Tech on the Med: Greek startups learn to swim
By Sean Mathews
Attendees at Greektech Symposium in New York City. Photo courtesy of Nondas Virvidakis
Lucy Xu left her job working in the New York City startup scene after visiting Greece for the first time on a solo trip in 2016. Telling Levendeia how she fell in love with the culture and lifestyle she confessed, “I was determined to find a way back.”
The Wharton Business School graduate made the final move to her adopted home in early 2017 and took a quick dive into Athens’ startup scene. She first worked for an educational technology company and then launched her own marketing consultancy firm – The Port – in 2018.
Speaking with Xu from Athens it is clear from the excitement in her voice that she feels she is on the forefront of a nascent, yet burgeoning, startup ecosystem, “We are excited because we see the seedlings of what Israel was a decade ago.”
Xu is not alone in her hopes. With the Greek economy stabilizing and a recent spree of big name acquisitions such as Microsoft’s purchase of Greek robotics company Softomotive, along with the US tech giant’s plan to open a research and development hub in Athens, a feeling of change has been gaining ground.
Lucy Xu speaking at the CSR Panel in Athens, Greece. Photo courtesy of The Port
“Greece is at the top of a tech-hype cycle now, and while it may go down in the near term, I think these recent developments are laying the groundwork for 10 years from now,” Xu said.
The very mention of a Greek startup scene would have been unimaginable five years ago when the country was reeling from a debt crisis and capital controls were in place.
Many credit the palpable excitement to the infusion of capital from Equifund, a public-private partnership that is the result of collaboration between the Greek government, European Investment Fund, and private investors.
Dimitris Kalavros-Gousiou, Co-Founder of Velocity Partners Venture Capital
Dimitris Kalavros-Gousiou is a partner and co-founder of Velocity Partners Venture Capital, a Greek VC operating under the EquiFund umbrella and managing roughly 24 million euros of capital. The fund focuses on investing in pre-seed and seed level start-ups with initial capital infusions of up to five hundred thousand euros.
Dimitris tells Levendeia that EquiFund has collectively invested approximately 80 to 90 million euros across 80 companies in the last two years.
“For a country like Greece that is a lot of money.” He adds, “If we have any issue today it’s a pipeline issue, not a capital issue.”
Having returned to Greece after studying abroad in the UK to work in the country’s startup scene Dimitris says he is proud and excited to be involved in the growth that has taken place in recent years, but he says projections of Greece becoming a Mediterranean Silicon Valley are premature and even reckless.
“We in Greece need to realign expectations,” he stated.
Dimitris says that one of the problems with the tech scene in Greece is the lack of cooperation between established industries in the private sector and startups. To those who point to Israel as a startup hub in the region that Greece can emulate he responds, “Israel’s two main pioneering categories are cyber security and agricultural technology,” major, developed industries in the economy that the Israeli tech world was able to work with.
“One would expect Greece to be a maritime and touristic tech hub with 35 percent of global fleets controlled by Greek companies and 20 percent of Greece’s GDP dependent on tourism, yet because the startup world and private sector are not close, there are fewer examples in Greece of productization of new ideas in these industries,” Dimitris told Levendeia.
Going Global
John Papadakis, CEO of market research company Pollfish and one of Greece’s first new breed of tech entrepreneurs, made a similar case to Dimitris, “Greek companies don’t take the risk of innovation like the West. In the US people will love you very fast and hate you very fast but in Greece the decision making process is much slower.”
His company, which has completed its Series B funding round and raised a total of 17.1 million dollars since its inception, has offices in both New York and Athens.
Asked about relocating to the states Papadakis discussed how startups must look for scalability on the global market, not just in Greece. The CEO said Pollfish’s move to New York was important so they could be closer to their clients, almost all of whom are located outside Greece.
“The purpose of the startup in Greece is not to get clients in Greece. It’s to get talent in Greece and expand abroad,” he said.
Ioanna Stanegloudi, Co-Founder of Finclude
That is certainly the path where Ioanna Stanegloudi, co-founder of the FinTech startup Finclude, has succeeded. She started the transnational European credit scoring company in 2018 with her partner Giannis Giokas. Since then they have undergone a rapid expansion making their services available to 2,800 banks throughout Europe.
She says scalability was crucial for Finclude as the business was started in order to fill a void in Europe’s credit scoring system by creating a model that could be used by banks across borders from Spain to Slovakia.
With Finclude, users input their demographic data and connect their banks to the platform and are able to view their credit score before deciding to share it with their bank. The service is free to consumers but paid for by the banks which will use the score to determine creditworthiness.
“Europeans have a common market and freedom of movement but no common credit score,” Ioanna explains. She says this paradox of freedom of movement for people but not their credit makes it particularly challenging for those who develop a relationship with their bank in one country then relocate within the EU. “If you are a Greek moving to Germany or a student from Poland relocating to France you have to start all over.”
While she sees more room for growth in Greece, Ioanna tells Levendeia that some of the countries Finclude is expanding fastest into are in central and eastern Europe.
Key Drivers
The one niche sector in the Greek startup world that should not have to look far for clients is maritime and logistics tech. Indeed, this is one of the Greek dominated industries that Dimitris Kalavros-Gousiou says his VC is focusing on and which offers the country its best chances of becoming a regional hub. “The discussion in Greece really is which are the key value drivers that can position Greece compared to other countries,” says Dimitris.
Greek startup community at Global Tech Happy Hour in Athens, Greece. Photo courtesy of The Port
Roberto Coustas is on the forefront of the maritime tech world. He spoke with Levendeia a few weeks after taking part in a video conference call with Greece’s Prime Minister Kyriakos Mitsotakis discussing the future role of startups in Greece’s re-emerging economy.
The Oxbridge educated CEO and co-founder of DeepSea Technologies is optimistic about the potential for Greek maritime tech, “There is a huge gap in the shipping and the tech sector and the value is immense.”
Coustas bridges the divide between the world of tech and established Greek industries that Dimitris Kalavros-Gousiou says is crucial if the Eastern Mediterranean country's tech scene is to mature.
His family founded the global shipping firm Danaos, and Coustas’ own knowledge of the shipping industry, its history, and business model is certainly commanding. He believes this perspective is key to coming up with practical and implementable tech solutions in the industry.
“Although shipping is a market in thirst for disruption, not many people understand its dynamics, including VC’s. This is one of the biggest problems,” he told Levendeia.
DeepSea installs its hardware on ships to collect operational data and monitor ship performance. They then analyze the data and use AI to provide inferences such as if the ship needs cleaning or painting to increase fuel efficiency, or if an engine needs repairs.
Coustas highlights the savings DeepSea Technologies can provide the industry, “Ships can use up to 10 or 20 thousand dollars a day on fuel so saving just 2 percent of that cost each day can save six hundred thousand dollars a year per ship on fuel consumption. Not only does this benefit stakeholders but it also has a major green component.”
DeepSea offers two products named after figures in Greek mythology: Cassandra, which uses AI to predict future problems through performance monitoring, and Pythia, a service that tailor makes route suggestions for the particular vessel it is installed on. Coustas says the percentage saving from that technology alone can reach 5 to 8 percent.
Workers at DeepSea Technologies in Athens, Greece. Photo courtesy of DeepSea
He feels implementation of this cost saving and green technology requires a new mindset in the shipping industry, “There is a lack of transparency and a contractual system that still rewards the old model.”
Discussing just one example of the flawed incentive structures that he hopes his maritime tech startup can address, he pointed to the current system in which it is normal for charter companies to pay for ships’ fuel, but for ship owners to bare the cost of maintenance that helps reduce fuel consumption.
“If you are paying for the fuel, contractually then, you should also bare the costs of maintenance. It makes no sense that someone else should pay for something that the charter company will benefit from,” he said.
Stakeholders in Greece’s shipping industry are not the only ones who are learning new ways. The very workers in Greece’s nascent startup scene are also on a steep learning curve in a country which for decades has harbored mixed feelings regarding the business world.
Coustas says, “In the UK they really tried to push us to invent things. They equipped us with the tools to excel in entrepreneurship. In Greece people are just starting to see that as a viable option.”
He told Levendeia about a recent case from DeepSea Technologies, “We issued stock options to our employees, but we had to explain what stock options were because some of the employees didn't understand. The mentality is not there yet.”
The one mentality that is in Greece is the relaxed Mediterranean lifestyle that attracted young entrepreneur Lucy Xu 3 years ago. “The warmth and the welcome here is amazing and I’m a ferry ride away from gorgeous islands,” she says.
It’s not just expats like Lucy who see Greece as a desirable spot to live and work. Coustas says that amongst members of the diaspora there is an urge to return and work in the tech ecosystem, “We have many Greeks who study abroad and want a new startup to work in. Because there aren't that many startups in Greece, it is easy to attract good talent.”
This is the appeal that Dimitris Kalavros-Gousiou says makes the Greek tech scene unique and can contribute to its long term success, “In a work from anywhere post-lockdown world, Greece has a lot to offer and if you bring the talent then the money will flow.”