Hungary

Budapest

MEMBERS:
National Research, Development and Innovation Office Ministry of Innovation & Technology

We strongly believe that local talent combined with a vibrant startup ecosystem will significantly contribute to innovation in Hungary. The government is co-funding private investments of technological incubators and that of HiVentures, one of the largest VC in Europe.

Tibor Gulyás
Deputy State Secretary, Ministry for Innovation and Technology, Hungary
Top 15 European Ecosystem: Affordable Talent
Top 30 European Ecosystem: Funding

Highlights

Startup.co.uk recently ranked Budapest the best European city for startups to launch post-Brexit, citing Hungary’s super-low corporate tax rate, as well as the city’s low cost of living and high quality of life. There are many other reasons to expect the city’s buzzing startup scene to continue to grow, with more than 700 startups and scaleups already located in Budapest, supported by 50+ angel investors, creating a vibrant tech scene. Manufacturing startups, in particular, are attracted to the city due to its great transport links with the EU. The government also offers strong support for startups. It has recently streamlined the company formation process so that new businesses can set up in just 72 hours. The National Research, Development and Innovation (NRDI) Office and Ministry for Innovation and Technology (ITM), recently launched the Startup Factory incubator program with ~$6.6. million in co-funding tech investments. The government is funding VCs and nation-wide educational programs like Startup University. The city’s tight-knit startup community also hosts regular tech events. Security BSides, for instance, is billed as the first grassroots, DIY, open security conference in the world. Another event, Crunch, is a conference for people interested in building the finest data-driven businesses. Successful companies emerging from the ecosystem include Bitrise providing application development technologies, raising a total over €20 million, and SEON Fraud Prevention, which raised a total of €11.6 million in funding. Programming school Codecool has raised a total of €14M over 4 rounds and Shapr3D continues the legacy of Hungarian graphics-based startups.

Ecosystem by the numbers

TOTAL EARLY STAGE FUNDING
$85 m
GLOBAL AVG.
$431 m
ECOSYSTEM VALUE
$668 m
GLOBAL AVG.
$10.5 bn
MEDIAN SEED ROUND
$180 k
GLOBAL AVG.
$494 k
MEDIAN SERIES A ROUND
$0.43 m
GLOBAL AVG.
$2.7 m
SOFT. ENGINEER SALARY
$30 k
GLOBAL AVG.
$42.1 k

Sub-sector Strengths

Artificial Intelligence

AI is expected to add 11-14% to Hungary’s GNP by 2030, according to the government’s National AI Strategy. The strategy sets a target of training at least 10% of society to gain an understanding of AI. Based on this strategy a National Data Assets Agency (Navu) and an AI National Laboratory was established recently. Hungary is already a European center for the development and testing of self-driving vehicles. AImotive, Europe’s largest VC-backed automated driving company, has raised over $70 million.

Fintech

Magyar Nemzeti Bank launched its Innovation Hub and Regulatory Sandbox framework in 2018 to safely test innovative financial solutions. MKB Bank’s Fintechlab, one of the first local Fintech accelerators, has already incubated 22 startups, many of which relocated to Budapest from other regional hubs for the program. In 2020, electronic payment solutions company Barion raised a $2.2 million Series B round and Insurwiz, an insurtech company raised a $1.3 million Seed round.

Reasons to move your startup to Budapest

Central Location

Hungary is located in the heart of Europe and has been part of the Schengen zone since 2008. The Hungarian market of around 10 million people has strong links with other European countries, making it ideal as a business hub.

Skilled Workforce

The education system in Hungary is skill-centered and practical, producing high-quality, workforce-ready graduates. 90% of students speak English and two-third of the startup workforce are STEM graduates. This has led many companies in sectors such as pharmaceutical, engineering, R&D, IT, and physics to look to Budapest when searching for talent.

Startup-friendly Tax Policies

Since 2015 the KATA tax system, a flat-tax system where the self-employed pay a fixed monthly amount to cover all Hungarian tax obligations, has reduced tax payment for entrepreneurs. The corporate tax is a flat 9%, the lowest in Europe. There is no residential tax on non-citizens, a policy designed to bring more foreign investors into the country.

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