Cyprus’s Startup Odyssey: The Rise Of Entrepreneurship

by Marios Roussos
Professor Savvas Chatzichristofi

A Conversation with Professor Savvas Chatzichristofi

Reflecting on recent years’ transformative growth, Cyprus has a thriving startup community, with a bet to dive into the evolution of the island’s entrepreneurial landscape.

From significant growth to emerging trends, Mr. Savvas Chatzichristofi, Vice-Rector of Research and Innovation and Professor of Artificial Intelligence at Neapolis University Pafos sheds light on the feedback, needs, and aspirations of local startups.

Mr. Chatzichristofi offers keen insights into the trends shaping Cyprus’s startup scene and highlights the feedback, needs, and aspirations of its vibrant community.

Drawing inspiration from successful international models while advocating for tailored approaches, he outlines strategies to further fortify Cyprus’s position as a regional hub for innovation and enterprise.

In a dynamic dialogue with Mr. Chatzichristofi, we delve into the multifaceted evolution of the island nation’s entrepreneurial landscape and glean valuable advice for aspiring entrepreneurs navigating the exciting realm of startup ventures in Cyprus.

A growing ecosystem

How much the startup community has changed in the past years and what trends do you see?

Over recent years, the startup community in Cyprus has experienced transformative growth characterized by a burgeoning incubator and accelerator landscape, heightened access to funding, and an increasingly vibrant tech ecosystem. This expansion is most notably observed in the ICT sector, which has notably contributed approximately €3 billion to the Cypriot economy. Besides tech, Cyprus has also seen developments in financial services, real estate and construction, renewable energy, and green initiatives.

Regarding trends, there is a significant focus on fostering innovation and attracting talent to fortify Cyprus’s digital future. The government has launched financial incentives for innovative SMEs and startups and initiated schemes like the Start-Up Visa and the Digital Nomad Visa to draw entrepreneurs and high-caliber professionals. Moreover, there is a concerted effort to bolster education and training, particularly in STEM fields, to develop a skilled workforce that supports a robust, innovative economy.

Additionally, the country is enhancing its technology sector with increased state support, new national strategies for tech integration, and incentives aimed at attracting more IT startups and regional headquarters. Cyprus is positioning itself as a regional hub for science and tech companies, with several major international ICT companies establishing regional headquarters there.

The advanced research output, as detailed in the Cyprus 2024-2026 Research and Innovation Strategy document, underscores the commitment to leveraging research and innovation as drivers of sustainable growth. The strategy aims to transform Cyprus into a leader in research and innovation within the EU and globally. This includes developing world-class research infrastructures, connecting research to businesses, and enhancing entrepreneurial success through strategic investments in technology and targeted support for emerging sectors such as digital technologies, renewable energy, and agri-food systems.

Professor Savvas Chatzichristofi

These concerted efforts not only highlight Cyprus’s strategic positioning but also its dynamic adaptation to global technological advancements and challenges, thus cementing its status as a thriving hub for innovation and enterprise.

Needs and concerns

What is the feedback you get from the startup community and what are their needs or complaints?

Feedback from Cyprus’s startup community portrays a positive and supportive environment characterized by mutual assistance, information sharing, and communal enjoyment among entrepreneurs, startups, and investors. The community places high value on collaboration, mentorship, and accessible resources that empower startups to overcome challenges, refine business models, develop effective market entry strategies, secure funding, and achieve sustained success.

However, there are voiced needs and concerns within the community that call for more customized support programs, particularly for addressing sector-specific challenges such as those faced by cleantech ventures and the commercialisation of innovative academic research. Additionally, there is a discernible demand for enhanced access to resources, expanded mentorship, and broader networking opportunities to stimulate innovation and growth among startups and SMEs.

Overall, while the initial feedback from Cyprus’s startup community is largely favourable, there remains an evident and ongoing necessity for more focused support, resources, and programs that cater specifically to the unique challenges faced, thereby further strengthening the country’s entrepreneurial ecosystem.

How, in your opinion, should the whole startup ecosystem in Cyprus be working? Any examples from other countries?

To foster a thriving startup ecosystem, Cyprus should enhance integration and collaboration within its existing structure, focusing on a few strategic approaches inspired by successful international models, such as those observed in Israel and Estonia. These approaches are also in line with strategic priorities identified in Cyprus’s current research and innovation policy framework.

·         Robust Incubation and Acceleration Programs: Drawing inspiration from Israel’s strong network of incubators and accelerators, Cyprus could further develop its programs to support startups at different stages of growth. This includes providing both seed funding and advanced entrepreneurial training, as well as fostering connections with international markets and investors.

·         Specialized Support for Key Industries: As seen in the strategy documents, Cyprus has identified priority sectors like agri-food, maritime, renewable energy, and digital technologies. Tailored support programs, including industry-specific incubators and accelerators that offer specialized resources and mentorship, could be modelled on Estonia’s approach to nurturing tech companies.

·         Integration with Education and Research Institutions: Cyprus has a network of 12 universities and multiple research institutions which can be leveraged more effectively to foster innovation. Creating formal partnerships between these academic institutions and startup ecosystems could mimic the success seen in Estonia, where tight-knit collaboration between universities and the business sector has fueled a dynamic entrepreneurial environment.

·         Funding and Investment Incentives: A robust framework for funding is essential. Cyprus could expand on its funding avenues by incorporating more diverse financial instruments such as convertible grants, equity investments, and innovation vouchers, similar to the varied funding options available in Israel.

·         Internationalization and Open Innovation: Following the strategic emphasis on making Cyprus a regional hub for research, innovation, and entrepreneurship, there should be a greater focus on attracting international startups and investors. This could include simplifying the business and visa regulations and offering competitive tax incentives, aligning with the policies that have supported Estonia’s rise as a digital leader.

·         Policy and Regulatory Support: Continual assessment and refinement of policies that affect startups are crucial. This involves not only providing financial support but also ensuring that regulations facilitate rather than hinder startup growth, a principle that both Israel and Estonia exemplify in their regulatory reforms to support entrepreneurship.

By enhancing these areas, Cyprus can aim to not only match the success of countries like Israel and Estonia but also carve out its own distinctive identity in the global startup landscape. The strategic emphasis should be on creating a conducive environment that promotes innovation, leverages existing strengths in research and education, and actively engages with the global economic and technological community.

Opportunities from Europe

Α Small states like Cyprus should have help from Europe to strengthen the ecosystem. To what extent is it currently being done? Is there anything extra for startups to seek?

Cyprus has been proactively bolstering its startup ecosystem with significant support from Europe. The Cyprus Startup Manifesto aligns with the European Startup Manifesto, underscoring the digital economy’s potential and advocating for a shift in Europe’s attitude towards entrepreneurship and accepting failure. Moreover, Cyprus places a strong emphasis on entrepreneurship education and skills development to equip students and aspiring entrepreneurs with the necessary tools for success.

Financially, the startup sector in Cyprus has witnessed a consistent rise in available funding over the last decade, achieving a peak with a record €85.5 million raised in 2021. Despite a return to pre-pandemic funding levels in 2022, the momentum remains positive. The nation has also given rise to successful tech unicorns such as Nexters and Outfit7, alongside burgeoning startups in sectors like gaming and edtech.

The Cyprus Entrepreneurship Ecosystem continues to expand, with an increasing number of incubators and accelerators catering to the diverse needs of startups. This growth is complemented by a supportive infrastructure of co-working spaces, media outlets, and government initiatives, all of which contribute significantly to fostering innovation and entrepreneurship across the island.

Furthermore, Cyprus’s integration into the European Union and the European Economic Area opens up extensive opportunities for EU funding, programs, and policies that further facilitate the development of startups and SMEs. Additionally, Cyprus’s strategic geographic location at the intersection of Europe, Africa, and Asia presents advantageous prospects for expanding trade and investment opportunities.

Do you think the competition is high, to a point that is not sustainable?

The country has experienced a notable increase in startup investments and the number of registered startups, emphasizing its commitment to creating a nurturing environment for entrepreneurs.

The increasing competition within the startup scene appears sustainable, supported by a robust ecosystem, ample funding opportunities, and Cyprus’s strategic position as a talent hub in Europe. Government initiatives, tax incentives, and access to EU funding and programs further bolster the sustainability and growth of the startup ecosystem. The presence of incubators, accelerators, co-working spaces, and organizations dedicated to supporting startups showcases a comprehensive and holistic approach to fostering entrepreneurship and innovation across the country.


Startup World Cup Cyprus

Embrace and utilize

What is your advice to young entrepreneurs?

Here are some tailored pieces of advice:

Engage with the Research and Innovation Ecosystem: Cyprus has a strong emphasis on research and innovation with significant advancements in highly cited scientific publications and research outputs. Young entrepreneurs should connect with universities and research centres to leverage these resources for innovation and product development, which can enhance their startups’ technological edge.

Maximize Funding Opportunities: Take full advantage of the diverse funding options available, from the Cyprus Entrepreneurship Fund offering equity financing up to €6 million, to various tax incentives that encourage investment in startups. Understanding the landscape of available funding can significantly ease the financial challenges of scaling an early-stage company.

Utilize Co-Working Spaces and Incubators: Co-working spaces, incubators, and accelerators are not just about affordable office space; they are hubs of knowledge, advice, and networking. Engaging in these environments can provide crucial industry insights and connections vital for early-stage growth and learning.

Seek Mentorship and Continuous Learning: Several organizations offer mentoring and resources critical for navigating the early stages of business development. Continuous learning through these channels can help refine your business model and strategy.

Embrace and Contribute to the Entrepreneurial Culture: Cyprus recognizes entrepreneurship as a key driver for economic growth. Immerse yourself in this culture, contribute to it, and use it as a springboard to launch and grow your innovative ideas.

Establish Strong Research Collaborations: With Cyprus’ strategic focus on sectors like agri-food, maritime, and renewable energy, there are ample opportunities for startups to collaborate on research and innovation projects. These collaborations can lead to the development of groundbreaking products and services that have a significant market impact.

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