here. Most of those interested in entrepreneurship speak English or French.
With a smaller war chest, you can fight disproportionately bigger battles with longer runways. People in Moldova are also less picky when it comes to benefits, parties and free food. You don’t even need a ping-pong table, hence can have one, if you like to play.
Currency: 20 Moldavian LEI = 1 USD
Just as an example, a junior software engineer costs an average of 9,000 MDL (US$450) per month and a mid-senior engineer runs about $1,000-1500. And they are good. They are trained and competent.
4. A Community Led by Entrepreneurs.
According to Brad Feld, the founder of TechStars and a leader of Boulder’s startup community, “Boulder Thesis - startup communities typically have leaders and feeders. Leaders are the entrepreneurs. You don’t need a lot of them to make a huge difference, but they have to be committed for a long time (think 20+ years). “
Several of us from Moldovan who have entrepreneurial or educational experience in the West have made a similar commitment here at home. All of us are enthusiastic and passionate entrepreneurs want to share what we’ve learned with some of the bright, ambitious young people we see everywhere here, people with the smarts and drive to start businesses of their own.
We established Dreamups, a campus in Chisinau where you can find entrepreneurs, mentorship, events and working space for startups. We’ve also partnered with Founder Institute and Startup Grind to bring events and mentorship from abroad.
Our mission is to create a platform in Moldova for the launch of global tech startups. We started with an idea two years ago and more than 100 startups have now passed through the program, raising angel, going to established European accelerators, bootstrapping, and becoming profitable. Even the unsuccessful ventures have been exciting and learning experiences.
Startup Grind is an active, educational, inspiring community that is connecting entrepreneurs. It hosts some of the best startup events in the city. Many entrepreneurs say it is bringing a lot of experience, connections, and words of wisdom to the community.
Dreamups is supported by Orange, USAID, other corporate sponsors, grants and community contributions.
USAID and Sida designed a fund of around $4 million to be deployed in this ecosystem. There was a big investment made within the Technical University of Moldova, where a tech innovation center called Tekwill was recently created. It aims to enhance Moldova’s global competitiveness along with its business and investment environment.
Co-working spaces, such as Generator Hub and iHub, have cropped up as well, quickly becoming great working environments for freelancers, founders, and startup teams. They also offer interesting events and educational activities that facilitate learning within the community. There’s also GEN Moldova, part of the Global Entrepreneurship Network. It is a year-round platform of programs and initiatives created for local community.
5. Young Population.
Moldova is a young country. Its 18-40 age group represents around 45% of the population, compared to about 30% in the United States or Europe.
What does that have to do with startups? As Paul Graham says: “Startups are made of people, and the average age of the people in a typical startup is right in that 25 to 29 bracket. It's hard to imagine a place becoming a startup hub without also being that.”
In other words, Moldova has the large and vibrant community of young people that is a key ingredient to achieving critical mass for a startup ecosystem.
6. Lack of capital can be an opportunity, too.
Venture capital is scarce in Moldova, which is among Europe’s poorest countries. Just as Silicon Valley has its garage stories, many startups are launched from bedrooms or cafes. By the same token their costs are low. They don’t need a lot of money to make something interesting happen.
When my friends and I started our own companies, we invested our time, skill and personal resources. We self-funded all the way. The truth is that relying on outside investors can be limiting belief in many situations. The most important need is always to create value for your customer. If you do that, the money will come.
Your first investor should be your customer. That’s why more and more people in Silicon Valley have begun talking about profits, not just users (surprise). A real entrepreneur doesn’t complain but finds ways to excel.
When looked at it this way, the Moldovan ecosystem is a filter to dissect entrepreneurs from wantrepreneurs. Startups in emerging ecosystems need hustlers doing things that are focused on product, not pitching, and that may not scale in the beginning.
If they prove to have a great product or service that customers actually want, the investments will be there.
It’s not a fantasy to believe some of the world’s great new startups can and will emerge from Moldova, especially with such a strong entrepreneurial support system now starting up and growing every day. Just look around.
Startups such as Skype, Looksery, Viber, LiveRail, Avangate, Toggl and Prezi all emerged in environments similar to Moldova’s. As someone who knows lives in Silicon Valley and knows well my home country, I am excited by what’s happening.
As Jack Ma would say, “Today is hard, tomorrow is harder, but the day after tomorrow is beautiful.” There is so much potential in this emerging ecosystem, especially among the people. The signals are everywhere.
But, as in any new initiative, the only guarantee is that we’ll have to work our asses off, for many years.
If anyone reading this wants to see this for themselves, I hope they will come check out Moldova. You might even want to try a glass or two of the delicious wine.
p.s.: Thank you to Aryk Grosz, Oleg Ciubotaru, Ana Boisteanu, Ross Tanner, Mihai Stipanov and David Jarmul for contributing to this article.