FinTech in Vienna: CEO Talk

ALEKSANDAR VREGLEVSKI: The Financial Market Authority (FMA) in Vienna is really open to FinTechs. Together with a few stakeholders in the market, they developed the FinTech sandbox, which is a simplified pathway supervised by the FMA. It’s like a hotline to the FMA where you can ask them any question you have, on anything you’re currently developing, such as about which regulations apply. So, it’s like a test bed for you to be as open as possible. 

The crypto community is also strong here. As early as 2011, Vienna was home to research focus associations in the field of crypto, such as Bitcoin Austria. The Viennese FinTech Week, this year from 23^rd to 27^th November, aims to build bridges between startups, banking, and regulatory world. There is a flourishing research sphere, with independent research centers like Riot, Austrian Blockchain Centre, SBA Research and AIT, present. 

The stable economic environment in Austria, strong purchasing power and closeness to the CEE region make Vienna a really good entry point to penetrate the German speaking sector.

ALEKSANDAR VRGLEVSKI: The green and sustainable finance sphere is getting bigger. Machine economy is getting traction is a really interesting field to see machines also as an economic agent somehow. 

ALEKSANDAR VRGLEVSKI: We have a great public funding sphere in Vienna, such as the Vienna Business Agency and other stakeholders like aws, the FFG, to name a few. You also have a growing VC sphere here with Speed Invest which is well-known also in the CEE region. Some other major European early-stage VCs include Uniqua Ventures. Uniqua is invested and interested in everything in tech and finance related. And then you have really specialized VCs like Smape Capital and the Rep Free Fund. As the name already says, it heavily focuses on everything Web3 related, blockchain related, crypto, crypto economics related… you get the idea! Another interesting venture here is Elevator Ventures of the Raiffaisen Bank International - a bank that's also widely known in the CEE region.

ALEKSANDAR: There's a really big pool of talent here. We have a big economic university and universities for applied sciences. The technical university is strong, with a particularly good computer science department. 

GEORG HARER: First of all, as it was in our case and I think in many cases, there are EU regulations. MICA is an EU regulation which, for the first time in the crypto scene, allows you to acquire a license in one country and then what is called passport. This is a license to all the other European countries, meaning you can serve the entire European market with just one license from one country. When applying for MICA, you have to go through a local regulator. Some have a reputation of being very easy, but not very well regarded in the rest of Europe.

As Bybit has a compliance-first approach, it was important that we find a regulator that is well regarded. This is why we landed in Austria: because the Austrian FMA is quite strict, has high standards, but especially for MICA, they created a specialized team of experts who also have a lot of industry experience.

If, like us, you are willing to commit to compliance and to follow the rules, it can be done quite efficiently. We are a proof of this. We started in September 2024. Back then, I was the first employee. We didn't even have an office or a bank account. And about 10 months later we already went live, fully regulated and licensed without cutting corners.

FRANZISKA WALDE: In the first years, we were blessed with a fantastic grant ecosystem – not just from the Vienna Business Agency but also from the Deep Tech fund, FFG and aws. We have been lucky to build with strong scientists and geospatial engineers. It enabled us to build this strong platform and then for the seed round also the vines ecosystem to the VC scene, the bridge from the funding into the capital market, private capital market was also really well suited. 

CYPRIAN BRUCK: In terms of grants and large programs, funding, research and basic research, Austria is excellent. I think Austria compares well internationally and from an early-stage perspective, Vienna does well. I think the critique is that if you need series B-scale capital or significant growth that the local pool things thin out really quickly. This is probably true for other places as well: Poland, Holland, other interesting jurisdictions for FinTech. 

GEORG HARER: I agree that, in general, finding new seed capital - so the first stage - is difficult in Austria, but it is possible. From this perspective, I do understand why some founders move to other countries or cities for the better opportunities. On the other hand, speaking of the crypto scene again, we're now seeing established players coming to the market and we're hoping that there will be new ideas in the crypto FinTech areas. They can also see how industry players will be willing to support these ideas because there is innovation, because there are new ideas.

CYPRIAN: A famous business leader once said that invention becomes innovation when there's a paying customer. All of these inventions in the crypto space about tokenizing real world assets aren't going to meet wider demand unless they solve a problem that a relational database can't. That said, I think it's a fairly compelling use case on the surface. Say you have a CNC machine or an MRI scanner worth a million euros. If you tokenize it then, then all of a sudden you have opened the door to fractional ownership, programmable cash flows and potentially secondary liquidity that a fund-based solution can't offer. I think other problems will get solved first before tokenized assets take off.

GEORG: I would disagree that there is a use case and a paying customer. Unfortunately, when it comes to real world assets, you touch the legal field of ownership, which is still regulated on a per country basis and not on an EU level. And most of those legal frameworks have very long and different traditions. We're basically one legal change away from having tokenized assets work and improving business functions. But you need to look into each and every law - make sure it's safe and secure. The question is: is there a demand big enough for the governments in the European Union to look into this and provide a framework that would work?

FRANZISKA: Yes, absolutely. We actually started with three Vienna-based enterprises and one German one. The flexibility and the workload that some of the enterprise departments have in Austria compared to, for example, the German ones also somehow push them for openness for technical solutions to partner and copilot with them. So, I can absolutely approve that the Austrian market and enterprise sales is an ideal customer or testing market for this kind of elections. 

CYPRIAN: I think Austria is excellent for validating your product on a B2B level. Clients are demanding and quality conscious. If you can sell B2B FinTech products in Austria with that sort of discerning audience, it will do well outside the country. And I think people abroad should always keep in mind that if you build something in German, that's 100 million consumers and a large chunk of EU GDP works in German. Another strength in Austria: there's a lot of language competence here. Being an English-first company in Austria is absolutely doable. While it's not Scandinavian levels of English competence, there's also other languages that people speak readily in Vienna; the entire Eastern European languages are well established, and others. There's a broad base to use as a launching pad for European operations. 

FRANZISKA: Where to start? Vienna is a fantastic city. There’s a large talent pool based on the Technical University, and the BOKU University in our case. The general market, reaching into the CEE market, being in a strong DACH market, and expanding to all of the horizons of Europe. There are strong stakeholders that a startup can really benefit from, like the Vienna Business Agency or all the other interest groups. In the Austrian culture there is a political level of interaction and always putting people and innovations together. I think this is also a strong benefit from the mindset. Even though I have to admit, being German born, sometimes the Viennese grumpiness is a bit of challenge! But you need to take it with a sense of Austrian humour. 

GEORG: On the flip side: if you live in Vienna, wherever else you travel, the people are extremely friendly! But jokes aside, I think there are a lot of public or semi public entities that really show support: the Vienna Business Agency, Austrian Business Agency, in the crypto case the fma, the Digital Assets Association Austria. They want innovation, people, and companies coming from outside to establish a foothold here in Vienna. You don't need to be German speaking - even regulators now speak English in Austria. This is a big help and makes Vienna more attractive.

CYPRIAN: To Franziska’s point: I think I would call it the talent-cost ratio. Given Austria's system of collective bargaining agreements, Kollektivvertrag, there's a very clear talent-cost pyramid and you can get to early stage and build up a company with reasonable talent at a reasonable employment cost. Whereas if you look at what it costs to employ anybody in London, Paris, or Zurich, the financial risk as a founder or an early stage company is significantly larger. To Georg's point: I think there are a lot of public and semi-public institutions bringing people together and that's a real core Austrian strength. I think wherever Austrians are organizing stuff, they're good at bringing people together. A bit of community,a  bit of Weißer Spritzer, and then the conversations keep flowing!

CYPRIAN: I was born in Canada and went to school in Salzburg. I studied in Vienna and then I spent 18 years abroad all over the world. Vienna wins the awards for quality of life. If you're looking for a metropole in Europe, from the climate to the culture to the food, there's an incredible amount on offer in Vienna. For any businessperson, the ease of travel is a real argument. It's the heart of Europe. It's close to a lot of other major centres, it's got excellent train connections. And having lived in London for 10 years, I'm very appreciative of the trains here in Austria!

FRANZISKA: I don't want to mention the German Deutsche Bahn compared to the ÖBB (Austrian Federal Railways)! Austria would definitely win. I've made my mind up to spend the rest of my life in Vienna. It's an adorable, fantastic city for all different stages in life – whether it's just a chapter or forever. But I can prove it based on being here for more than 15 years already.

GEORG: It boils down to a lot of small factors that add up. It's a very efficient city to get around. I'm not just thinking about work, but day-to-day. I travel about 10km by bike every day and it’s almost all bike lanes. Even if you can't travel by bike, the subway, the trains, the luxury of being able to walk around essentially everywhere at any time of the day without fearing for your life and security… It just makes working much, much more efficient. I often just go biking or swimming on the Donauinsel, because it's literally free and open to everyone. For many things you don't even need to spend money.

CYPRIAN: That's a good point. If you live in London, you get taxed at every step of the way. It's £10 here, £20 there. Whereas in Vienna, there's lots on offer for free. 

FRANZISKA: Also the water quality compared to living in London and Berlin is amazing! I was actually one of the reasons why I moved from Berlin to Vienna - fantastic tap water!

JAN RIEPL: Just imagine you are a successful company in your respective home country. You have local customers, you might already have your first international customers. And then you think about penetrating the DACH region, the German-speaking market. This can easily be done from Vienna. How do you approach this whole endeavour? Where to start? This is fairly easy: you just get in touch with the Vienna Business Agency. We then set up an online call where we discuss what your plans actually are. What do you want by coming to Vienna? We can give you a step-by-step guideline and then we’ll follow-up with all the information. We can also put you in touch with legal experts, with tax experts, with our in-house experts, whatever you might need. 

CYPRIAN: It depends really whether you're a new founder or establishing a subsidiary. If it's a completely new company, that's probably a trip to the notary to set up a new company at the one stop shop service that they offer. But if you're an international company like Bybit and you're looking to establish a regional subsidiary, you might be get in touch with a business agency to understand, ‘how do I rent in a premises?’, ‘what licenses do I need to set up shop?’, etc.

GEORG: Definitely one of the first things to do, especially for the FinTech or crypto scene, is to check out all the events on offer and communities you can join that are also almost all for free. You meet a great people there, get a lot of advice and a lot of support. Especially if you're in the early stages, connecting with those kind of people will definitely help.

CYPRIAN: The other thing to shout out is probably the media platform Brutkasten. From open positions through to the regular magazine that they send out and articles covering new startups, raises, all that good stuff. That's certainly a huge platform to orientate yourself in the Austrian FinTech and founding scene more generally.

JAN: Corporate taxes are 23%, but the taxable base depends on your introductions etc. Personal income tax depends on your incomes, with the highest level being 40%. Austria is not a low tax country, but the services you get in return make it really worthwhile. I pay a lot of taxes, but I get a lot of money back. For my kids, family, the health system - I think it's one of the cleanest cities you can live in. As we've heard before, the tap water, so everything's potable. Swimming in the Danube. So those are the kind of things that of course swallow up tax money, but you get something in return.

CYPRIAN: I’ve lived in Tokyo, Hong Kong, London - which are among the most expensive cities on the planet. And I was paying probably four or five times the rent that I was paying for something equivalent in Vienna, probably five times. So, while nominally your income tax might be low, you're spending a disproportionately larger amount on just having a place to live. I think having less risk financially in Vienna is attractive - especially if you're a founder setting up shop and you need to be cost-conscious.

FRANZISKA: That Viennese people are gurmpy!

GEORG: Maybe not a myth, but a surprising fact. I think, and I hope I won't get sued for this, that Vienna in many instances has better pizza and ice cream than Italy. There, I said it!

CYPRIAN: Coffee. When I arrived in Vienna 25 years ago, the coffee was pretty awful and the café culture was amazing. The places you could go and hang out for two euros and read three newspapers were amazing but the coffee itself was awful. Then the big American chains came in and offered a standardized soy latte and actually put the up the ante. Now there's a lot of barista culture and I think there's fantastic coffee to be had as well!

FRANZISKA: Als,o the culture scene: aside from the classical scene, which everyone knows about, electro and techno music are big here -raving in Vienna is fantastic! We have really nice cultural sub-movements.

JAN: And maybe just to put industries in perspective: the ICT sector in Vienna makes 25 billion euros a year, whereas I believe life sciences are doing 14 to 15 billion.The creative industries - from filmmaking to music to marketing - is at roughly 12 billion. And you have tourism with 8 billion. So, as you can see, the ICT sector in Vienna is definitely thriving and contributing the most to GDP.