In a study commissioned by the Austrian Federal Economic Chamber, EcoAustria examined the “value creation of start-ups in Austria”. The result: a need to catch up. In this country, 687 start-ups and scale-ups are registered per million inhabitants, placing Austria middle of the European average. To put this in perspective, Switzerland has 1,220, the United Kingdom 1,811, and the Netherlands 2,400. In terms of venture capital financing and the value of exits, Austria again falls short.

According to Monika Köppl-Turyna, it’s not due to a lack of capital:

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We have enough money in Austria. It is just tied up in real estate and foundations.

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“Meaning that all the wealth generated here is not being devoted to the best, most productive purposes. We’re investing too conservatively. In Scandinavia, the majority of venture capital is provided by pension funds – that should be an important element of Austrian reforms.”

In 2020, Köppl-Turyna took over as director of EcoAustria. The institute, which has been active in the Austrian research landscape for more than ten years, focuses on the evaluation of economic and social policy measures. Köppl-Turyna describes her role as “constantly reminding decision-makers of perspectives that go beyond the next election.” After all, many things are lost in the day-to-day business of politics. Venture capital, for example, still remains a rather niche field of discourse.

As the aforementioned study attests: If the number of start-ups in Austria were to be brought into line with the level in the United Kingdom, the competitiveness of Austrian companies could be significantly improved. Demand for domestic goods would increase, and companies would have greater incentives to invest. If the Netherlands were taken as a reference, investment and employment effects would increase by 1.3 percent or 12,000 employees after ten years (26,000 after twenty years).

Potential is yet to be realized particularly in the field of health and care: “We examined this across different nations. Digitalization has the potential  to create considerable savings of taxpayers’ money through increased efficiency. This is particularly valuable in periods when skilled employees are in short supply, allowing for the reallocation of personnel to more productive tasks.” Particularly in rural regions, innovation could help relieve pressure on the entire system.

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IoT, smart beds, care robots, the technologies  already exist, you just have to put them to good use.

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However, progress is still to be made before Austria can create an environment beneficial to entrepreneurship. Most notably, the country needs to develop policies that will attract and encourage aspiring founders. “In order to achieve an international competitive edge in the start-up sector, it is essential to cut down on bureaucratic procedures and costs, remove any obstructions to entry, and reduce taxes and other burdens.” Köppl-Turyna noted that Austria’s current economic situation cannot be solely attributed to the state. Instead, she argued that a shift in the mindset of the people is necessary to foster a more entrepreneurial spirit. Founding is not present enough in Austria, nor in Germany, and the fear of taking risks is too great, she added.

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We need new technologies and innovation. It is vital to remain competitive in the long run.  You can’t achieve that with  economic stimulus programs,  not with government money.  A critical mass of companies is absolutely essential for creating a vibrant and dynamic market.