Success Breeds Success
By Endeavor Greece Nov 14, 2021
From Exits to Scale-ups and the Importance of Storytelling
This interview is one of many seen in our Greek Tech Revolution report. Check out our report and stay tuned with our channels as we publish more interviews featured in the 2020 issue.
An ecosystem does not always grow linearly. There are times when this growth demonstrates itself through “jumps.” Such a jump can take place when the community in a country changes dramatically to the best and embraces entrepreneurship. Such jumps can also happen through spotlighting success stories, which in more ways than we think can affect and change our views, in other words, the “narrative,” as well as the prospects of technological entrepreneurship.
The motto “success breeds success” applies to the Greek innovation ecosystem as well, as we have realized in the past few years. In 2020 alone, we have had exit deals exceeding 479€ million, which is the highest amount ever for the Greek standards. As the ecosystem grows and matures, as it registers more and more success stories, it can have a multiplier effect on the wider economy bringing to light more success stories. In this case, it is a virtuous circle of growth of great value which is imperative for us to understand, especially at this turning point for the Greek ecosystem.
What is the Meaning of Success?
First of all, it is useful to consider that “success” has a broader meaning than just achieving a remarkable exit. The growth of a company, its rising influence on the labour market, the extroversion, and the innovation it embraces, are all markers of success that multiply its influence. At the same time, it is clear that exits are viewed as an acknowledgment and a reward, while they awaken the public’s interest in the business ecosystem in a unique way.
In 2020, although it was a difficult year due to the COVID-19 pandemic worldwide, Greece achieved significant success in this field, which will be thoroughly analyzed in the present report. More precisely, the acquisitions of InstaShop by Delivery Hero, of Softomotive by Microsoft, and of Think Silicon by Applied Materials will be examined, as the first two have achieved record valuations and the third one has had an impressive influence on Patra’s innovation ecosystem. They took place in the path set by the acquisitions of tech companies, such as Beat, Innoetics, efood, and Avocarrot in the previous years. It is worth noting that all this happened in spite of the fact that ten years ago, in 2010, there was only one exit in the entire ecosystem!
Such exits are extremely valuable for the Greek economy for a number of reasons. Firstly, they have a signaling power, as they inspire more people to get involved in entrepreneurship. Such a message is not self-evident in a country, where the risk-taking business mindset is not widespread. Latona’s analyzed data from Global Entrepreneur Monitor, demonstrating the first ten people who are afraid of failure. Greeks ranked third in 2019, as 58% of them are afraid of failure and they do not take advantage of the opportunities they come across.
Consequently, a significant exit at a high amount of money accomplishes two things as far as the risk-taking mindset is concerned. On the one hand, it makes clear that such a risk can be rewarding when the conditions are favorable. On the other hand, if the effort, the difficulties, or even the previous “downfalls” of the people who made an impressive accomplishment are revealed to a certain extent, then “failure” little by little ceases to carry negative connotations.
It is no coincidence that the mindset “if you fail, it is not such a big deal; on the contrary, you can learn a lot from this experience and be more prepared next time you try,” along with the system that “is ready to support you to try again,” is regarded by many of our speakers as a key point for supporting entrepreneurship, especially the tech startups which are exposed to higher risks.
In Silicon Valey, “failure is a recognition badge,” Andreas Stavropoulos reminds us, Partner at Threshold Ventures, an American VC. “There are people who have tried and failed several times, and they make it in the end. They raise funds, the doors are open for them. This mindset was not shaped in a day. Silicon Valley attracts lots of people precisely for this reason, that one can give it a try.”
In recent years, there are several tech companies in Greece, some of which are exceptionally successful. Nikos Moraitakis, Co-founder and CEO at Workable, which provides an innovative platform for hiring employees on the global market, estimates that this first crop of successful startup companies makes people believe that they can follow their example. “Imitation can generate bad trends, as was ‘frozen yogurt’ in Greece some years ago, but generally speaking this is how new companies are founded. When a company grows and is profitable, it trains people and creates new ‘norms.’”
Funds Bring New Funds
Another striking benefit that exits bring about to the local ecosystem is the assertion that startups in Greece mature and bear fruit to those who have invested in them early enough. In this way, they awaken the interest of more investment funds, yielding significant funds to their founders, who themselves often invest in other business ventures, contributing the valuable know-how they acquired as entrepreneurs.
Equifund’s initiative and the venture capital funds that have been generated because of this, the support of innovation, and the ever-improving human resources in the field of technology are factors that create new conditions for the growth of the Greek economy. However, it is very important that the investor community further grows in Greece.
With the first Innovation State in Greece in the old warehouses of CHROPEI in Piraeus already on track, as well as with the similar project “Thess INTEC” in Thessaloniki, which will have been assigned to a contractor by the end of the year or the beginning of 2022, the development of the tech ecosystem is being steadily implemented.
With regard to the angel investors, who are experienced investors or investor teams that invest their own funds in startups, there is clearly room for expanding their activities, Mr. Apostolos Apostolakis says, founder and Partner at VentureFriends. “I believe that it is very useful and very creative,” he adds. A large number of the investments made by him and by VentureFriends in recent years have been translated into the most striking success stories of the Greek ecosystem, such as Beat, food, and, more recently, InstaShop.
“In other countries, we witness very strong angel ecosystems. “Angel investing” provides experience, and consequently, it can offer very good practices. An angel investor has their own network, and they can support the business development of a startup through their own contacts, can enhance the human resources, and contribute to the maturity of a company, so that it attracts more investors,” he concludes.
Scale-ups: A Superlative Influence on Economy
As a company gets acquired or absorbed, it continues to grow through its new place as part of a bigger framework, it generates a significant number of new and sometimes high-class jobs. It grows, along with the company that acquired it, and with the ecosystem, it emerged from. This is the point where another rule asserts itself; 60-80% of the new jobs of an economy are generated by 5-10% of the so-called scale-ups, that is the companies that grow to more than 250 employees.
These are technology companies that used to be startups, which have scaled in terms of size and dimension, have hundreds of employees, deep tech know-how on an operational and technological level, and have the potential to evolve into “incubators” of ideas and companies. Such companies grow significantly, not necessarily through an exit -which proves that an exit is not the only “destination” of success- but they often exploit their own powers and the trust the investor community and their customers show to them.
Upstream is possibly the most typical example of a Greek scale-up, founded by Marco Veremis and Alexis Vratskides, which managed to evolve into one of the most successful mobile marketing companies worldwide. Their founders, and several of its executives, have affected considerably the Greek ecosystem. Endeavor has configured a graph with Marco Veremis’ influence so far, who apart from co-founder and Executive Chairman of Upstream, is also Partner at Venture Capital fund BigPi.
The following graph clearly shows how important the success of scale-ups is for investment activity within the ecosystem. However, when talking to Marco Veremis, one realizes the important role Greek scale-ups -such as Blueground, Workable and Skroutz- play in creating high-standard human resources. “These companies create the executives that will feed the ecosystem,” he points out. As American venture capitalist Alex Lazarow has highlighted, when asked to talk at an event organized by Endeavor Greece (“Redefining Innovation Outside Silicon Valley” – 27/1/21), one of the things that elevate startup ecosystems to the next growth phase is to “get mid-sized companies to be massive.”
After Marco Veremis has taken us on a tour in the world of technological exits, we are provided with a clear picture of the startups that are ready to negotiate their exits. These data are encouraging. Even though, as Panos Papadopoulos, Partner at Marathon VC, points out, “evidently we have to carry out a number of exits -5 to 6 valued at 100€ million, and 3 to 4 valued at 300€ million- in order for the ecosystem to find its place.
The Necessity of Storytelling
Last but not least, one of the most suitable and effective factors that feed the growth circle is the appropriate “storytelling,” the country’s narrative, which all our speakers seem to believe that we are still in need of. “We need some more time to attract global investors. We should bring to light all the stories we have in Greece,” Apostolos Apostolakis underlines. “Obviously, we should spotlight all our success stories. These stories have to be told, it should be made known how these people came to this point. The more we talk about entrepreneurship and its outcomes, the more people will be inspired to enter the business world.”
Elias Korosis, Partner and Head of Growth Investing and Strategy at Hermes GPE private equity fund, who moderated Endeavor Greece’s event (“Rethink: Greece As A Top Destination For New Foreign Direct Investment” – 17/2/21), placed emphasis on the importance of having concrete examples so that more people discern a future in the field of technology entrepreneurship. “It is not enough to tell somebody that they can follow a successful career at Palo Alto, because it seems a faraway prospect. However, if their partner, their cousin, or their sibling works for a fast-growing technology company, being a technologist, a venture capitalist, or somebody who is actively involved in the ecosystem is suddenly much more attainable.
Equally important is to diffuse how the people behind the success stories interact with the wider ecosystem after an exit. Recycling people and funds regularly can cause reactions that lead to the multiplier effect of technology entrepreneurship, as we have already witnessed in Marco Veremis’s case. Another example of the multiplier effect is the one of Nikos Drandakis, founder of Beat, whose acquisition from Daimler was one of the largest success stories of the past decade. Some years after Beat’s exit, Nikos Drandakis launched a new company, Sync, with members of the team he had set up when launching Beat, only this time he operates in the healthcare industry.
Referring to good business developments that take place but are not made public, as the focus on such stories is very poor, Panos Papadopoulos of Marathon VC underlines the necessity of capturing the strong ties that exist among the companies that constitute the ecosystem itself. This will contribute to the development of a narrative around the ecosystem. “We are never informed when a certain company has increased its manpower by 300% or has helped 6-7 companies to do the same. This would be a very good story, which is currently not part of the discussion.” The present report makes an effort to change this situation.