BrexitToRemainia Newsletter #51

For (+/-British) entrepreneurs interested in Romania. Every 2 weeks. Reads in <5 minutes

While most of the regular citizens celebrate the 1st of May as a mini-vacation, Romanian politicians fight among themselves and threaten each other with escalations or even impeachments. Official reason: a non-legitimate act from the Government to decide where Romania’s embassy for Israel should be (Tel Aviv vs Jerusalem). Unofficial reason: 2019 is electoral year for Presidency and PSD leaders aim for the top job, trying therefore to undermine the authority of the curent one. With a GDP growth of nearly 7% in 2017 and a booming tech startup ecosystem (read a full report below), who wouldn’t want the top job?

Read the online version of this edition here and the full BrexitToRemainia Newsletter archive here.

President versus PM: a fresh new scandal

Not talking about scandals in the Romanian political scene every few weeks is like not talking about Romania. Period. The latest in the making is also quite concerning as it could easily transform into a constitutional crisis.

The short version of the story is: PM Viorica Dancila and her powerful PSD party leader Liviu Dragnea plan to move the Romanian embassy in Israel from Tel Aviv to Jerusalem. They even conducted an external affairs visit to Israel and met PM Netanyahu during past days. Of course, it is no secret that external affairs and international diplomacy is the exclusive accountability of the President, not of the Government. So president Iohannis made what was expected of his function: pushed back strongly and even suggested PM Dancila should resign.

The long story reads something like this (our own interpretations!):

• Ruling PSD party (via its leader Liviu Dragnea) has a history of deepening relationships with the USA and Israel. Last year Mr Dragnea paid to attend the inaugural event of president Trump and sold the story back home as a personal success. In 2016 the anti-corruption leader Laura Codruta Kovesi was harrassed by an Israeli-based private intelligence group, with hypothetical links to PSD. And last but not least, Herman Berkovits, the personal doctor of PM Netanyahu (of Romanian origins) has recently been appointed honorary counsellor of PM Dancila
• The USA has recently agreed to move their embassy from Tel Aviv to Jerusalem, a move followed only by very few other countries in the world, mainly in Latin America (e.g. Guatemala). No EU country has made such a move, as the european position is clearly against escalating conflicts between Israel and Palestine. The United Nations members also requested US to change its mind via a resolution that was supported by 128 countries (while 9 opposed it and 35 abstained). But PSD leaders want to get closer to US and they play the Israel card
• There is also a huge political token at stake, as 2019 is electoral year for Presidency. Mr Dragnea is surely not happy to be a standby-er and given PSD’s extraordinary meeting on May 10th, he might try to push his case for nomination (or worst case scenario, have Mrs Dancila, his close ally, selected). There are also speculations that PSD will try to impeach the President (linked to a referendum around same-sex marriage, potentially happening in May). Or at least he tries to weaken him in the eyes of a population who sadly enjoys drama and authoritarian characters :(.

We will be keeping an eye on the situation and report back in 2 weeks’ time. Hopefully things will have cleared out by then, and the Romanian Leu would stop its upward trend versus EUR. Not good for Romanians.

The Romanian tech startup scene: 2017

Few months ago we presented to you the great work of Bogdan Florin Ceobanu who published on Medium his own analysis of the Romanian tech startup scene during first 6 months of 2017. We were eagerly awaiting for him to release the full year perspective … and he did!

“Romania could be the next Berlin by 2020. New technologies, fast growing clusters and the token economy are changing the game. UiPath reaches $1B+ valuation”: this is how his 2017 report starts.

Over $53M were invested in Romanian tech companies during 2017 (x3 more than in 2016 and x4 more than the year before). But compared to the $19B spent on tech investments across Europe, the Romanian share is still a tiny fraction and therefore has huge potential.

We won’t spend too much time on UiPath, as we wrote about their unicorn story very recently. Let’s focus on the other startups that received substantial funds (above $1M):

1. In July 2017 Elefant.ro got a $2.5M infusion of capital from a consortium of 3 investors. This is an online retail platform originally backed by Fribourg Capital which sells items for kids, home, wellness and various other. Their 2017 revenue was around 40 million EUR and the company expects to nearly double in 2018 (reaching 70 million EUR)
2. Cyber Swarm received 1 million USD from Tim Draper, a renowned American investor active in the field of virtual currencies. The startup produces a processor of cybersecurity which can protect the industrial machines and autonomous machines from hacking
3. Other interesting $1M+ stories earlier in 2017 were: DCS plus (who reportedly received $5M for expanding globally their IT solutions for the travel and tourism industry), as well as zitec (a major provider of business solutions, digital services and personalised tech products who received 1.7M EUR from emag.ro)

Another insightful section of the report shows how many new business incubators, accelerators and co-working spaces came to life in 2017 across Romania. The most noteworthy are the following:

1. “Made in Romania” program organized by the Bucharest Stock Exchange. A nice year end report / book was published here, so you can read for yourself about the 15 Romanian companies that were propelled through this program (some of which quite established names locally, we would dare say :))
2. Spherik Accelerator, Orange Fab, Startarium and Hubcelerator which together produced 36 startup “graduates”
3. While Bucharest and Cluj-Napoca lead the way in terms of innovation-driven programs, plenty of activity can be noticed in Timisoara, Iasi, Brasov, Constanta, Oradea or Sibiu. Just have a look at the map in the report and you’ll understand

Before we let you read the full report on Romania, have a look at this World Economic Forum article about quite a similar topic: how Eastern Europe became a hotbed for tech innovation. It’s a little bit old (October 2017) but gives a nice regional perspective on the topic.

Top 10 places to be in Romania’s cities

Do you have a business meeting and don’t know where to hold it? Do you happen to travel in one of Romania’s lesser known cities and cannot find good places to eat or socialize? Look no further than Top10 magazine, issued by Zile si Nopti website. The users of the website voted for top 10 pubs, restaurants, clubs and festivals in nearly 20 Romanian cities. Each of them has a short description, some photos, a map and contact details.

We randomly selected one for illustrative purposes: La Casa cu Stuf, situated few km away from Braila. Food looks amazing (try the local fish speciality) and there is a mini-zoo on the premises, in case you happen to be around with family.