Optimism and Financing

By Endeavor Greece Dec 12, 2021

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.

When asked if the Greeks’ investment profile has changed in recent years, in the same episode of the “Outliers,” co-founder and Executive Director at Hellas Direct, Emilios Markou, points out that the startups themselves have changed the way they approach financing. “Our primary problem was that we did not know what we wanted,” he says. When asked why investors should make an investment in them, the Greek companies set the goal of the multiplies too high and “that sounded too good to be true.” “We used to set an eye to Silicon Valley and forgot everything about the survivorship bias, that is the fact that the largest number of the startups that had been founded was closed.”

He places a special emphasis on the importance of focusing on the basics of the company – turn- over, costs, profitability. “When talking with family offices and ‘real investors,’ one has to keep the following in mind. Be a realist, build a company, and take into account the mathematics, namely that Greece is a country where one could invest tens of millions in order to make hundreds of millions. Do not talk of ‘global domination’ and do not adopt the line of thought that urges you to raise funds to show everybody how amazing you are. Let this come on its own. Let it come to you, when you are properly set up.”

The American and the European investments in the field of technology, both in Israel and in the Nordic countries, are enviable examples of growth. However, there are funds for investments in Greece as well. The amounts of money engaged in financing confirm this trend. According to Endeavor Greece’s research, over 470$ million were invested in total in Greek startups. At the same moment, a report written by Found.ation in cooperation with EIT Digital (department of the European Innovation and Technology Institute) says that in 2020 approximately 34€ million were invested in startups through the EquiFund program, thus raising the total investments to 92€ million from 2017 to date.

Therefore, the emerging shift in the Greek entrepreneurs’ mindset in the startup ecosystem, combined with the reliability that our country gains globally, change the scene. “Some years ago, the American funds used to invest in the USA, and the European ones in London,” Stefanos Loukakos underlines. “At the present juncture, there is plenty of money and it is a lot easier for the foreign funds to invest in Greek companies. The financing wave has been expanded thanks to the venture capital funds that have been established in Greece.”

Optimism in the field of financing, as it is expressed by Greek entrepreneurs either they live in Greece or abroad, arises from the global experience that was accumulated in recent years and the outcomes brought about by the investments. “Let us not forget that even private equity investors are willing to invest in technology because it has been proved that such investments are profitable,” Nikos Bonatsos, Managing Director at General Catalyst, says. “Therefore,” he adds, “their ambition to create larger companies is constantly growing. Venture capital funds in the USA used to think that investments in Israel was a waste of time. Now, not only is the situation completely different, but companies in Israel are acquired for billions of dollars.”

Funds to Invest

There is no doubt that investors see Greece in a more positive light, and this shift has taken place in the past few years, as our country emanates more trust and credibility, and displays a more friendly attitude towards entrepreneurship. The “caliber” of the investors that enter the market is particularly important. The following graph shows some leading global funds that have invested in two or more startups in the Greek innovation ecosystem. “And there are the exits as well,” Apostolos Apostolakis points out. “This means that the country gains publicity. Nowadays, there are funds to be invested, and we have to wait 1-2 years and see how many promising new companies will emerge.”

On the grounds that the technological field inherently targets the global market and that 9 out of 10 most valuable companies are tech companies with market capitalization worth millions of euros, it is of vital importance that our innovation ecosystem further grows. “On the one hand, we have made progress, which does not reflects itself in the financial dimension. Human resources have been developed to such an extent that they generate solutions for some of the largest customers of the world. There are at least 30 companies that operate that way. However, smaller companies will not be able to follow new technologies, and even if they manage to do it, they have a limited budget, and that is a real problem. Limited budget is the biggest problem for the startups,” Panos Papadopoulos underlines.

Participating in the discussion organized by Endeavor Greece (17/2/21), Stelios Elia, Managing Director at BC Partners with an extensive investment track record in our country brought to light the investors’ way of thinking in Greece. “It is important to point out that there is no shortage of global capital in the market today. There are 3$ trillion in private equity funds that are destined for investments all over the world. If somebody seeks to invest in Greece, it is not because it is an amazing country; we do not see it that way. We are in search for specific companies, which compared to other companies of the same industry in other countries, provide a better risk reward profile. One of the things that were deterrent to us, and to other major investment funds in the past, was the small size of the businesses in Greece or that they operate exclusively within the Greek borders.” According to him, Greece can provide investors with a great deal of opportunities, which are underestimated and are not fully covered, and as a result they are off the radar of global investors. “There must be a coordinated effort so that we make manifest all the advantages that these companies have.”

Find the report here