European Union pumps millions of euros in innovation, governments are throwing money on startups and VCs. But who actually makes money on startups, especially in CEE?
Startups?
Not really. They try to build their products fast and as cheaply as possible. They often struggle with salaries for founders, try to hack marketing and generally are broke all the time. That’s the beauty of early stage companies. They count each cent spent on anything to not to waste money on unnecessary things.
Event organizers?
As far as I am concerned almost all organizers struggle with sponsorships for startup events. Covering travel expenses and accommodation for speakers is often a challenge. Most small and medium events in startup industry are organized by volunteers, so they don’t get paid for their work. Some of the biggest conferences managed to develop a business model allowing to hire a core team so they don’t have to do it part-time. But those are exceptions.
Maybe Accelerators?
They also seem operate on very low budgets. Even those offering financing to startups hire underpaid passionates who really have a mission to do something awesome. And by awesome I don’t mean driving a brand new Tesla car. They definitely don’t make money on exits as from 113 researched accelerators there were 33 exits reported. Even the most recognized accelerators in Europe can’t brag about significant revenue.
Investors?
Investors are the fancy ones. They usually seems to have some money. They know shits about entrepreneurship, teaching startups how not to fail. They do invest, they sometimes exit but… Everyone looking for a sponsorship for Startup Weekend or any other community driven event knows how little contribution to the budget comes from investors. Of course they have to pay their teams and cover first need expenses, but sponsoring some community activities would be nice. However, marketing and sponsorships seems to not be included in yearly budgets of CEE VCs. But hey, it should not be surprising as exits seem to happen everywhere but not in CEE.
Mentors and consultants?
Nope. They usually earn money on something totally different and do mentorship for free or for shares. Very little mentoring programs co-funded from EU have a budget for mentors. However, it is usually more like pocket money than a significant contribution to yearly budget of a mentor. Consultants on the other hand look very likely to support startups, but that’s usually before they realize that no startup will pay for consulting.
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So who actually makes a real money in startup industry? I have no freaking idea, but we should stop pretending that it’s the market where everyone should get everything for free because “supporting startups”. It is not a charity fest but business. Or at least should be.
View Comments (3)
I guess that services(hosting, APIs etc) IP, ad companies, employees are making some money out of startups. Everybody makes an app or a website and consumes some APIs and needs to pay for it (think why Google has invested so much in cloud and Firebase). I guess the startups are a huge market today. Maybe I should build an app to help startups in some way. I guess an exit is feasible in this market.
Yes, various service providers make some money from startups. Also real estate owners, lawyers, accountants and so on. But they are not in the startup industry. And startup employees are payed with much smaller salaries than in big IT companies. The market seems big indeed, but who makes money (as in a real profitable business)? At least, who in the CEE region?
It is the definitely and mostly the service industry as mentioned here by other comments (real estate, lawyers, tax consultants, IT etc).