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If your company is considering expansion to Central or Eastern Europe, we bet you could use some tips and pointers. In our series on scaling up in Europe, Silicon Canals talked to Barnabas Malnay, business developer at the EIT Digital Accelerator in Hungary. He has a lot of knowledge and experience on scaling up in this specific region. These are the key takeaways for you to benefit from.
#1 Combine local tech talent with management skills from elsewhere
There is plenty of technical talent in Central-Eastern Europe, and Hungary within it. More and more people are getting trained to have careers in tech. Besides universities offering engineering degrees, professional schools are increasingly important, as they not only train ‘regular’ students, but also retrain people that come from different careers into programmers and developers, or specialists in UX, UI, big data analytics, AI/ML, etc. But what we also see is that people with outstanding international business development and management experience, especially that required at the scaleup level, are in much shorter supply. Success typically comes from a combination of the local tech talent with business development and management talent brought from outside of the region.
#2 Take advantage of relatively cheap working force
This is a no-brainer: labour is relatively cheap in this region, compared to Western Europe. And the even better part is that the quality is just as good, especially in tech. This is mainly because of all the schools and the level of the technical education as mentioned before.
#3 Knowing the local language is necessary
“Being proficient in English is definitely necessary for scaling up to Central and Eastern Europe (CEE). However, many people in the region, even among corporate decision makers, are still uncomfortable speaking English on a continuous basis. Having local personnel is therefore rather indispensable, especially in B2B sales. Not only to speak the local language on a native level but also to understand the tech working culture and business environment.”
#4 Investors prefer a global vision and unique technology
“In Hungary and the other countries in CEE, getting funding is not that difficult: there are many funds, private, state-owned and in-between. Hungary is certainly flushed with venture money these days. But usually, companies don’t come to Hungary for the money, since getting funds is easier where your home market is. But if you do consider raising funds here, it is important to have a global vision, really know where you are going with scaling up and have a unique technology, not just a better version of something that already exists.”
#5 Make cold emails warmer and don’t lose hope if you’re left in the dark
“Social proof is very important here, more so than elsewhere even. Make cold e-mails warmer by identifying shared connections and referring to them. Or if it’s an option, go directly through a shared connection.
You should also keep in mind that if you do not get an answer to your e-mail for a while, it doesn’t automatically indicate that you are being ignored. It may also mean that the other party is working on getting you an answer, but would not tell you in the meantime that this is the case. Why bother sending e-mails when one does not yet have anything substantial to say – that’s the thinking, I guess. This strikes people, especially from the U.S., as odd.”
#6 Mutual respect pays off
“Most of the important rules of business etiquette are the same in the CEE region as in Western Europe. Punctuality is important, just like giving your business partners due respect: looking them in the eyes, shaking their hands firmly, and the like. In fact, such gestures are probably disproportionately important, as – due to the difficult history of the region – people are often more proud and at the same time a little less secure than their counterparts in the rest of Europe. They are sensitive to being treated as equals and not be hurt in their (national) pride. It’s better not to question the narrative that they espouse about their own history, geography, and place in the world.”
#7 Hierarchy matters
“Since hierarchical organisational structures often play an oversized role at this end of the world, be prepared that most decisions will not be made during your business meetings, as chances are that not all decision-makers with a stake in the matter at hand are present at your meetings. This, again, requires patience on your side, similarly to when you get no acknowledgement of receipt to your e-mails.”
#8 Invest in relationship management and trust building
“People in Central-Eastern European countries may at times be distrustful, pessimistic, or confrontative. I put this one as well down to our complicated histories and cultural impulses. On the flip side, Central-Eastern Europeans are typically frank and artless, they rarely shy away from discussing unpleasant points and potential difficulties, albeit not always in the most straightforward and solution-oriented manner. Add to this the fact that people are also more emotional here than in Western and Northern Europe, and you will not wonder why success requires a fair dose of relationship management and trust building in our region.”
We really hope these tips will be helpful for all the deep tech scaleups looking to spread out in Central and Eastern Europe. If you have any questions or opinions, do share your thoughts in the comments section below.
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