Bucharest startup scene maintains positive outlook as economy grows

The startup ecosystem in Bucharest was valued at USD 37 billion last year, which made it one of the Top 10 emerging cities for entrepreneurship value creation, according to a Startup Genome report. At the same time, the city’s economy has continued to grow, with the Bucharest-Ilfov region’s GDP per capita being on track to meet the EU average of EUR 30,000.

By Ovidiu Posirca

Even though Bucharest currently lacks a district that amasses startup founders, such a location is mentioned in the draft version of the General Urban Plan (PUG), which should be approved in late 2024. This document is mainly intended to guide real estate developers, but there is a section on the city’s economy that describes the area around the Politehnica University as the “smart city.” This area has already seen an influx of investments from office developers, and the PUG states that the location can attract innovative players in fields such as IT, engineering, biochemistry, and pharmaceuticals. In short, there is room for growth in the startup segment as well.

“Regarding market size and strategic positioning, Bucharest is already relevant as a hub for CEE startups looking to expand regionally. We have seen this with startups from Turkey and Bulgaria opening shops in Bucharest,” Cristian Munteanu, managing partner of Early Game Ventures (EGV), tells BR.

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Bucharest is ranked in the 61-70 range out of 100 for cities with a growing startup market in the Startup Genome report. The city gets the biggest score—7 out of 10—on market reach.

“To become a truly regional hub, Bucharest should become more attractive in terms of capital raising, fast and affordable recruiting, and a flexible legal framework. The truth is that there is more capital available in Bulgaria or Poland than in Romania, while more talent at a more affordable price is available in Ukraine or Poland. And when it comes to a startup-friendly legal framework, Estonia is the go-to destination in the region,” Munteanu adds.

The health of the economy and its outlook is a relevant factor for startup founders, and Bucharest continues to do well in this department. Data from the European Commission shows that the Bucharest-Ilfov area will record a GDP per inhabitant at constant levels of nearly EUR 27,000 this year, while the EU average will reach EUR 31,000 per capita. In 2025, the GDP for the Bucharest-Ilfov region is estimated to edge closer to EUR 28,000 per capita.

“Bucharest stands out as the most vibrant and active startup scene in Romania. The great talent makes it attractive for investors and I think the appetite of regional funds and their increasing presence shows it,” Alexandru Bogdan, CEO of Roca X, tells BR.

However, he adds that the key ingredients for fostering successful hubs are the startup success stories which can’t be artificially generated as well as the availability of daring capital. This is where local or central actors like regulators can work to boost the capital availability, number of funds and fiscal incentives etc. Bogdan says this latter aspect presents an opportunity for the local environment.

Romania still playing catch up on digital skills

The digital skills of the population and the share of new tech graduates are also contributing factors in a country’s attractiveness for founders, especially for regional startups. On this topic, Romania’s picture is mixed.

On one hand, Romania sits well below the EU average on basic digital skills (28% versus 54% EU average). The EU’s target is for 80% of the population aged 16-74 to have these skills. Meanwhile, 2.8% of Romanian employees are in the ICT field, compared to the EU average of 4.6%.

However, the share of ICT graduates among all graduates in the country is significantly higher than the EU average (6.9% versus 4.2%). Romania also has one of the highest proportions of female ICT specialists in the EU, at 25.2%, according to the European Commission report on the state of the 2030 digital decade.

Another challenge is the limited digitalization of businesses in Romania—but that could, in fact, create more opportunities for startups.

“The take-up of advanced technologies like cloud computing services, artificial  intelligence, and big data have been significantly below the EU average. The gap with the EU average is slightly smaller for SMEs with at least a basic level of digital intensity, at 53%, compared to an EU average of 69% in 2022,” the report states.

By 2030, the EU aims for at least 75% of all companies to adopt cloud computing services, big data, and/or artificial intelligence in their operations. In addition, more than 90% of small and medium businesses (SMEs) should reach at least a basic level of digital intensity. On the startup front, the EU is looking to double the number of unicorns, which are companies with a valuation above EUR 1 billion. Although the EU is pouring billions of euros in initiatives designed to attract new startups, there is a global race for promising firms and the US is still the go-to destination.

EGV’s Munteanu says the best founders will do anything in their power to get a chance to succeed, and they will always go to wherever the epicentre of their respective industries is on planet Earth. He also notes that “unfortunately, not many such epicentres are located in Europe.”