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Your Ticket Out Of Romania (aka. "Cum Sa Scapi Din Romania")

That's it. I've had it.

I keep promoting Romania as a 'Land of Opportunity'. I write about the businesses that can flourish here. I keep saying, "Be the change" and, "Yes it can be done, even in Romania." And, well, I'm not entirely wrong, but I'm more wrong than I'm right.

Opportunity here is limited to an immature and uneducated market. You can have the best idea but once you put it in practice it'll likely come crashing down -you're just too early for this market, bub. You can be the change, but you'll be pretty lonely. Finally, even if you start a new business, it won't flourish.

I know I sound bitter, wanna know why?

I have a friend who's the co-founder of a promising startup. Over the weekend a client messaged him saying their bank was refusing to make transfers to a Romanian bank; too high risk, they said. He now has to scramble to add PayPal support to his product. I asked him what he's planning to do about the situation in the long run. He said that he'd need to look for a 'low risk' country that will allow him to incorporate the business and open a bank account. Anyway, he said, they'd have to eventually do this because once they hit 30,000 Euro in revenue, they'll need to start charging a 25% sales tax (VAT).

Truth is, they will hit that figure sooner or later and this will force them to raise the pricing for their subscription plans if they want enough of a profit to fuel their growth. If they do that, then two things will happen: clients will get pissed off and they won't be competitive anymore. Either of these events can be the kiss of death for a startup, both at once are an execution. I doubt anyone in the Romanian government's ever had a startup though, otherwise they'd realize it's a ludicrous situation, and that it's great for Canada.

In Ontario, the harmonized sales tax (HST) business charge is 13% after $20,000 in revenue. Makes a bit of a difference. But what makes a bigger difference is the policy attitude towards new business, particularly startups. The federal and provincial governments have been making some good progress on this end since about 2010. They're supporting a highly successful Accelator,  created a new Ministry of Research and Innovation, and a couple of weeks ago, they added the cherry on top. Thanks to a couple of Romanians, Canada is the first country to offer a Startup Visa. Canada is now poised to offer over 2,500 startup visas this year. One of those will go to a future Amazon, another to a future Facebook, one to an Apple, and so on. It's not prophecy, it's just a game of numbers, one that Romania's clearly not interested in.

Don't get me wrong, things are happening, but it's Romania so you know it's gonna be backasswards. First, they're going to build the 'entrepreneurship infrastructure'. Apparently a lack of buildings is what's holding our startups back. Then, they're going to invite some really big tech companies to 'anchor' the project. As we all know, massive corporations are the epitome of startup living and can really provide guidance and support to budding entrepreneurs. Finally, every software engineer in Romania is going to be so impressed by the shiny new buildings that they'll rush in to occupy every inch of office space. And then Romania's GDP will increase by 5%.

That piece I wrote before, about the Silicon Valley pipe dream, was rather optimistic in its cynicism. It's not how I feel now. Back then, I imagined our entrepreneurs still living in Romania, still hustlin' and trying to build value here -now I know they're going to be in Canada, raising the GDP by 10%.

Curious to hear from Romanian readers. What do you think about this ticket out of here? What do you think the Romanian government could do in order to halt the eventual wave of departing entrepreneurs?


  1. Sadly enough, there's not a single thing this generation of politicians will do in order to stop the "wave of departing entrepreneurs". They could, but they won't.

    Why? Because it's hard work and they all need to get along to pass new legislation. Tax breaks, real state-supported incubators and so much more.

    At this point all these efforts are glorified real-estate schemes, nothing real or proactive - what the actual entrepreneur needs.

  2. Yeah, Lorand, that's what I'm afraid of too. The disconnect between what entrepreneurs need and what politicians think entrepreneurs need is represented by a large chasm of misconception and ill-conceived fiscal policy.

  3. You know Matt, this makes me think of this story:

    Expecting the Romanian Government to do anything for startups is unfortunately wasted time: they're cutting funding from pre-approved scientists, never mind allocating funding to assist unproven concepts.

    Is this right? No, of course not. The people need to complain, and the only way they really do that in any way that a Government listens is vote it out.

    In South Africa, there is a general consensus that our Government is also making grossly incorrect decisions in several areas, but for complicated reasons it is unlikely to lose power in the next 15 years. South Africans have become pretty adept at coming up with solutions in spite of Government, instead of because of it ... you might argue that they're wiser and more capable because of it.

    An entrepreneur of the Facebook caliber will always rise to the top, and I think the real act of innovation is coming up with a product which is a success despite of huge obstacles, instead of a fledgling which was ham-strung by investor or Government requirements and inspections.

    I'm looking at leaving South Africa, so I don't blame you for being frustrated with Romania. If Canada is the miracle cure for anybody, then I say that's awesome. But I think in terms of Governments it's better to just ignore them until it's election time again.


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