European Start-ups Research Articles

Investor Behavior in Venture Capital Investment: An Analytical Study of Georgian and Central-Eastern European Startup Markets

This research paper investigates venture capital investor behaviors within the startup ecosystems of Georgia and Central Europe, providing comparative analysis of these markets. Utilizing a mixed-methods approach, the study integrates qualitative and quantitative data derived from questionnaires distributed to VC investors in both regions. Detailed diagrams visualize critical trends and patterns, enhancing the understanding of investor behavior. The findings reveal distinct investment preferences, regulatory landscapes, and other details in each region. Georgian investors, often navigating an emerging market with limited infrastructure and networks, display cautious investment behavior, prioritizing stable returns and market potential. In contrast, Central-Eastern European investors benefit from more mature ecosystems, demonstrating higher risk tolerance and a greater focus on innovative ventures. Key factors driving investment choices include market potential, innovation levels, startup industry, and regulatory frameworks. The study highlights how these elements interact to influence investor confidence and preferences. For instance, while Central-Eastern European investors are motivated by Innovative Technologies and market size, Georgian investors are more influenced by government incentives and emerging market opportunities. By understanding these behaviors, this paper offers valuable insights for entrepreneurs, policymakers, and investors. It aims to enhance the startup ecosystem in both regions, providing a foundation for more informed and strategic investment decisions. This analysis contributes to the broader discourse on global VC trends, emphasizing the critical role of regional contexts in shaping investor behavior and their implications for emerging markets. Keywords: Venture Capital, Startups, Startup Ecosystem, Georgian Startup market, Investors

Analyzing How European Startups Generate Eco-Processes and Eco-Products: Eco-Innovation Implementation, Financial Resources, and Patents

Despite the pivotal role of European startups in addressing pressing environmental concerns, the current literature has neglected the dynamic factors that influence startups’ decision-making to implement eco-innovation. This study aims to bridge this gap by exploring the impact of eco-innovation implementation on eco-processes and eco-products, considering financial resources and patents as mediators. An integrative framework was proposed, focusing on customer demand, expected benefits, and the description of green innovation as the main dimensions influencing European startups’ decisions to implement green innovation. Furthermore, a questionnaire was distributed to European startups to cover all feasible sectors, resulting in 114 valid responses. The methodology used SmartPLS for descriptive statistics and structural equation modeling. The results showed that financial resources mediate the relationship between eco-innovation implementation and eco-processes, while patents do not mediate either relationship. Eco-innovation implementation also directly influences eco-products. In conclusion, financial resources are essential for advancing eco-process improvements in European startups, emphasizing the necessity for targeted financial support mechanisms to stimulate green innovation. Also, the patents’ absence as a mediator suggests a focus on immediate operational benefits over intellectual property. This paper’s implications can inform strategic decisions for policymakers, investors, and entrepreneurs to promote a more sustainable entrepreneurial landscape.

An empty shell? Relocation of central and eastern European startups, virtual headquarters and beyond

Some of the best technology startups born in CEE moved their headquarters to a foreign jurisdiction before scaling. These ventures became ‘foreign’ companies but kept the principal business functions in the countries of origin. We theorize about this phenomenon, referred to as virtual relocation, and consider what it conveys for the asserted reduced relevance of location-bound advantages and constraints in the digital era. We take a process approach and investigate the cases of 34 technology startups from Poland, Hungary, and Romania. We find that CEE startups’ choice of a ‘virtual’ type of relocation can be traced back to the tension between the retention factors and the push/pull factors influencing their locational decision. We show that the factors that push CEE startups away from their home countries, pull them to the destination country, and make them retain specific business functions in their home countries are equally location bound. If virtually relocated startups manage to seize the assumed opportunities in the destination country and scale, the virtualness of the HQ office will gradually fade: employment starts growing also at the HQ location.

Characteristics of special purpose acquisition companies as a new challenge in European markets

Special Purpose Acquisition Company (SPAC) is a special type of public listed company available to investors in financial markets, and was formed with the aim of investing in one or more existing operating companies after raising capital. This paper provides an overview of academic and financial literature on SPACs, describes their characteristics, advantages and risks of using SPAC as a form that does not offer services and does not conduct business operations, but is formed only for the purpose of acquisition of target companies. The paper focuses on the analysis of the impact of these forms of short-term investments on private companies, SPAC managers and investors. The paper further examines whether the impact of SPACs on European financial markets can be expected to grow. Authors’ findings show that, beside limitations for growth of European SPAC number, there is evident interest among European startup companies to go public through SPACs.

Large language models from OpenAI, Google, Meta, X and Co. : The role of "closed" and "open" models in radiology

In 2023, the release of ChatGPT triggered an artificial intelligence (AI) boom. The underlying large language models (LLM) of the nonprofit organization "OpenAI" are not freely available under open-source licenses, which does not allow on-site implementation inside secure clinic networks. However, efforts are being made by open-source communities, start-ups and large tech companies to democratize the use of LLMs. This opens up the possibility of using LLMs in adata protection-compliant manner and even adapting them to our own data. This paper aims to explain the potential of privacy-compliant local LLMs for radiology and to provide insights into the "open" versus "closed" dynamics of the currently rapidly developing field of AI. PubMed search for radiology articles with LLMs and subjective selection of references in the sense of anarrative key topic article. Various stakeholders, including large tech companies such as Meta, Google andX, but also European start-ups such as Mistral AI, contribute to the democratization of LLMs by publishing the models (open weights) or by publishing the model and source code (open source). Their performance is lower than current "closed" LLMs, such as GPT‑4 from OpenAI. Despite differences in performance, open and thus locally implementable LLMs show great promise for improving the efficiency and quality of diagnostic reporting as well as interaction with patients and enable retrospective extraction of diagnostic information for secondary use of clinical free-text databases for research, teaching or clinical application.

Investigating the entrepreneurial orientation of circular-social hybrid start-ups by assessing their path toward sustainability: Evidence from 20 European cases

Circular-social hybrid start-ups have a remarkable potential to create environmental, social, and economic value. Despite their relevance for the sustainability transition, there is a dearth of literature analysing their entrepreneurial orientation and how they create environmental and social value in their business models. Therefore, the present study, framed in the theory of entrepreneurial orientation, empirically assesses the dynamics of creating positive sustainable value by aligning the initial orientation with the sustainability activities and performance. The research is conducted through semi-structured interviews with the founders of twenty European start-ups. The study shows that circular-social hybrid start-ups have a strong sustainability orientation, but some display difficulties in achieving their initial mission. This entrepreneurial path from mission to reality is identified by uncovering business model dynamics and leverage points: scale-up and growth, use of digital solutions, improvement of working conditions, research and development, and alignment of business processes. These leverage points influence the potential mission drift of the start-up, i.e. its deviation from the path to sustainability. Entrepreneurs can use this study to identify leverage points to support their path toward sustainability.

NVIDIA GTC 2024: AI AND ROBOTICS INNOVATIONS OVERVIEW

This article explores the current trends in Artificial Intelligence (AI) and the Internet of Things (IoT), specifically focusing on their integration into the emerging technology of AIoT (Artificial Intelligence of Things). Analyzing materials from the NVIDIA GTC 2024 international conference, the paper highlights the wide-ranging applications of AIoT across diverse sectors, including industry, logistics, robotics, urban development, and autonomous vehicles. The article delves into NVIDIA's innovative developments, such as the Blackwell platform for Generative AI, the Omniverse platform for creating digital twins, and the Isaac platform for advancing robotics. These technologies unlock new possibilities for AIoT applications in various domains, including urban planning, public transportation, drone navigation, and household robotics. Particular attention is given to the concept of Edge AI, which involves data processing and decision-making at the network edge. The shift from cloud-based solutions to Edge AI promises reduced latency, enhanced reliability, and personalized device operation. The article showcases the experience of Swedish developers who successfully transferred a digital twin of Gothenburg city into the virtual world using NVIDIA Omniverse technology. Furthermore, the article reviews projects presented at the conference, dedicated to the development of autonomous public transport, the creation and training of household and industrial robots, and solutions for smart cities. Additionally, it analyzes successful collaborations between European startups and NVIDIA in the field of robotics. Notably, it examines the developments of Fraunhofer IML, Enchanted Tools, and ANYbotics, demonstrating the practical application of AIoT in solving real-world problems across various industrial sectors. The article concludes by emphasizing the growing demand for AI solutions across diverse industries, reflecting their recognized practical value. It underscores the importance of collaboration between developers, researchers, and technology companies to create solutions tailored to specific needs. Finally, it highlights the relevance of legal regulations for AI, which can foster trust in this technology and ensure the development of more reliable and secure AI systems.

Innovative cluster development across Europe compared to silicon valley

Methods. In order to reach the results of the conducted research it was necessary to apply the ensuing scientific methods: abstraction – which was employed to define the essence of the innovative clusters; induction and deduction – which were used to identify the root causes of European innovative clusters lagging behind Silicon Valley; generalization and specification – which om distinguishing between various approaches to evolvement of start-up economy. Results. The study has enabled one to put forward some of the recommendations concerning the remedies to the visible lagging behind of innovative clusters across Europe compared to Silicon Valley. For instance, it is recommended to increase cross-border cooperation and coordinate regulatory actions to promote venture development and scaling throughout Europe. The first step for this is to create a common corporate rulebook, specifically for fast-growing businesses. Another crucial recommendation is to establish fair competition throughout Europe. It will help new start-ups in their goals to rise up alongside giant corporations and compete worldwide. Monitoring competition with foreign businesses will also be essential for providing a safe haven for European start-ups to establish a worldwide presence and lessen the strain of intense fragmentation and rivalry within Europe. Novelty lies in broadening of the term innovative cluster in order to put an emphasis on the factors that exercise influence on evolvement of start-up economy under modern circumstances. Practical value is enshrined in establishing the factors that can have impact on evolvement of the innovative clusters across Europe. This may serve as a foundation for implementation of government policies aimed at ramping up economic growth through start-up economy.

Value creation and appropriation from the use of machine learning: a study of start-ups using fuzzy-set qualitative comparative analysis

This study focuses on how start-ups use machine learning technology to create and appropriate value. A firm’s use of machine learning can activate data network effects. These data network effects can then create perceived value for users. This study examines the interaction between the activation of data network effects by start-ups and the value that they are able to create and appropriate based on their business model. A neo-configurational approach built on fuzzy-set qualitative comparative analysis (fsQCA) explores how the design of a firm’s business model interacts with various aspects to explain value creation and appropriation using machine learning. The study uses a sample of 122 European start-ups created between 2019 and 2022. It explores the system of interactions between business model value drivers and value creation factors under the theory of data network effects. The findings show that start-ups primarily activate the efficiency and novelty elements of value creation and value capture.

Transformative Business Models for Decarbonization: Insights from Prize-Winning Start-Ups at the Web Summit

The increasing social pressure for decarbonization has placed businesses under considerable scrutiny to actively reduce carbon emissions. A critical step towards achieving this objective is to shift conventional production and consumption systems to more sustainable alternatives. Thus, there is an emergent need to understand the patterns and drivers of the transformative business models (BMs) that underpin that shift. This study adopts a mixed-methods approach that integrates different literature streams—including Sustainability Transitions Theory (STT), Strategic Niche Management (SNM), and the Business Models approach—and stakeholders’ interviews to investigate the key elements of business models that lead towards sustainable practices. This research examines the organizational arrangements of European start-ups operating between 2014 and 2020. The transformation towards decarbonized production and consumption is characterized by an efficient combination of business strategies that incorporate advanced technologies (ATs), such as artificial intelligence (AI), machine learning (ML) and its algorithms, along with sustainable elements, resulting in transformative business models. By exploring the driving elements behind the transition to low-carbon approaches, this study fills a significant gap in the existing literature on business models. The findings from this research also hold relevance for policymakers to promote decarbonization.

Creation Experience of Startup Campuses in Major Regions (North America, Far East, Australia and Europe)

Startup campuses are a gathering place for local startups. On the one hand, they bring together innovative startups, and on the other hand, they offer solutions for international market entry through various incubator programmes, investment services, training networks, education, extensive networking capital, and mentoring. Startup campuses should be seen as a 21st century combination of decentralised incubators, accelerators, and business angels. The world’s leading startup and innovation campuses recognise the need to build the right environment and ecosystem for startups to grow quickly and efficiently. Among the startup campus ecosystems, the US Silicon Valley stands out, home to seven of the world’s top ten startups. Currently, five large startup ecosystems (New York, London, Beijing, Boston, and Shanghai) have the best business development capabilities, and two are trying to catch up (Los Angeles and Tel Aviv). Among startup ecosystems, the US leads the race by a significant margin, but European startup campuses are also growing steadily, while South American startup incubators are lagging behind. The study seeks to find out what services startup campuses provide in different regions, what their main activities are, and how successful they are. The topic is also important because startups most often respond to broad societal problems, such as access to basic services at affordable prices, reducing poverty and inequality, and increasing diversity and inclusiveness. On environmental issues, the most common targets are improving food supply and security, clean energy, climate change solutions, water, and sanitation.

The relationship between management control systems and innovativeness in start-ups: evidence for product, business model, and ambidextrous innovation

PurposeThis paper aims to analyze the relationship between the use of management control systems (MCSs) and innovativeness in start-ups pursuing product innovation (PI), business model innovation (BMI) or ambidextrous innovation (both PI and BMI ).Design/methodology/approachThis paper reports on survey data collected at 143 European start-ups using a structured questionnaire sent to a member of the top management team at each firm.FindingsThe authors find that the control levers and their interdependencies associated with increased innovativeness significantly differ between the different forms of innovation.Practical implicationsThe study provides important guidance for entrepreneurs so that they can effectively support their innovation agenda with the MCSs tailored to their needs.Originality/valueThis research contributes to a growing literature that shows the positive role of MCSs in innovative and entrepreneurial processes. It adds to the understanding of the multifaceted nature of innovation and the crucial importance of BMI and ambidextrous innovation for the success of start-ups.

The Fundraiser's Transfer of Personal Data from the European Union to the United States in Context of Crowdfunding Activities

European start-up companies must overcome more ‘transfer hurdles’ when personal data is transferred from the European Union to the US (United States of America) as part of crowdfunding campaign activities. Transfer of personal data is commonly not associated with (small scale) crowdfunding activities. However, the strict rules of the EU GDPR (European General Data Protection Regulation) on safeguarding personal data apply to all companies when data is transferred from the EU to the US - regardless the size of the business.
 This article identifies exchange of personal data that takes place between primarily fundraiser and crowdfunding service provider in different steps of fundraising campaigns. The framework for rewardbased crowdfunding for goods production that is provided by the US based Indiegogo platform is used as example and context. The article highlights by way of example the obligations that must be met by European fundraisers as "data controllers" when personal data is transferred to Indiegogo. No easy solutions are provided by either European Union or national data protection authorities on how to establish an adequate level of personal data protection. Paradigms on how to secure transfer of personal data to third countries are available in form of so-called standard contractual clauses, but still conditions for transfer of personal data from Europe to the US are hard to comply with. Apart from entering into an inter partes agreement on use of standard contractual clauses with the crowdfunding platform provider, a European fundraiser must furthermore make a so-called "transfer impact assessment" to ensure that third party access to personal data is avoided. In the case of transfer of personal data from the EU to the US the fundraiser must consider using encryption of data as a "supplementary measure" to block third party access. Encryption of data is however not suitable for exchange of data in a dynamic crowdfunding campaign so other means for protection of data must be found and applied.
 The reason and explanation for making data transfers from the EU to the US that hard for e.g., fundraisers are thus to be found at interstate level in the relation between the EU and the US. According to EU law, more specifically the GDPR and several of the provision of the Charter of Fundamental Rights of the European Union, US security legislation authorises a disproportionate access for US intelligence services to citizens' personal data. A solution on manageable transfer of personal data from the EU to the US may be found before the end of 2022, since a new TADP (Trans-Atlantic Data Privacy Framework) is currently being negotiated between EU and US at top politician level. However, the implementation of the TADP may take som time since the EU legislative framework needs adjustments to make the new transfer possibilities operational.

Comparative Research of Central and Eastern European Startup Researches Based on Artificial Intelligence-Based Natural Language Processing

Abstract Objective: In our study, we analyze Central and Eastern European (CEE) scientific papers published in peer-reviewed scientific journals between 2015 and 2021. We examine what category systems and methods are used in Central and Eastern European start-up researches in the recent years. Methodology: Our used methodology was structured literature review analysis and artificial intelligence-based natural language processing which is one of the most evolving methodological directions in economics and social sciences at present but it is very rarely used in review analysis of startup research. Value Added: The NLP method has not been widely used for the analysis of the startup literature. Furthermore, our study is the first which analyzes CEE startups research with NLP technique. Findings: Based on our results, it can be stated that CEE startup researches follow the big global startup research narratives. However, a specific conceptual network is also emerging which contains several shifts of emphasis compared to the directions of global research.

Next-generation business models for artificial intelligence start-ups in the healthcare industry

PurposeValue creation based on artificial intelligence (AI) can significantly change global healthcare. Diagnostics, therapy and drug discovery start-ups are some key forces behind this change. This article aims to study the process of start-ups' value creation within healthcare.Design/methodology/approachA multiple case study method and a business model design approach were used to study nine European start-ups developing AI healthcare solutions. Obtained information was performed using within and cross-case analysis.FindingsThree unique design elements were established, with 16 unique frames and three unifying design themes based on business models for AI healthcare start-ups.Originality/valueOur in-depth framework focuses on the features of AI start-up business models in the healthcare industry. We contribute to the business model and business model innovation by systematically analyzing value creation, how it is delivered to customers, and communication with market participants, as well as design themes that combine start-ups and categorize them by specialization.

Alternative proteins attract investment

Alternative proteins attract investment

Екосистема стартапів в Європі: кращі практики та уроки для України

The scientific research paper examines the European experience in the development of startup ecosystems. The definitions of scientists of the concepts “startup” and “ecosystem of startups” are given. The importance of the development of the startup ecosystem for Ukraine and possible ways to find better solutions to strengthen such development are identified. Factors of internal influence on the startup ecosystem are analyzed, which include cultural (general business culture, history of successful business creation), social (human talent, investment capital, social networks, and mentors) and material, which has a specific geographical location (government agencies, universities, service companies, physical infrastructure, and open local markets). The structural components of the startup ecosystem are analyzed, their role in the functioning of the system and interconnections are revealed. The functioning of ecosystems of startups in Great Britain, Estonia, Germany, Switzerland, Sweden, and Finland are researched. The focus of the analysis was the structural elements of the startups ecosystem in these countries and their impact on the overall result. Statistics on venture capital flows, accelerators, and the total number of startups in leading European countries are analyzed. The main factors of successful functioning of the ecosystem of startups are revealed and the experience of European startup ecosystems are systematized. The Ukrainian ecosystem of startups is analyzed, their structural components and significant shortcomings that hinder its development are described. Weaknesses of the Ukrainian ecosystem of startups include lack of state support, insufficient funding, including due to international capital, underdeveloped infrastructure to support startups, lack of expertise and experience, the unfavorable investment climate and weak international ties. Possibilities and expediency of dissemination of European experience in the development of the Ukrainian ecosystem of startups is substantiated. Possible directions of application of the European experience of development of ecosystems of startups in Ukraine are substantiated. Three main steps have been proposed to strengthen the development of the Ukrainian ecosystem of startups based on European experience and in the context of Ukraine’s path to integration with the European Union.

How to Support Start-Ups in Developing a Sustainable Business Model: The Case of an European Social Impact Accelerator

Sustainability-oriented start-ups are fundamental to developing solutions for, and to fostering, a societal transition towards a low carbon society. In this context, social impact accelerators (SIAs) are organizations specializing in accelerating the progress of sustainability-oriented start-ups. In order to design their accelerator elements (e.g., training, coaching, and funding) effectively, SIAs must be aware of the knowledge needs of start-ups to support them in developing a sustainable business model (SBM). Using a case study approach, we present one of the largest cleantech accelerator programs in Europe, the EIT Climate-KIC RIS Accelerator. Based on the program’s curriculum and manual in 2019, we analyze from the perspective of the program how cleantech start-ups could be supported in the development of their SBMs by presenting accelerator elements that are intended to support start-ups in reducing their knowledge needs by (1) providing new knowledge to start-ups (e.g., trainings, workshops, and e-learning), (2) supporting start-ups’ assimilation of new knowledge (e.g., coaching), and (3) supporting start-ups’ application of new knowledge (e.g., documentation of planning and reporting as part of the program’s contract design). Further, we discuss the knowledge needs of 63 European start-ups before and their progress as a result of accelerator participation in developing a SBM based on qualitative and quantitative data. All 63 start-ups participated in the same batch of the accelerator in 2019. Regarding the development of a SBM, knowledge needs are described considering the triple bottom line including the economic, ecological, and social layer of a business model. Based on the start-ups’ evaluation, we reflect—with a focus on the environmental layer—about the most promising content and support elements of our SIA case to address the different layers, discuss their combination, and present improvement potentials to reduce start-ups’ knowledge needs. With our findings, we claim to contribute to theory development in the emerging literature on SIAs and give practitioners working with sustainability-oriented start-ups insights into the usefulness of start-up support programs and different accelerator elements for developing a SBM.

Standing up against crisis-induced entrepreneurial uncertainty: Fewer teams, more habitual entrepreneurs

The global spread of coronavirus disease 2019 (COVID-19) caused by the novel coronavirus SARS-CoV-2 (severe acute respiratory syndrome coronavirus–2) has led to drastic infection control measures that have dramatically affected societies and economies worldwide. Against this background, it is the purpose of this commentary to illustrate how innovative entrepreneurial activity in particular has been affected by the rising uncertainty caused by the first COVID-19 wave. By comparing innovative North American and European startups established pre-crisis and during the first wave of the pandemic, this commentary suggests that startups founded in the crisis are characterised less by entrepreneurial teams and more by habitual entrepreneurs. Interestingly, female entrepreneurial activity seems not to have been affected by the crisis when measured as the proportion of women founders involved in innovative startups pre-crisis and during crisis. The commentary thus, illustrates what particular type of entrepreneur persists during rising uncertainty and allows us to draw conclusions for policy-making and further research on the interface of entrepreneurship, crisis and uncertainty.

Impact of Covid-19 in the European Start-ups Business and the Idea to Re-energise the Economy

This paper has been constructed with the aim to evaluate the profound Impact of Covid-19 in the European start-ups business as well as to illustrate certain effective ideas in order to re-energise the economy. The sudden arrival of this deadly pandemic has impacted the overall world in many different ways and economy is one of them. Therefore, through the execution of secondary research, this study is going to assess the distinctive notions of economic downfall in the context of European countries and different industries of this continent. In the last decade start-ups have generated a lot of employment. Start-ups have found new markets and opportunities that have revolutionised the way business has been perceived. The titans of commerce and various industries have been left behind by smart innovation and sheer brilliance. So it is only natural that there should be more scrutiny on the impacts of the Corona pandemic on the start-up industry. The impact of the Covid-19 pandemic on the start-up industry should be carefully studied in order to make more informed policies. The aim of this paper is to study the impact of Covid-19 on the start-up industry of the European Union. This paper will also make an in depth study of the strategic remedies employed by various governments re energise the sector.