Digital Startup Strategy of Hungary

September 2016

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Strategies and Action Plans

The Digital Startup Strategy of Hungary, created as part of the Digital Success Programme, outlines a comprehensive approach to fostering a thriving startup ecosystem in Hungary. By focusing on entrepreneurship, competencies, cooperation, and a supportive business environment, Hungary aims to become a significant player in the global startup landscape, driving economic growth and innovation.

Vision and Mandate

The strategy’s primary goal is to position Hungary as a key player in the global startup ecosystem by 2020. The Hungarian government aims to create a supportive environment that fosters the growth of startups, particularly those with high growth potential and global market ambitions. This vision includes a regulatory system that is flexible and responsive to technological changes, thereby enhancing the competitive advantage of Hungarian startups.

Strategic Objectives

The strategy is built around five main pillars:

  1. Supportive Business Environment:
    • Regulatory Environment: The strategy emphasises reducing administrative and social security burdens for startups, streamlining business liquidation processes, and offering preferential taxation for business shares.
    • Special Economic Zones (SEZs): Startups with significant growth potential that require extended R&D phases will benefit from congenial regulatory environments within SEZs.
    • Government Communication: There will be extensive communication about available government programs and grant opportunities to avoid duplication and enhance accessibility.
  2. Entrepreneurship:
    • Social Perception: The strategy aims to improve the perception of entrepreneurship within Hungarian society, particularly for women and disadvantaged groups. This includes campaigns to promote entrepreneurship as a viable career path and reduce the stigma associated with business failures.
    • Educational Integration: Entrepreneurship will be promoted at all educational levels, from public education to vocational training, to develop an entrepreneurial mindset early.
  3. Entrepreneurial Competencies:
    • E-training and Development: A national program for developing entrepreneurial competencies will be implemented, including e-training, entrepreneurship hubs, and public-domain educational materials.
    • Train the Trainer: Educators will receive up-to-date training to effectively impart entrepreneurial skills to students.
  4. Culture of Cooperation:
    • Collaboration: The strategy seeks to strengthen cooperation between Hungarian SMEs and large companies, as well as between public administration and startups. This includes initiatives like opening public data for startup use, promoting industry-cluster collaborations, and encouraging R&D partnerships.
    • Attracting Foreign Startups: Programs like the Startup Budapest Programme and the Startup Visa aim to attract foreign startups to Hungary, fostering a reverse brain drain and boosting the local ecosystem.
    • International Expansion: Hungarian startups will be encouraged to engage with global markets, particularly through programs that connect them with ecosystems like Silicon Valley.
  5. Sources of Financing:
    • Angel Investments: The strategy proposes encouraging angel investments through tax incentives and co-investment schemes with the government.
    • Investor Upskilling: A program to upskill investors, particularly in venture capital, will ensure they can effectively support the growth of startups.

Implementation Mechanisms

Two key horizontal instruments will support the strategy’s implementation:

  1. DSS Action Plan: This plan will operationalise the strategy’s measures, detailing responsibilities, deadlines, and required activities.
  2. Startup Hungary Centre for Methodology and Coordination: This center will ensure coordinated implementation across the various pillars, acting as a bridge between different stakeholders.

Situation Assessment and SWOT Analysis

The strategy includes a thorough situation assessment, noting Hungary’s strengths, weaknesses, opportunities, and threats (SWOT analysis). It acknowledges Hungary’s educational solid foundations and vibrant urban life in Budapest but highlights challenges like high administrative burdens, complicated self-employment conditions, and a taxation environment that hinders investment. The strategy seeks to address these issues through targeted interventions.