It’s widely thought that Central And Eastern Europe (CEE) provides some of the best technical talent in Europe, while the U.K. — and London particularly — is not only one of the largest tech hubs in the continent but, arguably, has some of the best access to VCs and acts as a bridge to other markets.
Hoping to capitalise on the two is Fiedler Capital, a CEE-based VC, and the U.K.’s Oxygen Accelerator, via a partnership that will see them recruit a cohort of Eastern European and Baltic startups to be accelerated in Blighty.
The 13 week accelerator programme kicks off in Spring 2015 and, notably, will based in Birmingham U.K. not London, which is about an hour and a half away. Ten startups from across the CEE/Baltics will be selected and receive €21,000 in investment in return for 8 percent equity. Applications close on 8th February 2015.
Meanwhile, the Oxygen and Fiedler teams are planning to hit the road on a 14 day CEE and Baltic tour in January to help seek out the best startups in the region. This will then follow with a 2 day “”selection camp” in Budapest for those shortlisted, before the final ten are chosen and relocated to Birmingham.
Regarding the latter, Walter Rivera, Portfolio Director at Fiedler Capital, had this to say: “We’re launching this programme in the City of Birmingham, because it is the U.K.’s second largest city, has a reasonable cost of living, great access to talent, has a thriving startup ecosystem, and it’s less than 1 and a half hours away from London.”
What’s also interesting about the setting up of an exclusively CEE/Baltics-based startup accelerator in the U.K. is that the CEE region isn’t exactly short of local accelerators, nor is Europe as a whole.
And the U.K. alone is swimming in accelerators, all of whom take teams from right across Europe and elsewhere.
But, obviously, Fiedler and Oxygen think they can offer something different.
In a Q&A with Simon Jenner, CEO of Oxygen Accelerator, I attempted to tease out what that is.
In terms of the CEE and Baltic region, which local accelerators are you competing with via this arrangement?
There are a lot of local accelerators in CEE & Baltics but none of them are able to provide the quality of the mentorship and the direct access to U.K., U.S. and Western European investors and markets.
It’s worth noting that we were competing with them anyway — 16 per cent of applications from our last cohort came from the CEE and Baltics.
Why would very early-stage CEE and Baltic startups want to come to the U.K. to accelerate, can’t they build and validate their startup/MVP from anywhere in Europe?
We are focusing specifically on very innovative startups whose markets are the U.S., U.K., and Western Europe. It is crucial for these startup to get investors from these markets early on, thus they need to have validation in those markets. Therefore, staying home and growing from Eastern Europe is not an option for these startups. We are encouraging the startups to move their management and sales team to the U.K., while leaving the tech development at home.
If they do want to accelerate in the U.K., wouldn’t they be better off applying to Techstars, Ignite100 or Seedcamp? Or one of the vertical accelerators, depending on their industry.
They can do. Those accelerators are great and other than Seedcamp, we’ve all been around similar amounts of time. In this time we’ve created a huge network – across industries – that the startups get huge benefit from. Vertical accelerators can be an option but they don’t cater for everyone and can sometimes be driven by corporate agendas. We’re another option, but this time if you’re a CEE startup, you know we’re taking 10 teams from this region alone.
As this particular programme is funded by a CEE VC firm, it means you’ll still have support in Eastern Europe whilst having a foot on the ground in the U.K.
Do you charge any management fees etc., on top of the €21k for 8%?
One complaint I’ve heard about Oxygen is that the term sheet/investment involves multiple signatures from an array of investors, making it cumbersome compared to other accelerators. Can you clarify if this is still the case?
We knew this was an issue so we’ve changed it to a single signature to simplify things. But for this programme, Fiedler Capital are the only investor, so it will be very straightforward.
You talk up cheaper costs in Birmingham compared to London, but surely it’s even cheaper to stay in CEE and Baltics, while London is also where the investment community is?
It comes down to opportunity cost. It is cheaper for startups to stay in Eastern Europe, but they don’t have access to the same resources – the same market, mentor network, tech startup ecosystem or investor base. They can go to London, but at a pre-seed or seed stage the expenses might not be worth the relocation. Birmingham offers a perfect middle ground for Eastern European startups. It places them in a location with a thriving tech ecosystem and vast amount of resources at their disposal (including London that is close and cheap to get to) while still allowing them and their investors to be able to physically keep the startup in the U.K. and invest in a U.K. Ltd. company.