Greece went to the brink this week. And the country’s entrepreneurs wasted no time in stepping into action.
Failing to reach an agreement with its creditors to extend the deadline to pay back a $1.7 billion IMF loan on July 1, the country missed its payment. It is unlikely that Greece, unhappy with the bailout terms put before it, will be able to meet its obligations to others, including the European Central Bank. In response, Greek Prime Minister Alexis Tsipras shut down Greek banks, and imposed capital controls.
Capital controls are just that – controls on the free flow of capital. Since Monday Greeks have only been able to withdraw $66 (€60) per day. Credit cards have been temporarily cancelled. Payroll has been suspended. Payments abroad cannot be executed.
That has been a nightmare for Greek entrepreneurs, several of whom have taken steps to counter the capital controls and think about the possibility of even worse. However defiant these entrepreneurs stand, they expressed real concern about their country’s situation.
“The biggest thing this crisis has done is caused us reputational damage. It (the crisis) has made it difficult for us to maintain the credibility we’ve built over the years as an entrepreneurial community,” said Stavros Messinis, an entrepreneur and the co-founder of The Cube, a startup space in Athens.
“On an operational level these capital controls have made it exceptionally difficult for Greek startups to pay their bills,” Messinis said. Web hosting services, Internet connections, personnel are among the key bills affected.
If there is a positive to come from this crisis it is that people are looking at entrepreneurship more seriously
It has also asphyxiated an otherwise respectable investor scene. There are a handful of Greek-based funds, including Attica Ventures, First Athens, Odyssey, Openfund, and PJ Tech catalyst. These firms collectively handle approximately $150 million.
“Over the past several years Greek entrepreneurs have been successful in raising funds from various venture capital firms and a number of firms have set up here in Greece. In fact, there is more money than they can disperse.” The problem Messinis said is that Greeks “spend 80 percent of our time explaining making excuses for the Greek government and 20 percent of our time doing real business.”
Dimitris Kalavros-Gousiou, the co-founder of Found.ation, an Athens-based accelerator, noted, “No one wants to talk about fundraising in this atmosphere.” That is, an atmosphere overwhelmed with the uncertainty of what Greece will face over the next few weeks.
Amid Greece’s prevailing environment the Greek startup community would struggle but it would not be set back Kalavros said.
“If there is a positive to come from this crisis it is that people are looking at entrepreneurship more seriously.” Previous generations he said focused on getting jobs in the public sector or working at a multinational, not of starting something on their own. With unemployment in Greece hovering above 25 percent, Kalavros said that people are launching enterprises in order to create their own jobs.
While he doesn’t expect these “first wave” of entrepreneurs to turn Greece around or contribute to the country’s economic gains, he told me that they are “creating the momentum and paving the path for the second wave of entrepreneurs.” The second wave looks more at opportunity and takes more risk, Kalavros said
Any Greek startup must be focused on taking risks not just in Greece but abroad. With a population of 11 million, the country is too small. Like Israel and Singapore it must develop products and services internationally. Over the past several years Greeks have been focused on developing products and services in the tech space.
We have seen a network of collaboration between our companies and have rolled in others that are suffering from the effects of the crisis – to triangulate payments and ensure that payments are executed
Among the most notable tech companies to emerge from Greece in recent years is Workable, a web service to help sort job applications, Taxibeat is an app to find taxis, and BugSense, an app analytics platform for Windows phones. The San Francisco based Splunk acquired BugSense for an undisclosed amount in 2013.
In order to ensure that Greek startups continue their operations a number of investors have come forward to act as “proxies” — to cover expenses and act as a guarantor.
“We have seen a network of collaboration between our companies and have rolled in others that are suffering from the effects of the crisis – to triangulate payments and ensure that payments are executed,” said Georgios Kasselakis, a partner at the Greek investment firm Openfund.
Panos Papadopolous, BugSense’s founder, put out a call on Facebook on Monday morning to help Greek startups in a similar way.
“If any Greek startups are having a problem paying for services, you can rely on us; we can act as your proxies by using our credit cards in the U.S. to cover your expenses,” Papadopolous wrote.
They have managed to helped 12 people so far through an application process that screens for legitimate companies with five or more employees. “We want to make sure that they have been operating and that they can still operate,” Papadpolous said. “This isn’t “Kickstarting” something new. It’s about maintaining the momentum that they already have.”
On Sunday, Greeks will go to the polls to vote in on whether to remain in the Eurozone or not. Nearly all the entrepreneurs I spoke to are confident that their fellow countrymen will vote “Yes”.
“If there’s one thing about this crisis,” Stavros Messinis said, “it’s that we’ll be strong when we get out of it. Then they’ll say ‘if you can make it in Greece, you can make it anywhere.”Featured Image: Surian Soosay/Flickr UNDER A CC BY 2.0 LICENSE