Romania has the funding and tech-knowhow, but needs business knowledge to go global

Bitdefender CEO Florin Talpeș explains why Romania needs to learn how to go global to become an innovative tech player.

Since the fall of communism, Romania has grown to be a hotspot for outsourcing and R&D.

A strong focus on STEM education going back more than 60 years means the country has long had the skills and workforce to turn it into a tech stronghold. However, few startups from the country ever make it on to the global stage.

According to one of the country’s few internationally-recognized CEOs, Romanian startups need more global business nous in order to move on from simply being an outsourcing hub.


How Romania became a tech hotspot

“A myth about Romania is that the technology sector is something completely new,” says Florin Talpeș, founder and CEO of Romanian security company Bitdefender.

“In 1958 - 60 years ago - there used to be only 8 countries in the world that designed and built electronic computers, and Romania was one of them.”

A heavy focus on STEM education, especially around mathematics, meant the country’s academics were well placed to jump into the field of computers and programming. With the likes of CIFA, DACICC,  and MECIPT, Romania was an early entry into the world of computers. And the production of the Felix, HC, CoBra, and Independent line of computers throughout the 80s ensured it wasn’t only academics who had an interest in technology.

But it was the fall of communism which really helped to kickstart Romania’s transformation into a tech hub.

“The domestic market collapsed, and pool of domestic tech talent was in a position to look for new markets,” says Talpeș. “We started to become entrepreneurs; me and my wife created a company, and we started to develop software.”

SoftWin, the company founded by Talpeș and his wife Măriuca, eventually morphed into Bitdefender after they realized there was more money to be had in selling the security products it had developed internally than in outsourcing.

“That's typical for the region; entrepreneurs starting in the 90s with outsourcing, building funding, and start to innovate and build products and continue with creating new, innovative startups.” 

Today the company is known largely either as an outsourcing hub or as a common location for major companies to house Research and Development centres. Amazon and Fitbit have both opened R&D centers in the country within the last year, while the likes of Nokia, Infineon, and Oracle also base some of their research there.


Romania has the funding, but not the business acumen

From its roots as a services company, Bitdefender has grown to become a big player in the security space and one of the global success stories in Romanian business. Today the company boasts over 500 million users in more than 150 countries. It was recently valued at $600 million after investment from London-based private equity firm Vitruvian Partners. However, despite these successes, few other companies have followed in Bitdefender’s footsteps when it comes to going global.

“In Romania you find exceptional technology talent. The innovative part of the industry is developing hugely -- it is not the funding we are missing -- but we still need to build that critical mass of people which have the knowledge of how to go international.”

The site lists nearly 400 startups locally. And there is money flowing into them. In 2017, Romanian startups raised more than three times their 2016 figure in just the first six months of the year -- €38.4 million ($44.9 million) compared to €11.3 million ($13.2 million). But with the odd exception – US-based UiPath was founded by Romanian entrepreneur Daniel Dines – few of these companies are known internationally.

“From the beginning, US companies think about going global. European companies are more focused on the domestic market and eventually, later on, they're thinking about growing.”

“When you're looking to the industry it is still dominated by global services (i.e. outsourcing), it is not dominated by innovation-based industry. We strongly believe innovative industries could be a significant part of the Romanian future.”

To help the local ecosystem, Talpeș and Bitdefender are working with local accelerators to offer mentoring to startups, especially around planning and go-to-market strategy. Earlier in the year he claimed that building up these kind of business skills locally is the only way to stop the “migration phenomena”.

During the dotcom boom, Romania saw much of its tech talent leave, says Talpeș, and the country never had a brain gain strategy like the US or UK, which have the appeal of international universities and global cities.

Following the bust, efforts were made to retain the country’s tech talent, namely increasing wages and reducing taxes so that the country’s tech workers don’t need to move to be well off.

“When I used to be a researcher in 1990, my wage was $100 per month. Today the tech in Romania has the highest wages in the economy.”

While these changes mean the technical talent is often happy to stay, the ones who do leave, however, are often part of the entrepreneurial segment of the population, according to Talpeș. So, the company is looking to help develop local companies into more global-thinking entrepreneurs.

“The value we can bring to Romanian startups is the knowledge we have on how to develop internationally, how to understand the market and so on. We are developing that business knowledge; how to go international, how to understand different markets to the one you are in.”


Also read:

“Outsource Romania”: Why Romania is new outsourcing hotspot

Romania’s tech sector breeds jobs

The evolution of tech in Cluj, Romania