Lure of easy money continues to define Greek entrepreneurship

Greek entrepreneurship continues to be dominated by small businesses such as cafes, restaurants and clothing and shoe stores. In the third year of the crisis, and despite constant warnings from experts and authorities alike that investors need to explore new business models, nine in 10 new businesses are still in the so-called nonproductive sector, which usually provide no more than a few hours of work for the owners and maybe some of their family members. Such businesses tend to go downhill after just a few months of operation, forcing their owners to close – often with unpaid debts to the state, social security funds and suppliers.

According to research conducted by Endeavor Greece with data on new businesses from all the relevant authorities, 93 percent of new businesses established in 2008 – before the crisis erupted – are active in sectors that are not productive, make no exports and use little in the way of technology. The top five sectors that saw new businesses were construction, apparel and footwear, real estate, accounting and consulting services and food services. Back then, there were about 75 businesses for every 1,000 residents and more than 55,000 new companies were established every year.

Since then, a lot has been said about the need for a new production model. Myriad conferences have been held on the issue and 55 organizations have been set up with the aim of helping new companies. However reality appears not to have caught up yet, and not just because the number of new businesses in 2012 declined by 45 percent compared to 2008.

According to the study by Endeavor Greece, 42,347 new businesses were launched in 2012, 90 percent (compared to 93 percent in 2008) of which were in the same nonproductive sectors. The only difference is that the greatest popularity was enjoyed by restaurants, cafes and bars, as 10,003 of the 42,347 businesses started in 2012 were in this field. Next in popularity, and despite the fact that thousands of such stores have been forced to close since the start of the crisis, came apparel and shoe stores, with 2,100 startups in this category in 2012. Accounting and consulting services came third with 2,046 new businesses, while the massive slide in construction activity did not prevent 1,628 new companies opening in the sector in 2012. Energy production and sale companies came fifth on the list with 1,621 new companies opened in this sector in 2012, a fact that is attributed mainly to the expansion – as irrational as it was later proven to be – of the photovoltaic market in Greece. This area is probably the best example to illustrate the opportunistic manner in which most Greeks do business.

Endeavor is an international nonprofit organization aimed at promoting entrepreneurship. It is supported by leading business leaders and investors from around the world. It began its activities in Greece in September 2012, and its board of directors comprises leading proponents of the Greek industry, shipping, tourism, commerce and media sectors.

Hopeful exceptions

To find startups in 2012 involved in so-called productive sectors you have to scroll very far down the list. Information and communications technology (ICT) firms, for example, come ninth in terms of popularity, with just 1,185 new companies opened in 2012 in this dynamic sector. These, together with enterprises involved in tourism, food production and processing, and high-tech development such as nanotechnology and biotechnology, are nevertheless just the areas that need development in order to help Greece out of the crisis. They represent a new business model based on ambition, long-term goals and strategies, businesses capable of creating growth by providing products and services with a high added value, as well as generating jobs.

According to the Endeavor study, only some 4,000 enterprises among those established in 2012 are in productive sectors, representing around 10 percent of the whole. Other than the ICT companies, 690 firms were set up in tourism services, 640 in food processing and 350 in industry in 2012.

Though such companies are still a small minority, according to the CEO of Endeavor Greece, Haris Makryniotis, the good news is that they have been increasing at a rate of around 40 percent per annum over the past few years. Of these, it is believed that around 1 percent can have a positive impact on transforming their sectors, on growing and on creating hundreds of jobs. This percentage corresponds to around 40 startups a year, companies that make a real difference in the economy and the job market. In the past three years alone, a core of some 100 companies has already been created, which in the 2012-13 period managed to increase their staff by 82 percent and their turnover by a collective 200 percent.

Foreign funds

Dynamic companies are very attractive to foreign investment funds, while some, especially in the food production sector, have drawn interest from individuals and prominent Greek industrialists such as Spyros Theodoropoulos, head of Chipita and a member of the Endeavor Greece board. A characteristic example is digital media brand Daily Secret, which began in Greece and has spread to other parts of the world, already receiving investments of 1.85 million dollars and currently anticipating the entry of another investor.

The profile of these new and dynamic entrepreneurs is often very different to what most people have in mind: They are not 20-something, developing a new idea in a garage at some place like Silicon Valley.

Endeavor Greece’s study found that most are aged between 25 and 45, have high education levels, having studied both in Greece and abroad – which helps them form international contacts – and also have at least three years of work experience in the private sector. What is most interesting is the finding that almost none has ever worked in the civil service and they decided to run with their business idea because they believed in it rather than because they didn’t have any other employment.

Eight promising sectors

The Endeavor Greece study singled out eight sectors where there are currently 49 investment opportunities for Greek companies. The majority are in the most traditional sectors of the Greek economy, but in specific areas where there is much room for growth and innovation.

These are:

* Tourism: Themed trips and devices and applications enhancing the travel experience, such as for museums and historical monuments. Greece is still lagging in services that help the tourist enjoy a more complete experience.

* Food & agriculture: Consolidation of the olive oil market, creating products designed for special diets (such as gluten-free foods), growing herbs and nuts, and the large-scale cultivation of products such as tomatoes, with a focus on big organic markets such as Germany, Austria and the Scandinavian countries.

* Energy & green technologies: Waste management, consolidation of wind parks and high-tech energy storage devices.

* Information and communications technology (ICT): Marketing and advertising via mobile phone services, technological solutions for traditional sectors such as tourism, shipping and agriculture, business-to-business and business-to-consumer communication development, electronic games and 3D printing.

* Financial services: Online insurance services and mobile phone payments.

* Health: Research and development of generic drugs, clinical trials and mobile phone solutions.

* Biotechnology & nanotechnology: Research and development of commercial products.

* Commerce: Developing online tools for price and markets comparisons, and developing a shopping experience that will combine the consumer’s physical presence at the outlet as well as online.

Of course, the mantra that time is money is especially relevant in Greece. Endeavor Greece estimates that the window of opportunity for developing business activity in Greece will remain as attractive as it is today for just a year or two, given that the country is in complete disarray and local players are beginning to compete with one another both domestically and internationally. The opportunities, says Endeavor, are golden because the costs are low enough to offset the risks, the obstacles and the hostile investment environment.


One of the biggest problems for the emerging class of entrepreneurs in Greece is that while they may have great ideas, getting them off the ground can be extremely difficult, the study found. In fact, many aspiring entrepreneurs are put off completely by the bureaucracy, the corruption in the public administration and, of course, the difficulty of securing loans.

Within the context of the study, Endeavor Greece spoke with funds and businesses that have an interest in investing in startups. Investors and organizations or groups that support entrepreneurship tend to agree on the needs of new businesses. They recognize the innovative nature of many of the country’s new businesses and the strong academic profile of new entrepreneurs. However, they express disappointment with the quality of the proposals that have come their way, saying that at least half are usually not up to par. Potential investors, the study confirmed, want to see a clear business plan and clear mechanisms for generating revenues. They applaud prior experience and are looking for entrepreneurs who can carry an idea to success and are open to criticism and suggestions.

“In conclusion it is clear that while many important changes have been made, we have yet to see a turn to large-scale business in Greece. Nor have we seen the formation of a comprehensive business ‘ecosystem.’ We are still in the first phase of the new Greek business arena. There are a rising number though still very few examples of successful businesses,” says Makryniotis. The CEO of Endeavor Greece also noted that the bodies responsible for propping up new business are also mostly doing much of the same as they’ve always done, with just a few starting to provide real support.

Another weakness in the Greek market comes from the investors themselves, who seem overly focused on ICT. Four venture capital funds with over 80 million euros in capital are investing in companies in this sector.

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