Romania seen through foreign investor eyes
I am a Romanian businessman, but I consider myself lucky for being born in a time when business became borderless. In other words, I’ve been interacting with non-Romanian partners for almost 10 years. So, since this text is in English, you are surely interested in a short list of my foreign partners’ perceptions of Romania. Warning: most positive things have a downside.
Work hard, play hard
Yes, we, Romanians, are known for that. We get enthusiastic quickly and react well to uncommon tasks, stimulated by the novelty of what we have to do. Also, overtime is less expensive in Romania than elsewhere for various reasons. Every foreigner I know was happy with the fact that we are connected 24/7 and most of us do react well to business messages sent at unusual hours, especially having in mind time zones.
However: Things can become hectic at this pace. If somebody spent 16 hours at the office the day before, you can hardly expect them to deliver something good the next day. Somehow, in this part of the World, we have to protect ourselves from work excess in order to be able to obtain better long-term results.
Good English language knowledge
You can order a beer in English almost anywhere in a big city. You can even bet on a certain degree of command of English from middle-aged taxi drivers. There are even things that Romanians can hardly name in their native language, such as computer menus or marketing lingo. Romanian itself got invaded by English after the fall of communism, in domains that simply lacked the vocabulary. Most of them are related to business or technology.
However: There are people who have studied English and there are people who learned it by ear. You may face some misunderstandings ranging from funny to problematic. You also may be surprised of how little English legalese a technical person understands and the opposite — what a lawyer can make of a marketing report. My advice: if you’re in search of really strong abilities, look for English certificates rather than self-assessment in resumes.
One could hardly say anything good about Romania in this respect. In my view, you can never be cautious enough about it. Have you heard about the rule that you’ve got to get the agreement of your closest neighbors when setting up even the smallest, quietest business in an apartment? An American friend of mine asked a bureaucrat about the meaning of it and the bureaucrat frowned: ‘There have been cases when we’ve had dozens of companies registered in the same apartment, which is totally fishy.’ The American was bemused: ‘This is precisely what I pay for in New York and it’s totally legal. A box located at a physical address, together with hundreds of other businesses, just in case. It’s 50 dollars per year and it’s the only address I need in the US!’
Responsiveness and punctuality
A big part of Romania, at least the one you’ll be interacting with mostly, is somehow prone to progress. I’m not bragging with my conationals – it’s the observation of an Italian partner. It comes down to the will to overcome ourselves and catch up with what is sometimes still called here ‘The West’ or ‘The Civilized World’. This is causing the enthusiasm and ability to work hard I’ve already mentioned and, obviously, punctuality. You can use it all to your own and your local partners’ advantage.
However: Have you ever heard anybody saying in Romanian ‘Imediat!’? It is an answer to a request and it literally means ‘Immediately’ or ‘Right away, Sir’. Some other cultures have it, but in Romania it’s some kind of automated answer, it hardly means anything. To a Swiss gentleman that I know, it means: ‘Gimme 15 minutes’, or simply: ‘F… off!’ The Swiss gentleman owns an Omega and I suppose he knows a thing or two about time.
Yes, Bucharest – as well as other big cities in Romania, such as Cluj or Iași — is lots of fun. You might have heard of the Old Centre, which is something similar to Campo de’ Fiori in Rome or the Jewish Quarter in Budapest. It’s right in the center, full of pubs and clubs. The kind of area that travel guides call, in lack of a better word, ‘vibrant’.
However: During weekends, the Old Centre gets stormed by low-cost city break cheap beer addicts and they sometimes don’t even book a hostel room. Music is loud, fine cuisine is scarce and yes, everything is cheaper than in London, but significantly more expensive than in other parts of Bucharest. My advice: look for an Arabian restaurant. You might have nice surprises, because they are run by Palestinian or Lebanese folks that came to Romania in the eighties, in communist student exchanges. Many of them have remained here, got into the food business and they’re really good at it.
All in all, I do love Bucharest a lot, in spite of what I’ve said. But a foreigner’s experience here depends strongly on their local contacts. As most other peoples, Romanians are very appreciative of their own hospitality. In general, it’s true, we are very welcoming, because until 30 years ago we were isolated and we had to report contacts to foreigners to the communist Police. To younger people in big cities, strangers are less appealing. So, in the end, finding compatible partners is a good idea in terms of personal comfort. As it always is for business, isn’t it?
It used to be the case that one would have some money, and they would go to an advisor who would then, in turn, research different markets and make a recommendation. That person would charge their client a fee for managing the money and a success fee should the placement of funds generate a profit. While the former would vary from, generally, 0.5% to 2% (with the rule being that you pay less when you place more money), the latter could go to up to 20% of your profits. And while, in the old days, one would pay for the work the advisor does behind the scenes to research and get top-notch information in a market, the alternatives nowadays no longer justify paying such high prices to place one’s money. The advisor is slowly being replaced by a user’s own research, online investment management companies, or even Artificial Intelligence.
The price for investing your money has also gone dramatically down, with the rise of more and more digital companies using advanced software to analyse data and generate attractive portfolios.
Stock market investments are also an attractive alternative. However, without experience in the field or a fee-hungry advisor, this can prove to be a problematic choice. The issue is two-fold: on the one side, picking the stocks to “bet” on can be extremely difficult, as it takes serious market research to identify the potential long-term champions; and then, of course, there is the approach that some companies might skyrocket when they are launching new products or tapping into a new market. However, this comes with significant risk, as overnight success is rare, and massive failures have been generating headlines since before we can remember.
One could think that actively investing one's own money is a bold move, but the old-fashioned “keep your money in the bank” option is now a money-losing option.
It’s been 12 years since the modern financial sector started to show its weaknesses, and 11 since the sequence of events that started with Lehman Brothers collapsing nearly destroyed the world economy. The new reality is one of lack of trust in the banks from the younger generation, and of negative interest rates. Yes, in many countries it actually costs you money to have banks take your placements.
As such, it is no wonder that it actually makes sense to find alternative ways to protect and expand one’s wealth. However, there is one significant risk that one should always consider: while not being tied to big institutions such as banks is what has made these alternatives attractive to younger generations in the first place, the downside to that is that, if anything were to happen to them, they will not have an entity behind them to bail them out, which poses an increased risk to customers. As such, research and caution are highly desirable.
Over the last 2-3 years, the shared economy model, championed by the likes of Uber, has been adopted in more and more industries, including the financial one.
More and more platforms are offering the option for people to create portfolios using small amounts of money, relying on the power of the crowd to create strength when put together.
So, here are a few of the options that are out there, and a bit on how they work:
- FinTech is always an exciting field. Have a look at players such as Robinhood and Sofi.com, which offer lending, mortgages and investment to categories of people who would not always qualify for support from a traditional bank.
- Peer-to-peer lending (P2P) uses marketplaces or platforms to match borrowers (people) lenders (also people) - see Mintos, Grupeer, Peerberry, Lendermarket. Those interested can “buy” a share of a loan on the platforms.
- Startups: new and exciting startups are in the news almost daily. Two of the ones that have piqued my interest are forgeglobal.com, seedrs.com. If you have a more serious amount of money to invest, getting “in on the action” at ground level can be incredibly rewarding, both in terms of supporting an entrepreneur who’s just starting out, as well as potentially getting a significant return for your investment. But, as with everything, make sure you do your due diligence and ample research in the space you are about to invest in.
- If you want to go industry-specific, there are now marketplaces for investments in real estate. Don’t have enough money to buy and flip a piece of real estate? That’s okay. You can pair up with other investors, crowdfund and get involved that way. Crowd Estate, for example, promises 17% annual returns.
Please note that I am an investor in some of the companies I have mentioned in this article. This article is not meant to provide investment advice, it is merely an investor’s perspective on alternative investments available. Capital at risk.
If you’re a startup or scale up founder, or if you are working up to launching your idea, events can be useful to see how others do or dit it. It’s useful to see what worked and what didn’t for successful entrepreneurs, how they think, their approach to business.
It can take a lot of time and energy to attend business events, and the gains aren’t always immediate, but success doesn’t happen in isolation – entrepreneurs need a certain vibe and energy to keep going, they need networks, need to be connected to their markets, their competitors and their peers.
I go to a few events every year, and I choose those where I am likely to see new ideas put into action, meet smart people and explore different sectors. I do focus on my key areas (property, fintech and medtech), but I keep my eyes open for what’s going on outside of there areas too. So here is what’s on my list currently.
- Central European Startup Awards – happening this week in Bucharest!
Conflicting agendas mean that unfortunately I’m not going, but I’ll follow it with interest.
This is a regional program run by the Global Startup Awards. In Romania they’ve partnered with Impact Hub, one of the biggest co-working spaces and entrepreneur networking platforms. Annually, they select and award startups in tech / web industries. After the national phase of Central European Startup Awards competition, the winners of each of the 10 countries (Austria, Poland, Czech Republic, Slovakia, Romania, Bulgaria, Serbia, Croatia, Slovenia and Hungary) participate in a regional competition, whose winners are announced on November 21st in Bucharest.
2. Disrupt Berlin – 11-12 December, Berlin, Germany
Organised by TechCrunch, Disrupt Berlin showcases emerging trends in the business of technology and is a great place to meet or find information about game-changing founders, startups and technologies.
There are a multitude of conferences, workshops, networking opportunities and companies from all aspects of tech, but focused in on several category tracks. I'm looking this year at Artificial Intelligence/Machine Learning, BioTech/HealthTech, Blockchain and FinTech, but there are a few others.
3. Bucharest Tech Week – May 2020, Bucharest, Romania
5 days of conferences hosting international & local speakers, and a B2C gadgets and tech expo. Conferences are focused on innovation (seems to be an umbrella theme, which can fit anything these days though), HR, some coding conferences but also Fintech.
4. Wearable Europe - 13 - 14 May 2020, Berlin, Germany
Conference and exhibition focusing on wearable technologies, applications, and their commercialisation progress. The conference is part of the IDTechEx Show, a series of synergistic events on Printed Electronics, wearable, sensors, IoT, graphene & 2D materials, energy storage, electric vehicles.
5. EU-Startups Summit – 28-29 May, Barcelona, Spain
Some of Europe’s hottest startups and successful European entrepreneurs - over 1,500 founders, startup enthusiasts, corporates, angel investors, VCs, and media from across Europe. The two-day event is a great opportunity for networking, and a meeting point for aspiring entrepreneurs and investors who are aiming to build international tech companies.
6. London Tech Week - 8-12 June 2020, London, UK
A 5 day technology and innovation marathon, with events on connecting global markets, cybersecurity, digital transformation and innovation, for startups and scaleups.
7. Webit Festival Europe - 17-20 June 2020, Valencia, Spain
A huge event, Webit is a B2B and B2C festival and tech fiesta: 15.000 delegates, 450 speakers, 1,500 selected startups, 500 investors, international media.
With specialised summits for many verticals, I particularly am interested in the summits for health, fintech and blockchain. Other summits focus on cybersecurity, mobility, growth, future of food, or digital entertainment & media.
8. Techsylvania – 20-23 June 2020, Cluj, Romania
One of the biggest tech events in CEE, Techsylvania has tens of events, workshops, keynote speakers and panels. It can be very informative and great for networking and for benchmarking ideas, because it has almost 4.000 attendees - engineers, founders, investors, executives and CEOs of IT & digital companies, banks and startups.
There is a startup competition at Techsylvania too, Startup Avalanche, for early-stage startups, which get to meet international VCs and investors as they compete for the Grand Prize – €100,000 investment.