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Issue 25

The Cluj IT Ecosystem from the startup perspective

Ovidiu Mățan
Founder @ Today Software Magazine
OTHERS

The "ecosystem" term of the title is used as a metaphor of the economic context in Cluj, which establishes close relations between organisms such as the IT community, universities and financing resources. Each of these, the IT community through execution, the university through research and the local financing resources by sustaining the first two, are involved in creating a network of interdependencies and conditionings. The emergence of startups within this ecosystem is interpreted as an instrument of measuring innovation and entrepreneurial culture.

Although the first steps taken in this direction are relatively shy, the importance given to them and the local support are growing. Many of the local events in the IT area have a special section dedicated to startups: Cluj Innovation Days, IT Days, Techsylvania. We can find the same trend even within larger events, such as Cluj Business Days or TedX. All these prove the importance given by the community to the development of some local products, the generation of that IP (Intellectual Property) which provides, at the local level, a better stability and greater development potential. However, for the success of a startup on a global market, it is necessary that the whole ecosystem helps it grow from idea to implementation, visibility and profit. Victor Hwang has very nicely defined the overall picture. The classical outsourcing industry can be viewed as a farm where the planted seeds grow very fast, they all have the same size, the exceptions are few and generally do not represent a benefic thing. Alternatively, in a forest, the planted seeds, though they have a small chance to survive, can grow to become massive trees, which can live for a long time. In this environment, it is ok to fail, and this leads to diversity, as opposed to the farm where all the seeds have to become mature plants. In both examples, what matters the most is the soil where these seeds are growing, which to us represents the ecosystem. The development of some new products means communication, trust and sharing the acquired experiences.

We will go on to analyze the main factors that define the Cluj IT ecosystem.

IT Community

It is mostly made of IT companies which develop outsourcing products. There are some local exceptions, among which I would like to mention two, belonging to the games industry, Exosyphen and Idea studio, but also those of some big companies such as Arobs or Skobbler, which has now become Telenav.

An important number of companies are those which are part of an international company, they have ownership for the developed products and there is a R&D local division. Their number is still growing and we can enumerate some of them such as: Betfair, Yardi, Tora, HP, Ullink, SDL or Gameloft.

An interesting category is represented by the companies which activated on the local market and have been purchased, being thus integrated in the global market: NTT Data has purchased EBS, Accenture has bought Evoline, Nok startup was taken by Intel or Skobbler, purchased by Telenav.

From the perspective of personal development, the outsourcing offers the opportunity to work on important projects, as well as the assimilation of part of the client"s culture, of the way they work. From the more general perspective of corporations, the outsourcing gives access to a part of the culture of the other corporations, communication between different projects, but also meetings with teams from different corners of the world.

If ten years ago, in Cluj there was only mere execution, now we are dealing with a more and more extended ownership. Generally, the architecture of systems is now done locally, and product managers and business analysts are very valuable. This also means a lot of trust and acknowledgement of the quality of the software developed in Cluj, and the tendency is to focus on quality in spite of the costs. As a matter of fact, the higher and higher costs, which are also reflected in the programmers" salaries, also represent an important impediment in the development of startups. At the same time, it creates that coziness chosen by the majority to the detriment of trying to develop their own products.

The local software market has reached a first level of maturity. There are employees who have fifteen years of experience in the domain, but their share is relatively small. The market is generally young, without having grey-haired programmers yet. From the recruiting perspective, there is a continuous battle for attracting talents. Unfortunately, there are situations where people have dedicated 3-4 years to a startup in order to be employed. This can be a problem, but, on the other hand, the assimilation of a company"s culture and a better understanding of the product development process can lead in a few years towards the creation of a winning startup.

Universities

In the two universities in Cluj, Babes-Bolyai and the Technical University, approximately 1000 students are prepared to become programmers. Their number is small, compared to the necessities of the market, and this can be noticed in the bigger and bigger number of companies which open branches in other cities. Moreover, alternative programs such as 42.fr or Ruby Girls are developed.

The importance of universities and their role in the context of the development of local startups is rather small. We are trying, through the annual IT Days event, www.itdays.ro and also through Today Software Magazine, to promote the knowledge and projects completed in universities. They have to turn into an engine of innovation and of the latest technologies, similarly to what Standford is doing for Silicon Valley.

Investors

The main investments carried out until now in the startup area have been represented by the two accelerators from Bulgaria: Eleven and LAUNCHub. Five local startups have received investments of approximately 30.000 euro, but unfortunately they were all closed down. Among the things we can learn from this approach is the fact that the money granted was not enough for reaching the level of profitable business, ideal on the international level and that the necessities of the projects were not covered in respect to the development, marketing or legal part.

Crowdsourcing

It represents a simple financing alternative. The two local platforms, Creștem Idei (We Grow Ideas) and Multifinantare(Multifinancing), have not succeeded in attracting the public to a large scale, the projects and the amounts thus financed being at a low level. Recently, the Multifinantare project has entered a collaboration with Babes-Bolyai University, by creating a portal to support the academic projects.

Angel investors

If we draw a parallel to other development centers, part on the amounts invested in the local initiatives come from those who have achieved an exit. We can thus enumerate Phillip Kandal, one of the four founders of Skobbler, and Daniel Metz, who sold EBS to NTT Data. For now, the two investors have not announced any investment in the IT area, but we are expecting this to happen during the next year.

Accelerators

Gemini Solutions Foundry comes with a different approach. The Accelerator offers everything is needed to bring the startup to the MVP stage. This means technical support, mentorship, legal support, even work space situated centrally in Bucharest, Cluj or Iasi. The purpose of this MVP is to present the startups to some big investments funds from USA in view of obtaining financing. At the moment, the candidate selection is in full progress.

Social projects

A more popular alternative, especially for the IT companies which activate in the outsourcing area and want orientation towards products, is represented by the social projects. A free project is carried out for the community. A suggestive example is the application called "Statui de daci" (Dacian Statues), which promotes the work of historian Leonard Velcescu.

Locally, one can take advantage of the opportunity given by Cluj next year, when it will bear the title of European Youth Capital.

The accomplishment of such a project will mean a plus for the community, but also a simple way to promote a brand and go through the challenges of developing a product.

Other structures

Cluj IT Cluster

It is constituted from a group of Romanian companies, having as a main goal the attraction of some big projects which could not be carried out by a single company. At the same time, there is efficient communication between the companies involved, generating the conditions for a better coordination of actions. The annual event organized by the cluster, Cluj IT Innovation Days, brought together local companies, government representatives, European Union representatives, as well as researching projects. Recently, Today Software Magazine together with Cluj IT Cluster have organized in Brasov the event called: IT in Brasov - Collaboration Opportunities. The public showed real interest and we intend to have more events of the kind.

Startup Weekend

It is an event dedicated 100% to creating startups. If you haven"t participated yet to such an event, I suggest that you do. Only new ideas are accepted, and the teams are formed around the most popular pitches. It is a global phenomenon and many startups were born this way. The winners of the last three years are: Mircea Vadan with the Use Together platform, the Cloud Copy team and this year"s winner was an old collaborator of the magazine, Antonia Onaca, with an idea that should change the way employees are evaluated.

Techsylvania Hackaton

Organized within the first Techsylvania edition, it made available to the participants different mobile devices such as Google Glasses, Leap Motion, Sphero, Little Printer, Pebble and many others. The result was spectacular, the mini-projects accomplished being really interesting. They combined the use of Google Glasses with the Leap Motion in order to complete a game or the typing of a cod in an ATM by monitoring the eye movement. Probably a combination of Startup Weekend and the hackaton where the latest gadgets are made available would lead to the creation of truly innovative startups.

Today Software Magazine and IT Days

One of our declared goals ever since the first release of the magazine was to support startups. Today Software Magazine is supportive of the majority of initiatives in this area and we help promoting them. Moreover, through the annual event IT Days, which will take place on December 3rd -4th this year, we will present the most important local startups.

Conclusions

The startup phenomenon and the orientation of the companies activating in the outsourcing area towards product creation are continuously growing. We are glad to be able to give an example of real success: the company founded by two citizens of Cluj and an American, LiveRail, has been recently purchased by Google. This proves beyond any doubt the value of our local ecosystem and education.

The advice we give to those who wish to create a startup is to participate in as many local and international events as possible, since personal relations are very important at the beginning of the journey. It is not likely for your idea to change the world tomorrow, if you do not interact with a lot of people.

There are many opportunities, which we notice especially in the fact that programmers want more and more to create their own products and local accelerators are beginning to make their presence felt. The outsourcing developed products or those which are part of a big corporation have proved the fact that from the technical point of view we are able to bring anything to life. Unfortunately, due to confidentiality, most of them cannot be made public. Universities are becoming more and more open to communicate with specialists that are not part of the academic world and we hope to see in the future more courses on entrepreneurship and, why not, even an accelerator for students, where practice and research would be reunited.

Startups in Cluj

Next, I will propose to you a list of local startups which are worth keeping an eye on. I would like to thank Mircea Vadan and Marius Mornea for completing it. In the future issues, we will also present an infographic.

Squirrly - It is a wordpress SEO plugin. The company was founded by Florin Mureșan and it already enjoys a big number of clients. It is also sustained by Phillip Kandal, co-founder of Skobbler.

HackaServer and CTF365 - an old startup in Cluj, run by Marius Corâci and Marius Chiș. It is addressed to those hackers who want a legal challenge and to system administrators who wish to improve security by real testing.

HipMenu - is an application addressing those who want to order food at their office or at home. Marius Mocian, a local startup supporter, is part of this team.

Evolso - a startup started by Alin Stănescu, is now part of the acceleration program of StartupYard.

Mira Rehub - one of the most promising local startups. They have achieved a system of recuperation of locomotory challenged people by using the Kinect sensor.

Mockups - implement the creation of online mockups, having a large online user base.

Conference

Sponsors

  • ntt data
  • 3PillarGlobal
  • Betfair
  • Telenav
  • Accenture
  • Siemens
  • Bosch
  • FlowTraders
  • MHP
  • Connatix
  • UIPatj
  • MetroSystems
  • Globant
  • MicroFocus
  • Colors in projects