Developing the startup ecosystem in Slovakia : case study of the startup environment in the CEE

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STUDENT: Katarina Hanzenova STUDENT NUMBER: 10824863

1st_{SUPERVISOR: Dhr. Dr. G.T. (Tsvi) Vinig} INSTITUTION: University of Amsterdam (UvA) PROGRAM: MSc. Business Administration TRACK: Entrepreneurship and Innovation DATE: 31st_{August 2015}

WORD COUNT: 20 294!!

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Abstract

In the Central and Eastern Europe (CEE) a robust startup ecosystem appears to slowly evolve, where universities, governments, non-governmental organizations, angel investors, venture capitalists and startup enthusiasts are working together to promote entrepreneurship at several levels. This master thesis seeks to explore the startup ecosystems in one of the CEE countries, namely Slovakia, often referred to as the “heart” of the CEE region due to its central position between the neighbor countries such as Czech Republic, Poland, Ukraine, Hungary and Austria. The startup topic is becoming more and more popular in Slovakia. Recently many initiatives and events have been organized to boost emerging ecosystem and introduce it to the general public. The inspiration for the growing community comes mainly from the most popular startup hubs abroad such as Silicon Valley, Tel Aviv, London and Berlin. To study the unique Slovak startup ecosystem, I employ the exploratory qualitative research design by using the grounded theory together with the case study methodology and derive the data first from the international institutional reports. The next step for my data gathering are online interviews from the startup events and conferences of the key startup stakeholder from the region. These answer the questions necessary for the theoretical framework. Further my main data pool build personal blogs of the key players, influencers and shapers of the Slovak startup ecosystem. Personal blogs, although not traditionally considered as a primary data source, have showed to be an exceptional source of knowledge for this master thesis. Here I sought to understand the challenges faced by startups in this region and how the entrepreneurial environment in this post-socialist country can best assist in development of this emerging start-up ecosystem. Based on the personal blogs of the Slovak startup ecosystem shapers I analyze the advantages and disadvantages of the very young startup ecosystem and conclude by presenting key recommendations on how best to strengthen the region as a global startup hub, to bring valuable ideas to the market with the support from university management, policy makers as well as the region’s emerging entrepreneurial ecosystem of angel investors, venture capitalists and business incubators.

Key Words: Startup ecosystem, Development of the startup environment, Startup community, Entrepreneurship in the CEE

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Acknowledgements

First and foremost, I would like to thank Dr. G.T. Vinig for being my track coordinator and also the first supervisor for my master thesis. His lectures and discussions in the courses throughout the year inspired me to write my master thesis within the exciting topic of entrepreneurship focused on the startups. I highly appreciate his professional opinions, suggestions and guidance that stimulated me within the whole process. Also I would like to thank my second supervisor for reading my thesis.

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Statement of Originality

This document is written by student Katarina Hanzenova, who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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List of Abbreviations

CEE Central and Eastern Europe

CIS Commonwealth of Independent States EIF European Investment Fund

EU European Union FinTech Finance & Technology FDI Foreign Direct Investment

GEM Global Entrepreneurship Monitor

ICT Information & Communication Technology

IMF International Monetary Fund Km Kilometer

M Million

NIS New Indipendent States (15 former Soviet Union Republics) OECD Organisation for Economic Co-operation and Development R&D Research and Development

SAPIE Slovak Agency for Internet Economy

SARIO Slovak Investment and Trade Development Agency

SBA Slovak Business Agency

SMEs Small and Medium-sized Enterprises VC Venture Capital / Venture capitalist

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List of Tables

Table&1:&Classifying&the&context&of&entrepreneurship&(Manolova,&Eunni,&&&Gyoshev,& 2008)&...&6& Table&2:&Slovak&governmental&organizations&...&28& Table&3:NonKgovernmental&organizations&...&30& Table&4:&Incubators&and&Accelerators&in&Slovakia&...&32& Table&5:&CoKworking&spaces&in&Slovakia&...&34& Table&6:&Startup&events&and&conferences&...&35& Table&7:&Startup&awards&and&competitions&...&37& Table&8:&Corporates&supporting&startups&...&39& Table&9:&Angel&Investors&in&the&region&...&40& Table&10:&Venture&Capitalists&in&the&region&...&41& Table&11:&Crowdfunding&resources&in&the&region&...&42& Table&12:&Past&success&stories&from&Slovakia&...&43& Table&13:&Promising&Slovak&startups&...&44& Table&14:&Slovak&startup&ecosystem’s&eare&&&abundant&ingredients&...&55&

List of Figures

Figure&2:&The&Slovac&Republic's&wellKbeing&compared&with&other&OECD&major&economies& (OECD,&2014)&...&25&

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1 Introduction

The rise of entrepreneurship throughout the transition economies of Central and Eastern Europe (CEE) and the New Independent States (NIS) of the former Soviet Union, has fundamentally transformed these economies. Entrepreneurs and the startups they found create wealth and push these economies to a higher level of competitiveness through their sheer energy, relentless strategies, and sometimes-controversial practices. Increased knowledge about the wealth-creation process throughout transition economies can greatly enrich global entrepreneurship practice and research (Peng M. W., 2001). Entrepreneurship is now increasingly recognized as an essential part of the modern technological innovation process (Wooldridge, 2009) and some entrepreneurs even refer to the need for an entrepreneurial society (Schramm, 2006).

I have dedicated my last academic year to learn more about entrepreneurship and startups from many different angles. By studying the Masters with focus on Entrepreneurship in Amsterdam, that happens to be one of the strongest startup hubs in Europe (Graham, 2006), I have gained some very important insights about this topic. At the same time, I have been carefully observing the startup scene on the Eastern side of the Europe where I come from. I got genuinely interested into the phenomenon of startup ecosystem in the national context, which created the basis and an initial idea to write my master thesis about. More precisely, this thesis’s focus is on the exploration of the startup ecosystem in my home country Slovakia and the ways it can be developed and nurtured in order to achieve its future growth.

Because of my true interest to research this phenomenon I decided to find out how the development of the startup ecosystem can be arranged and supported. This includes mapping the current stage of the Slovak startup ecosystem and steps to be done in the upcoming years in order to reach the next stages of developing the startup culture in this country.

1.1 Problem Statement

This thesis aims to offer answers to how a development of a startup ecosystem in a CEE environment shaped by many specific external and internal factors of this region looks like and how it can be supported. It analyzes the startup community and the important actors in the overall building process in Slovakia. It examines possibilities of how it can evolve and be

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2 strengthened in regard to the most important factors.

There are several motivations to conduct research within the field of building a strong start-up ecosystem in the CEE: In the European Union there are many efforts to foster startups and entrepreneurship in general across the nations in order to support the economic development of the EU (Audretsch, 2009). In order to support it most effectively, it is important to have detailed insights of the situation, which is present in the given region at the moment. Analyzing the startup culture in Slovakia can have numerous benefits for startup culture evolvement in the CEE region. This topic is of particular interest from a political, economic and social perspective and has a big potential to support the future decisions in the national and international context (Audretsch, 2009). The CEE region’s startup potential is exciting to watch because of several aspects. One of them is the advantage of proximity of the capitals of diverse nations, such as Prague, Budapest, Vienna and Bratislava. This in particular offers a great diversity and many positive aspects contributing to a healthy startup ecosystem.

In this thesis, I will document the resurgence of Startup activity in Slovakia by reporting on the collaboration and local learning within the startup community. This activity is happening both between entrepreneurs, organizations that provide support, such as mentoring and funding, to entrepreneurs and government and its agencies. These connections deepen the strength of the ecosystem as it grows (Motoyama & Watkins, 2014).

1.1.1 Research Contribution

Slovakia is a unique country with its rich history, people, and culture. Yet, it shares many social and economic features with other cities across the nation. Although this paper’s focus is a single specific nation, other countries in the post-socialist Central and Eastern Europe (CEE) can draw lessons from my findings, and I hope this research adds value to the dialogue about what entrepreneurship practices and policies they might consider and why (Motoyama & Watkins, 2014).

This master thesis is divided into five chapters: (1) Literature review focusing on the relevant academic literature which discusses how a startup ecosystem can be supported, nourished but most importantly build and developed in regard to specific subjective factors in different environments. The next will be the (2) Methodology part elaborating on the qualitative research design and the conceptual model will be introduced. The (3) Analysis part will present a snapshot

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of the Slovak Startup Ecosystem and relevant data important for this research. With the help of qualitative analysis these will be categorized into two sections (i) Entrepreneurship in Slovakia (ii) Slovak Startup ecosystem. In the (4) Results & Findings section the key findings will be introduced followed by the (5) Discussion sections, where the research question with its sub-questions will be answered. To conclude there will be the lst section (6) Conclusion with some recommendations for the future research.

1.2 Entrepreneurial Background of Slovakia

As a part of the introduction, in this chapter I will briefly introduce the socio-cultural background in regard to entrepreneurship in Slovakia. I will bring closer the current stage of entrepreneurship in the country, the way it has been shaped and how it evolved over years. Here the most important characteristics relevant for the startup ecosystem will be pointed out.

1.2.1 Former Eastern Block

Pre-World War II historical accounts of industrial competitiveness in the heavily industrialized Central and Eastern European (CEE) countries show the presence of a strong, entrepreneurial culture in this region. Revitalization of this entrepreneurial potential in CEE can nowadays serve as the lever to open the door to international competitiveness and a comparatively high living standard through technological change within modern economies (Brunner, 1993). The incentives for innovation and efficiency were notoriously weak under communism (Hayek, 1945) so reformers in the transition economies have been also greatly concerned with Schumpeterian entrepreneurship (Schumpeter, 1934).

In the CEE private business ownership was basically banned because it would cause unaccepted wealth differences. Even if a plenty of good opportunities were provided, resources were not allowed to exploit these opportunities. As another consequence, risk taking could not evolve. Even today, most CEE entrepreneurs expect the state to provide financial allowances to private businesses and to decrease the financial risk of individual decision-making (Szerb, 2008).

Transition from a socialist command economy towards a market based system opened up enormous possibilities for private entrepreneurs (Welter F. , Exploring Entrepreneurship and SME Development in a Post Soviet Context, 2006). The average share of private sector output in GDP rose from virtually zero in 1989, at least in centrally planned economies like

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Czechoslovakia or the Soviet Union, to 62% in 2001. (Estrin, Meyer, & Bytchkova, 2006). The shape and pace of entrepreneurship in the economies of CEE is significantly determined by the dominant influence of the institutional environment (Ahlstrom & Bruton, 2002); (Peng & Heath, 1996); (Smallbone & Welter, 2001). In Slovakia, sweeping institutional reforms made entrepreneurial endeavors possible, after decades of suppression of private initiative under the communist rule (Manolova, Eunni, & Gyoshev, 2008).

When the Berlin wall felt down privatization helped to strengthen private ownership (Szerb, 2008). Slovakia has gone through a great deal of change in the 1990s. In the early years of this decade, building a private economy and a market presence in Western Europe became the focus of the new government in Czechoslovakia. Differences in opinion between political officials over the pace of economic reform eventually brought on a split between the two nations within the country. Since January 1, 1993, Slovakia has been an independent nation dealing with the task of economic transition on its own (Ivy, 1997). Ovaska and Sobel (2004) found that after 1995 these countries proved to be successful in new venture creation and support, however innovation was a weak point of their entrepreneurial activity.

While post-socialist economies do not lack entrepreneurship talents, there has been a lack of promotion of productive free-market entrepreneurship (Kshetri, 2009). Moreover the ruling elites and their connections have made use of informal economies associated with criminal and quasi-criminal activities (Warner & Daugherty, 2004). The political entrepreneurs received state subsidies and contracts in various forms and were associated with inefficiency (Burton, 1987).

1.2.2 Joining the European Union

With only 5.4 million inhabitants occupying approximately 49,000 km2_{Slovakia ranks among}

the smaller countries of the CEE region. In 2004, Slovakia became a member of EU and since January 2009 when it accepted Euro currency it also belongs to Euro Zone (OECD, 2014). The situation changed in the 2000s, when the main transformation changes were over, economy was liberalized, and the wave of privatization ended. For Slovakia, the European Union (EU) accession became the primary aim of economic policy. However, this required a further opening of its economy. Under the increased pressure of foreign competition and saturated domestic market new venture creation slowed down and the weaknesses of the quality related features of entrepreneurship become more prevailed (Szerb, 2008).

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1.2.3 Current Economic Stage

Slovakia’s dynamic growth has depended mainly on export-oriented manufacturing FDI, located largely in the West of the country close to its capital Bratislava. Other parts of Slovakia are largely lagging behind. Government debt has risen sharply since 2009 global crisis and is now running into constitutional debt ceilings. Indeed, it is too high to allow automatic stabilizers to work (International Monetary Fund, 2014).

Even before EU accession, the Slovak economy was characterized by a higher degree of openness to trade than other benchmark countries, called The Visegrad 4 (Czech Republic, Hungary and Poland). Nonetheless, the importance of international transactions has increased even further over time. The average of exports and imports in 2013 reached almost 90% of GDP. Only Hungary has broadly kept pace with Slovakia (International Monetary Fund, 2014). Substantial FDI, particularly in the automotive and electronic sectors, have led to a growing participation of the Slovak economy in global value chains. However the competition from the other CEE countries has increased and Slovakia has remained specialized in more downstream. A first long-term challenge is to shift from an efficiency- to an innovation-driven growth model (Nič & Świeboda, 2014). To move upstream in global value chains and diversify its productive base, Slovakia needs to improve in knowledge-intensive manufacturing, invest in R&D and the quality of human capital, where it compares unfavorably with regional peers. Research shows that the vulnerability of individual countries is heavily influenced by their position in global value chains (International Monetary Fund, 2014).

The country has not yet reached the living standard of western economies, although thanks to the reforms in the tax, healthcare, social welfare and pension system, Slovakia has managed to grow rapidly in the years before the 2008 financial crisis, when it had one of the fastest growing GDP in the whole European Union. Although in absolute numbers Slovakia still belongs to the less wealthy members of the Euro area, its GDP (PPP) per capita has reached 18,046.84 USD. According to IMF Slovakia has faced one of the fastest recoveries after 2009 in the region with 3.3% GDP growth in 2011, and is predicted to further grow (International Monetary Fund, 2014).

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2 Literature Review

In this section I will review the literature about research on entrepreneurial ecosystem in the CEE. I will highlight the most important academic findings and link them to variables essential for the startup ecosystem. Further, I will focus on how a startup community can be developed and then conclude with academic literature on how a nurturing and strong startup ecosystem can be evolved.

2.1 Entrepreneurial Ecosystem

There is a growing recognition that economic behavior can be better understood within its context (Low & MacMillan, 1988), such as social (Granovetter, 1985), spatial (Katz & Steyaert, 2004), institutional (Polanyi, 1957) and societal contexts (Weber, 1984). Gartner (1995, p. 70) prompts entrepreneurship research to acknowledge the context in which entrepreneurship takes place, as observers “have a tendency to underestimate the influence of external factors and overestimate the influence of internal or personal factors when making judgements about the behaviour of other individuals,” while Baumol (1990, p. 898) draws attention to the fact that the rules for entrepreneurship “do change dramatically from one place and time to another.”

Table 1: Classifying the context of entrepreneurship (Manolova, Eunni, & Gyoshev, 2008)

The terminology “entrepreneurial ecosystem” has gained increased scholarly interest over the past years (Krueger, 2012); however, understanding of the structure and the importance of adequate assessment mechanisms is still limited (Vogel, 2013). Prahalad (2005) provided a definition for entrepreneurial ecosystem, according to which the ecosystem enables the

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individuals, enterprise and the society to combine effectively for the cause of generating economic wealth and prosperity. The remarkable attribute of an ecosystem is to blend together the stakeholders who are often driven by different objectives and expectations (Suresh & Ramraj, 2012).

Isenberg (2010) postulates, “There’s no exact formula for creating an entrepreneurial economy. There are only practical, if imperfect, road maps”. It is not possible, for example, to replicate a new Silicon Valley in another community or nation by simply remaking the same characteristics of its entrepreneurship ecosystem; rather that, it is feasible to identify benchmark elements to be analyzed and developed according to each country’s specific reality (Isenberg D. J., 2010).

Isenberg (2011) has introduced four defining features of the entrepreneurship ecosystem:

! The entrepreneurship ecosystem consists of six domains, such as a conducive culture, enabling policies and

leadership, availability of appropriate finance, quality human capital, venture-friendly markets for products, and a range of institutional and infrastructural supports.

! Each entrepreneurship ecosystem is unique.

! Specifying generic root causes of the entrepreneurship ecosystem has limited practical value. The law of

small numbers is what helps evolving the ecosystem, namely success breeds success.

! Entrepreneurship ecosystems become (relatively) self-sustaining.

Isenberg (2011) argues that ecosystem is usually the result of intelligent evolution, a process that blends the invisible hand of markets and deliberate helping hand of public leadership that is enlightened enough to know when and how to lead as well as let go the grip in order to cultivate and ensure (relative) self-sustainability (Isenberg D. , 2011).

Entrepreneurial ecosystems can act as catalysts in speeding up the economic progress of stable economies and also as the prime mover when it comes to rescuing economies with a sharp decline (Suresh & Ramraj, 2012).

The cultural impact on developing entrepreneurial ecosystems cannot be ignored, because the individual’s personality and behavior, political & legal system and social mores are intertwined with the national culture from which they originate (Lee & Peterson, 2001).

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2.1.1 Entrepreneurial Indicators

OECD defines the entrepreneurial stage of a particular country based on:

! Regulatory Framework, that includes (i) Administrative burdens (entry and growth), (ii) Bankruptcy regulations, (iii) Product and labor market regulations, (iv) Court and legal framework, (v) Social and health security, (vi) Income taxes and wealth and bequest taxes and (vii) Patent system

! Market Condotions include (i) Antitrust laws, (ii) Competition, (iii) Access to foreign markets, (iv) Degree of public involvement and (v) Private demand

! Access to Finance includes (i) Access to debt financing, (ii) Access to venture capital and (iii) Stock markets

! Creation and Difussion of Knowledge includes (i) R&D activity, (ii) Transfer of non-commercial knowledge, (iii) Co-operation among firms and (iv) Technology availability and take-up.

! Entrepreneurial Capapabilities include (i) Business and Entrepreneurship education (skills), (ii) Immigration

! Entrepreneurship Culture include (i) Entrepreneurial intentions & motivations, (ii) Fear and risk of failure and (iii) Entrepreneurial education (mindset) (OECD, 2014)

2.2 Startup Ecosystem

Many research has been conducted on the entrepreneurship in Slovakia, however there is only little known about the startup ecosystem and the startup culture, which have emerged in this region only a few years ago. The recent development of the startup scene and startup community in Slovakia is very exciting and needs to be explored and mapped in order to foster it further (Motoyama & Watkins, 2014). This master thesis will map out startup ecosystem including its key stakeholders and assesses its effectiveness and efficiency based on predefined indices in Slovakia.

To create start-up ecosystem it is necessary to build an entrepreneurial ecosystem, which includes stable environment around start-ups from which all-valuable resources for startups are arising (Mason & Brown, R., 2014).

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Government, Culture, Success stories, Human Capital, Financial Capital, Entrepreneurship Organizations, Education, Infrastructure, Economic Clusters, Networks, Support Services, early Customers. The stakeholders include Government, Educational Institutions, Financial Institutions, Media and Network. In fact Isenberg has outlined a total of thirteen stakeholders, the pillars on which the edifice of entrepreneurship stands. Isenberg’s study encompasses several countries across the globe, from Puerto Rico to China, from Iceland to India, firmly establishing the idea of entrepreneurial ecosystem (Suresh & Ramraj, 2012). The Startup Revolution, according to Isenberg, is not due to the heroics of one person or even one idea but the collective vision of a group of stakeholders committed to the promotion of startups, creating an ecosystem to actualize their vision (Suresh & Ramraj, 2012).

As the CEE region seeks to successfully cultivate startup culture, a keen understanding of how, when, or why different players interact with one another and how the ecosystem evolves is likely to make both public- and private sector behavior more effective. Similarly, to identify potential policy implications, it is useful to analyze how existing successful startup ecosystems have developed over time and to attempt to get inspired or copy such an ecosystem (Motoyama & Watkins, 2014). In order to best support the new generation of entrepreneurs to redefine the labor market for themselves and their peers, one needs to understand which mechanisms best support their activities in regard to both firm survival as well as job creation. (Vogel, 2013)

Brannon et al (2013) noted that new organizations are imprinted with characteristics that fit the specific environment in which they were founded (Brannon, Wiklund, & Haynie, 2013). Ganco and Agarwal (2009) claim that the internal and external characteristics at founding have long-term effects on the development, survival and performance of new ventures (Ganco & Agarwal, 2009).

2.2.1 Resources

Establishing a new venture requires access to various resources such as financial capital, physical assets, technological resources, human capital, and organizational resources. Intangible ‘soft’ resources are often more useful than tangible resources in the early stage of venture development (Lichtenstein & Brush, 2001). Successful creation of a new venture depends on the ability to both assemble and organize resources (Brush, Manolova, & Edelman, 2008). In addition there is a need to build legitimacy in the relationship with all operating partners of the ecosystem (Delmar & Shane, 2004), (Zimmerman & Zeitz, 2002). As a result, startups greatly

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benefit from the advantage of the clusters’ location (Keeble & Wilkinson, 1999). The role of the local environment is particularly important for young startups (Vanaelst & Clarysse, 2006). These are developed and supported by local champions such as colleague scientists, university managers, technology transfer office staff, and people in the external network of the university who are often critical, particularly in early stages (Rasmussen, 2011) (Mulloth & Antonopoulos, A., 2014).

Van De Ven (2002) described in detail the industrial infrastructure that facilitates and constrains entrepreneurship. Such infrastructure includes institutional arrangements to regulate and standardize a new technology, public resource endowments of basic scientific knowledge, financing mechanisms, and a pool of competent labor, as well as proprietary R&D, manufacturing, marketing, and distribution functions (Suresh & Ramraj, 2012).

2.2.2 Knowledge-based economy

It is also necessary to consider the region’s potential, its current companies and which dynamics are present there. Such an approach needs to be able to incorporate holistic approaches to collective learning, competitiveness, sustainability and cohesion. Much has been written about knowledge and learning and its role in social and economic development, and specifically in the consequences of the development of specific places (Lever, 2002). There are places that are economically successful which claim to exhibit the characteristics of learning regions or learning cities (Keeble & Wilkinson, 1999) and many city and regional authorities have set their sights on strategies to develop knowledge-based activities, or to create learning communities (Longworth, 2006). Such an approach encourages new ventures to take more risks since the ecosystem perceives new ventures as a collective learning experience. In case of a startup failure, the probability of its absorption by an existing venture or institution in the ecosystem is quite high. In fact, the ecosystem recognizes failure as a valuable learning opportunity (Murphy, 2010). (Mulloth & Antonopoulos, A., 2014).

2.2.3 Network Economy

Recent scholarship on entrepreneurship has also tended to emphasize the efficacy of entrepreneurship in a modern network economy, i.e., an economy characterized by, for example, interwoven global networks (Nijkamp, 2003). According to this line of thinking, startups, which seek new combinations or recombination, can fit in well in a network economy. Romer et al

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(2005) of Stanford University have argued that “Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable.” In such a business environment, where speed, adaptation, flexibility and somewhat fluid restructuring are often needed, a successful startup is one that is responsive and adaptable to changing settings (Nijkamp, 2003). (Mulloth & Antonopoulos, A., 2014)

2.2.4 External National Environment

Ecology theory contends that the conditions of the external environment, such as venture capital availability, presence of experienced entrepreneurs, skilled labour force and stock market, are the primary determinants of entrepreneurial success (Suzuki, Kim,, & Bae, 2002). Also Bloodgood et al. (1995) described detailed key external factors that affect entrepreneurial behaviour, such as family, social support system, financing sources, local community, governmental agencies, and the cultural, political, and economic environments (Bloodgood, Sapienza, & Carsrud, 1995). There is enough evidence provided on the fact that startups do require the external environmental factors to be favorable for success (Suresh & Ramraj, 2012).

2.2.5 Cultural Background

A broad consensus in the literature suggests that the specific nature of the institutional environment and of institutional change processes shapes the patterns of entrepreneurship (Estrin, Meyer, & Bytchkova, 2006). CEE entrepreneurs have to learn a different coping behavior, formed by their experience under communism, and they may have different personal characteristics. Baumol (1990) argues that the definition of the entrepreneur should reflect the local incentive structure. In transition economies, this encompasses the onslaught of rapid changes and the resulting uncertainty, a wide range of opportunities thrown up by the restructuring of formerly planned economies, imbalances between supply and demand, fragile or only partial market institutions and a variety of informal rules and behaviors which are remnants of the communist past. However, while many market institutions were absent, the skill level and educational attainment and in some cases investment into local technology were on par with the developed world (Estrin, Meyer, & Bytchkova, 2006).

The transition countries in Europe are classified into two political-economic entities such as CEE and CIS. There is the CEE region and the CIS region, where the personal characteristics of entrepreneurs vary greatly. Roberts and Zhou (2000) find that CIS countries, represented by

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Armenia, Georgia and Ukraine, saw different entrepreneurial strategies than advanced CEE reformers such as Hungary, Poland and Slovakia. CIS entrepreneurs are more likely to start in trading, opening a restaurant, a taxi business or a meat-processing plant. They are mostly part-time entrepreneurs and conduct their businesses in the second economy. Their CEE counterparts are more likely to create firms that exploit and enhance their specialist skills and thus develop more focused business profiles. They are mostly sole proprietors and operate in official economy (Estrin, Meyer, & Bytchkova, 2006).

Central & East Europeans’ suspicion of entrepreneurs and the newly rich is not without empirical support. Although state socialism created its own privileged classes, these classes had neither the wealth nor the strength necessary to become the new post-socialist grand bourgeoisie and to generate a rapid and dynamic evolution toward capitalism and economic growth (Stoica, 2004).

Cultural evolution is a long-term endogenous process, which is revealed in society’s cultural traits and it is embodied in institutional characteristics, such as property rights protection, rule of law, etc. and transaction characteristics, such as risk levels, time required for start-ups, corruption levels, literacy levels, etc. (Petrakis & Kostis, 2014). It is known that people’s opinions and actions strongly depend on the cultural background. Schneider & De Meyer (1991) indicate that different cultures are likely to interpret and respond to the same issue in different ways and so these differences may help to explain and predict different responses of European countries to the entrepreneurial development (Schneider & De Meyer, 1991)

Some societies have norms that facilitate and promote entrepreneurship and its financing while some other societies discourage it by making it difficult (though not illegal), often unknowingly (Baumol, Litan, & Schramm, Good capitalism, bad capitalism, and the economics of growth and prosperity, 2009; Soto, 2000). Hofstede’s model is based on national cultural factors cultural factors influence risk taking and other cultural attributes in explaining the entrepreneurial behavior. Slovakia, Czech Republic, Romania, Bulgaria, Portugal and Spain are far more positively influenced by national cultural factors in regard to business startups. it is also true that factors such as wage rate, productivity, economic growth are also relevant in explaining firm birth rates. According to Erk & Erk (2011) new EU countries are far more responsive to cultural factors in explaining business startups (Erk & Erk, 2011).

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2.3 Model for the Startup Ecosystem

Ecosystem is ‘‘an interactive community within a geographic region, composed of varied and inter-dependent actors (e.g. entrepreneurs, institutions and organizations) and factors (e.g. markets, regulatory framework, support setting, entrepreneurial culture), which evolves over time and whose actors and factors coexist and interact to promote new venture creation’’ (Vogel, 2013).

There are many frameworks and models, which are representing individual parts of the start-up ecosystem. Every approach to start-up ecosystem is similar and it consists of very similar elements. However, none of these approaches is conceptual and does reflect the whole process of creation and implementation of start-up ecosystem from its very beginning – realizing the start-up idea towards its successful end – business scaling. The startup ecosystem to exists, it is very important that every stakeholder contribute by experience, knowledge, networks, products, etc. (Závodská, Šramová, Rybovič, & Jirásek, 2014)

While exploring the applicability of the entrepreneurial ecosystems in creating a ‘sustainable valley’, Cohen (2005) elaborates on the nine principal factors that are the key components. They are Informal Network, Formal Network, University, Government, Professional and Support Services, Capital Services and Talent Pool (Suresh & Ramraj, 2012).

Traditional methods used to evaluate entrepreneurial ecosystems have focused on sizing up risk capital, incubators, a supportive culture, or other elements in an entrepreneurial community. Motoyama & Warkins (2014) believe there is significant room for improvement by focusing instead on the relationships between these elements and the evolution of an ecosystem over time.

Bernardez & Mead (2009) showed how entrepreneurial ecosystems have created significant economic upturn in Argentina, United States, Israel, India, China and Mexico in spite of adverse economic and social conditions. They demonstrated how each entrepreneurial ecosystem grew around a specific competency, e.g. tourism, gastronomy for Palermo, Argentina; software and high-tech for Silicon Valley; finances for London; manufacturing for China; engineering and business processes outsourcing for India (Suresh & Ramraj, 2012).

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Brad Feld, an American entrepreneur, venture capitalists and author of “Startup Communities” defines these fundamental startup ecosystem ingredients: (i) Entrepreneurial communities are led by the entrepreneurs. (ii) The leaders must have a long-term commitment. (iii) The startup community must be inclusive of anyone who wants to participate in it. (iv) The startup community must have continual activities that engage the entire entrepreneurial stack. He states that despite all of the important stakeholders within the ecosystem it is the entrepreneurs that must lead (Feld, 2012). Entrepreneurs are the foundation that supports a thriving community, and without them there would not be any products or companies for the other participants to help support. There must be a cohesive intention of these leaders to build a community and also people, who can serve as central voices to help facilitate communication that perpetuates collaboration (Dale & Zell, 2014).

Feld illuminates who all these players are and what are these magic ingredients of collaboration that make an entrepreneurial ecosystem so strong: (1) Entrepreneurs, (2) Governments, (3) Universities,

(4) Investors, (5) Mentors, (6) Service Providers, (7) Large Companies (Feld, 2012).

Jeff Keen, an entrepreneur and a well-known blogger at StartupRevolution.com applied the above-mentioned principles to help boost his local startup ecosystem in Boulder, Colorado, USA. He had trouble putting together a critical mass of leaders.Eventually he developed themes

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and formed some working groups around three key initiatives, “(1) “Place” – hubs, or access points where entrepreneurs can get access to the services and support they need to start companies, (2) “People” – talent attraction and retention strategy to not only attract more talent to

the region but to create opportunities that will retain local university and college students upon graduation and (3) “Marketing” – creating a brand and awareness that our community welcomes and supports entrepreneurs and is a great place to start and grow a company.” All of Keen’s additions are worth considering, moreover it is worth noting, that his community was very early stage from its inception, which is similar to the Slovak one (Dale & Zell, 2014).

According to Feld (2012) the key to every successful startup community is startups. It is essential to make sure all the founders and founding teams are visible and connected to each other. Beyond that, he identified nine attributes of a successful startup community.

! Leadership: Strong group of entrepreneurs who are visible, accessible and committed to the region being a great place to start and grow a company.

! Intermediaries: Many well-respected mentors and advisors giving back across all stages, sectors, demographics, and geographies as well as a solid presence of effective, visible, well-integrated accelerators and incubators.

! Network Density: Deep, well-connected community of startups and entrepreneurs along with engaged and visible investors, advisors, mentors, and supporters. Optimally, these people and organizations cut across sectors, demographics, and culture engagement. Everyone must be willing to give back to his community.

! Government: Strong government support for and understanding of significance of startups to economic growth. Additionally supportive policies should be in place covering economic development, tax, and investment vehicles.

! Talent: Broad, deep talent pool for all level of employees in all sectors and areas of expertise. Universities are an excellent resource for startup talent and should be well connected to community.

! Support Services: Professional services (legal, accounting, real estate, insurance, consulting) are integrated, accessible, effective, and appropriately priced.

! Engagement: Large numbers of events for entrepreneurs and community to connect, with highly visible and authentic participants. The events include Meetups, pitch days, conferences, happy hours, startup weekends, boot camps, hackathons, celebrations, and competitions.

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! Companies: Large companies that are the anchor of a city should create specific departments and programs to encourage cooperation with high-growth startups.

! Capital: Strong, dense, and supportive community of VCs, angels, seed investors, and other forms of financing should be available, visible, and accessible across sectors, demographics, and geography.” (Feld, 2012)

According to Startup Genome and Steve Blank (2012) there are four broad aspects, that define the current stage of the startup ecosystem:

! Funding that includes the availability of venture capital such as the amount of VC investments and the average time taken to raise a round.

! Market reach that stands for access to customers allowing the startup to scale rapidly, based on its local and cultural markets, and its ability to scale globally to markets with different languages and needs.

! Talent that represents the quality, availability and cost of technically skilled individuals.

! Entrepreneurial experience of diverse ecosystem stakeholders such as advisors, employees, founders (Compass, 2015).

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3 Methodology

This chapter outlines the methodological approach of the thesis. First the research question together with the sub questions will be introduced. Then some important keywords will be shortly defined for a better understanding of the research topic. The overall research design section will explain how the research for my thesis was conducted and which steps were undertaken.

3.1 Research Question

The purpose of this thesis is to analyze the development of the Startup ecosystem with its strengths and weaknesses in order to create a flourishing Slovak startup culture.

The main research question in this paper is: How can the Slovak startup ecosystem be further developed? To address this question, I employ the qualitative research design based on detailed analysis of each variable in the ecosystem, supported by organizational and institutional research & reports, conference interviews & videos and most importantly by primer data source such as personal blogs of the key Slovak startup ecosystem shapers and actors.

Find something about the methodology when it comes to blogs (Levie, Hart, M., & Karim, M. S., 2011).

The research question is divided into the following sub-questions:

• How does the current startup ecosystem in Slovakia look like and in which stage is it? • What are the strengths and advantages of the startup ecosystem in Slovakia?

• What are the weaknesses and disadvantages of the startup ecosystem in Slovakia?

3.2 Research Design

The research utilized a qualitative and exploratory approach to gain a thorough understanding of the startup ecosystem in the CEE environment. This grounded theory method was chosen for its richness in data, its flexibility, and its ability to fulfill the research purpose of identifying and understanding the full range of activities and factors behind building a strong startup hub in Slovakia (Bosma, Wennekers, S., & Amoros, J. E., 2012). When little is known about a

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phenomenon, qualitative methods are advocated for their ability to discover the underlying nature of the phenomenon in question (Strauss & Corbin, 1990), which is also why this particular method was the best to apply to this research.

The research approach used for this master thesis is qualitative in nature. I employ an inductive approach where I also performed extensive primary and secondary historical research and analysis. In order to derive the best way of how to develop the ecosystem, I had to observe its evolution first. I accessed primary and secondary archival sources such as news reports, governmental reports, industry reports issued by consulting firms, financial institutions and industry experts, as well as coverage of industry developments in the media and industry trade presses (Mulloth & Antonopoulos, A., 2014). The main data source for my research comes from the influencers and key actors within the ecosystem by analyzing most of their startup blogs and forums about startups in Slovakia.

Approach to entrepreneurship also questions the dominance of quantitative methods in entrepreneurship research. Scholars such as Welter (2011) and Bamberger (2008) suggests that the gap in multi-context analysis partly also results from the neglect of (more) qualitative or combined methods, which allow capturing the richness and diversity of the context in entrepreneurship (Welter F. , 2011), (Bamberger, 2008).

A large part of this research is exploratory, since it aims to gain new insights into a complex and poorly understood system and assesses topics from a new perspective (Saunders & Lewis, P., 2012). This kind of exploratory research is appropriate because little research have been done when it comes to the startup ecosystem in the CEE. The study will use a qualitative case study design and the grounded theory, which is a viable option to conduct an exploratory research (Yin, 2003). In addition, Yin argues that a case study research design is appropriate when a “complex social phenomena” (2003) is investigated. The Startup ecosystem - as a ‘complex animal’ (Malm & Wallis, 1992) can be regarded as such a phenomena.Furthermore, Saunders et al (2012) suggest that a case study is particularly helpful “to gain a rich understanding of the context of the research”, which is especially relevant to this study (Yin, 2003).

The research design consists of 4 steps. The Proposed Data Analysis in this master thesis is following:

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• Institutional Reports

• Online Interviews & Video Conferences • Personal Blogs

The research is conducted in two main phases. The first step includes analyzing the reports about the society’s opinion towards the entrepreneurship in Slovakia based on previous research conducted by international organizations GEM, OECD, World Bank and IMF. Following by research conducted on the national level discussing the entrepreneurial situation in the country by organizations such as SARIO, SBA, SAPIE and ZMPS. Further a very important and rare report for this region conducted on the young emerging startup ecosystem by KPMG Slovakia. Due to the short history and young startup community, the ecosystem lacks statistical evidence and the main source of the most valuable data for this particular research were the personal blogs of the Slovak startup ecosystem shapers described below.

3.2.1 Data

This research topic covers a very complex phenomenon, which needs to be looked at with the help of relevant secondary data. Further the most valuable primary data for this research are the opinions, views, ideas and insights of the key actors of the Slovak startup ecosystem. The objective is to provide their knowledge and present it in a structured way applied to model of the ecosystem and offer propositions for its future development. Following the theoretical sampling of the Slovak startup ecosystems, I will build on the suggestive arguments that case study creates theory grounded in varied empirical evidence (Eisenhardt & Graebner, 2007). Following the work of other scholars (Gibbert, Ruigrok, & Wicki, 2008) (Leonard-Barton, 1990), I carried out the research in close interaction with practitioners who deal closely with the development of entrepreneurial ecosystems in Slovakia. In choosing an interpretive paradigm (Gioia & Pitre, 1990), I aimed to gain a deeper understanding of the phenomenon through the interpretations of that phenomenon from those experiencing it (Shah & Corley, 2006). Following the case-study methodology (Yin, 2003), I applied such methods as collecting personal opinions, ideas, views and assumptions about the Slovak startup ecosystem by the ecosystem developers and shapers. My primer information about the ecosystem came from within the ecosystem, from the key members of the organizations, entrepreneurial teams, VCs, Angel investors, etc. (Mulloth & Antonopoulos, A., 2014).

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Data has been collected via an extensive document search, focusing first on secondary documentary data such as organizational and institutional research and reports and then online interviews, videos and presentations. The primary data for this master thesis were collected from personal blogs of the key stakeholders of the Slovak startup community. The reason for picking this form of data and analyzing this topic based on them was threefold. First, it was due to the nature of the startup ecosystem. Second, according to Saunders (2009) it is appropriate to focus on some secondary documentary data when it has viable contribution to the case study research. Third, the use of some secondary data saved valuable time in the data collection process and therefore allowed this research to investigate in the following depth. To find the data a methodical search was conducted, using the constructs identified in the literature in combination with new insights gained during the research. The use of search engines (e.g. LexisNexis Database, Google scholar) resulted in great amount of relevant data. The data consisted out of scientific articles, newspaper articles, books, company websites, industry reports, online interviews, conferences, videos and presentations. The main source was the online blogs and online forums written by the key ecosystem professionals. The data will be organized by using an analysis framework, which is elaborated below.

Although not traditionally considered a go to source for many other types of research, I found blogs to be an exceptional source of knowledge for this paper. While articles, are usually a secondary source reporting on interviews, etc., blog entries are primarily personal, and first-hand accounts from professionals working within the startup ecosystem. In the case of the research for this paper, I found blogs from entrepreneurs, venture capitalists, mentors, corporate representatives, startup-enthusiasts and other participants in the ecosystem as the most valuable and contributing source, which could this research benefit from the most (Dale & Zell, 2014).

Appendix 9.1.5 presents the web-based resources that build my data pool for this thesis. It includes almost all available digital blogs about startups in Slovakia that give advice on starting new ventures, technology trends, entrepreneur’s dilemmas, startup data and statistics, etc. (Mulloth & Antonopoulos, A., 2014)

In order to prove the credibility of the given research, transcripts of several online interviews are attached in the appendix. Given the primary chosen data collection from the personal blogs, it was not possible to provide transcript of all the blog entries used for this research, however links to the blogs are provided in the bibliography.

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3.3 Conceptual Model

This study will use important constructs found in the literature as a guide. This thesis will search for case patterns, with the help of an analysis model. Based on the section 2.3 Model for the startup ecosystem, I will apply the model similar to the one proposed by Feld (2012). However, it will be added by some elements and the entrepreneurial background of the region will be first analyzed due to its unique characteristics important for the analysis.

The startup ecosystem will be presented as pillars of:

• Quality of Living in the Country • Major Industry for Slovak Startups • Governmental and Legal Support • Universities

• Non-governmental Organizations • Corporates

• Past Success Stories

• Slovak Entrepreneur’s Profile & Promising Slovak Startups • Startup community

• Networking

• Financing resources

All these players are magic ingredients of collaboration that make an entrepreneurial ecosystem robust and strong. Combining the academic literature on startups ecosystem with the recent insights of the startup ecosystem shapers, I propose a model of emerging startup ecosystem in order to analyze its current stage and propose the steps for its further development based on the key ecosystem influencers. In the analysis part I will show how I attempted to test this model.

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4 Analysis

This chapter starts with the current stage of the entrepreneurial activity in Slovakia. The main part is dedicated to the exploration of the Slovak startup ecosystem into the very detail.

4.1 Entrepreneurial Potential, Awareness and Attitudes

According to Global Entrepreneurship Monitor (GEM), the entrepreneurial potential in Slovakia, measured by a combination of knowledge, skills and opportunities, has a downward year on year trend, mainly due to the fact that Slovak individuals do not see enough entrepreneurial opportunities. The level Slovakia achieved (16.1%) is far below the average in Europe (30.4%). Both, the theory and the practice indicate that such a behavior is significantly affected by the external environment. The entrepreneurial potential in the broad sense requires special attention both as a major factor determining the perception of business opportunities as well as a factor affecting the overall entrepreneurial activities in the country. The reason for results of Slovakia is the fact, that in three out of the four components of social perception of entrepreneurship (1) entrepreneurship as an appropriate career choice, (2) perception of entrepreneurs and their

social status, (3) media attention devoted to entrepreneurship, had a negative year-on-year shift and in the

first two indicators, the international position of Slovakia is very unfavorable (Pilkova & et al, GEM Slovakia 2013, 2014).

Based on levels of countries’ economic development, differences in the prevalence and nature of entrepreneurship become apparent. In the group of efficiency-driven economies in Eastern Europe, the Slovak economy reported low rates of perceived entrepreneurial opportunities and capabilities. Not only geographic and economic factors impact attitudes toward entrepreneurship, but cultural and social issues also shape these perceptions. Unfortunately, social attitudes towards entrepreneurship and low business opportunity perception in Slovakia have a negative impact on the high entrepreneurial activity (Pilkova & et al, GEM Slovakia 2013, 2014). In order to build effective entrepreneurial ecosystem, we need to understand the components and assessment indices of such ecosystem (Vogel, 2013).

Fostering entrepreneurial awareness and positive attitudes towards entrepreneurship are getting higher on the policy agenda of Slovakia. In general, Europe exhibited low levels on all attitude measures. Even during the economic crisis, some countries maintained high economic

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development, so it is probable that people found other employment alternatives attractive, such as working for corporations, government or other entities, where entrepreneurial activity can also take place (Bosma, Wennekers, S., & Amoros, J. E., 2012).

Slovakia’s cultural and societal standards regarding the entrepreneurial activity support get mostly negative evaluations. The influence of cultural attributes such as personal initiative, risk-taking, creativity or individual responsibility on entrepreneurial activity is definitely unfavourable in Slovakia when comparing with other Western European countries (Pilkova & et al, GEM Slovakia 2013, 2014).

National culture characteristics are rather discouraging individuals to get involved into entrepreneurship, in addition they have negative impact on individual as well as societal opinions on entrepreneurship. It is characterized by lower level of important entrepreneurial attributes, such as support of individual success, autonomy and leadership, undertaking entrepreneurial risk and innovation. (Pilkova & et al, GEM Slovakia 2011, 2012)

The worst evaluated attribute is encouragement of entrepreneurial risk-taking by the national culture. However, in this attribute Slovakia exhibits the least negative position in the international context (despite considerable below-average evaluation) (Pilkova & et al, GEM Slovakia 2013, 2014).

Since cultural and social norms in Slovakia negatively influence individual preferences as well as societal attitudes towards entrepreneurship, they present more of a hurdle than support for entrepreneurial activity (Pilkova & et al, GEM Slovakia 2012, 2013).

4.1.1 Opportunity/Necessity Driven Entrepreneurship

The Global Entrepreneurship Monitor (GEM 2003) suggests that in CEE few entrepreneurs are driven by needs-based motives. Especially compared to other middle-income economies, where setting up your own business is an important route out of poverty. This reflects the still very extensive social security, which may inhibit new firm creation. In contrast to GEM (2003), Smallbone and Welter (2001) observe a large proportion of start-ups being motivated by push factors. This may stem from difference in survey samples as well as from the difficulty of giving empirical content to necessity versus opportunity driven entrepreneurship (Estrin, Meyer, & Bytchkova, 2006).

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From the analyzing of motives to start a new business, it can be deducted that the dominant motive in Slovakia is necessity. The results of GEM report for Slovakia show that in 2013, the share of entrepreneurs whose main motive for starting a business is necessity has increased, and reached the level of 40% for early stage entrepreneurs. This development has to be regarded as alarming for Slovakia. This percentage of motivation based on necessity is almost 10% higher than the average of the least developed countries whose development is based on factors. It is higher even compared to the world's poorest countries such as Angola, Nigeria, India and so on. The impact of such a situation is clearly reflected in the level of "sophistication" of entrepreneurship, so these entrepreneurs develop less innovative and more replicative entrepreneurship, with the lowest value added. Adverse developments in this area are also documented through the motivation index, which expresses the ratio of opportunity to necessity. In 2013 there was a decrease of this index (index value 1.0 in 2013, in 2012 the value was 1.2 and, for example, in the Czech Republic the motivation index reached value of 2.7) which means that the relative increase in the early stage entrepreneurs based on necessity is greater than those motivated by opportunity (Pilkova & et al, GEM Slovakia 2013, 2014).

4.2 The current stage of the Slovak startups ecosystem

Based on the institutional governmental and corporate research, followed by reports, conferences, interviews and blogs by the key actors of the Slovak ecosystem, the conceptual framework will be elaborated and the data relevant collected analysed in this sub chapter.

4.2.1 Quality of Living in the Country

Compared with other OECD countries, Brazil and the Russian Federation, the Slovak Republic performs well in a few of the 11 dimensions mentioned above that the OECD considers as essential to a good life. The Slovak Republic ranks above the average of the 36 countries in the dimensions of personal security, environmental quality, and work-life balance, but below average in education and skills, social connections, health status, income and wealth, subjective well-being, housing, civic engagement, and least in jobs and earnings (OECD, 2014).

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Figure 2: The Slovac Republic's well-being compared with other OECD major economies (OECD, 2014)

4.2.2 Major Industry for Slovak Startups

With its 5.4 million citizens, GDP 27 584 US$ per capita (compared to OECD average of 38 903 US$ per capita) (OECD, 2015), Slovakia belongs to rather smaller countries in the EU. It is known as the largest car manufacturers per capita in the world with companies such as Volkswagen, KIA Motors, Hyundai, PSA Peugeot-Citroen, Porsche and the upcoming Jaguar Land Rover. Now there is a challenge to build a knowledge-based economy, where up until now foreign companies used the cheap labour force and placed their plants for the last two decades (Ftacnik M. , 2015).

Slovakia’s traditional strength is in the technology and manufacturing fields, mainly in the Automotive, Electronics, Mechanical engineering, Chemical engineering, Information technology (OECD, 2014).

In the World Economic Forum’s Networked Readiness Index (NRI), which measures the propensity for countries to exploit the opportunities offered by ICT, Slovakia ranked 59th_{out of}

148 countries in 2014 (World Economic Forum, 2014). Among the indicators Slovakia scored highest in terms of ICT usage (ranked 49th), but lowest in terms of its environment (political, regulatory, business and innovation (ranked 74th). Visegrad Group countries, which represent a useful benchmark, ranked overall as follows: (i) Czech Republic 42nd_{, (ii) Hungary 47}th_{, (iii)}

Poland 54th_{(International Monetary Fund, 2014).} 4.2.3 Governmental and Legal Support

Recently, startups have become a very popular topic in the media and politics in Slovakia, to which the public sector responds very positively (Kiska, 2015). This is reflected in the wide range

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of promising startup-focused initiatives, increased use of startup supporting services provided by public entities and more importantly the brand new governmental plan about diverse forms of support for startups and their ecosystem.

On June 10th_{2015 Slovak Republic’s government agreed on some fundamental changes}

concerning startups in Slovakia:

! Startups will be exempt from paying income tax during the first 2 years of their existence. After this period they will get an income tax relief of the currently given 22% tax rate (Mikula, 2014).

! Further startups will be exempted from paying tax licenses. Up to 1000 startups will have the chance to receive financial vouchers from EUR 3000 - 8000 in a total amount of EUR 80 million to pay for legal help, technological support or commercial partnerships and to protect their intellectual property (Mikula, 2014).

! For students there will be a scholarship program called ''startupovy doktorant.'' It will allow them to skip paying the contributions for half a year and they will receive a monthly grant of EUR 700. Additionally they get 300 hours of mentoring, help with patents, meetings with investors and invitations to diverse international workshops and conferences abroad. The money used for these objectives will come from the Euro Funds as part of the program Horizon 2020 (Mikula, 2014).

! Besides of that a new form of business entity will be introduced. It is a hybrid form that combines elements of private limited company (Ltd.) and a public limited company (plc). Minimum share capital will start at EUR 1, which will not be possible to trade publically (Majková M. , 2015).

! There will be also “startup visa” offered to non-EU founders from abroad to set up a new venture in Slovakia and make use of all resources and advantages that the Slovak startup ecosystem has to offer them (Majková M. , 2015).

! The government also decided to attract more business angels. When an angel decides to invest in a startup, the state will offer the startup a grant in a certain amount of EUR without acquiring any shares. Moreover the startup will be able to get this grant more than once (Majková M. , 2015).

! There will be improved funding through the Slovak Investment Holding and some new financial instruments for financing startups introduced by National Entrepreneurship Center (NPC). It will include easier access to capital, offering convertible loans within the