Navigating your startup safely through Austria’s bureaucracy is tricky. Fortunately, a multitude of subsidies can give you a strong tailwind
Bureaucracy is a high art in Austria. Imported, no doubt, with the “red tape” that bound court documents in 16th-century Habsburg Spain, and centralized in the 18th under Maria Theresia to hold her far-flung empire together, Austria has long been known for its jungle of regulations. For internationals hoping to do business here, it can be daunting indeed.
There are some remedies, though. Along with free consulting services from agencies of the city, state and national governments, as well as the Viennese and Federal Chambers of Commerce, there is a plethora of subsidies for entrepreneurs addressing pressing technological needs. These subsidies can support new companies until they are fully on their feet.
According to consultant Roland Bair, the programs most frequently used by start-ups in the Vienna area are the AWS (Austrian Wirschaftsservice – Federal Promotional Bank), the FFG (Forschungsförderungsgesellschaft – Austrian Research Promotion Agency), and the Vienna Business Agency (Wirtschaftsagentur Wien). These are the big three for startup funding and promotion in Austria, and using these, he is able to help most early-stage entrepreneurs.
Still, starting a new venture is never easy. Despite reforms, the tax system remains intimidating. But the relatively high taxation, according to the Austrian Business Agency (ABA), also goes to finance “a comprehensive funding system and support measures for startups and innovation projects.” The system is diverse and consists of non-repayable grants, guarantees, and subsidized loans.
There are also support schemes from the Austrian Public Employment Service (Arbeitsmarkt Service – AMS) that subsidize the salaries and insurance of workers if companies hire the unemployed and reintegrate them into the job market. In addition, the Viennese Workers Support Fund WAFF (Wiener ArbeitnehmerInnen Förderungsfond) offers salary subsidies and support for employee training that can be used to keep startup costs low.
As a result, the startup ecosystem is strong in Austria. Its cities and regions provide relatively easy access to considerable material, financial and advisory support at each stage during the establishment and launch of a company. Getting a startup off the ground, like founding any other new business venture, requires knowledge of the market and the local landscape, but the EU, the Austrian federal government, and local cities and regions provide a wealth of options to help entrepreneurs with ideas and funding (See sidebar).
A second hurdle is the high cost of social insurance, which for business owners and freelancers must be borne by the entrepreneurs themselves. The Austrian Social Insurance Authority for Business (SVA) is the umbrella organization for all agencies in Austria. Most small self-employed and independent entrepreneurs are enrolled in the GSVG, but if the company grows larger or changes its legal status, ASVG insurance (the general Austrian health coverage) may be required for employees and even for the owners.
Because insurance coverage costs employers an additional 30% of each employees regular salary, new founders must carefully consider how many people they want to hire. In the GSVG insurance scheme, entrepreneurs get subsidies and pay low fees during the first three years in business, after which they are required to pay the full freight.
From research to riches
Austrian universities also play a vital role in the startup scene. Many of the ideas for the most successful startups germinate in university seminars and lecture halls. Knowledge transfer between these institutions and innovative startups is one of the main focus areas for the Austrian Research Promotion Agency, FFG. Its COIN program is designed to help smooth this transfer and promote startups with cutting-edge ideas, not only in the energy and space sectors, but also in new production processes.
The biggest tip for obtaining subsidies is to familiarize yourself with the application process from the website and available brochures. Be sure that your proposal is clear, adheres to the regulations, and includes all of the required paperwork and forms.
The subsidies in most of the programs are small (in the €500 to €5,000 range). There are, however, subsidies from the FFG and AWS up to €200,000 and €500,000, which can offset at least 50 % of the expenses to operate and scale-up a business. With that kind of cash, a well run-up startup has excellent chances of making it big on the European Common Market and maybe even breaking out into the global marketplace.
In fact, around 60% of Austrian startups receive public seed funding. So despite the difficulty of founding a company and the insurance regulations, there is hope. All it takes is an investment in time and filling out the forms. And, of course, having a great idea.
A Compass for Ideas and Funding
The sheer number of agencies and advisors can be overwhelming. With our selection, your first steps into entrepreneurship will be easier.
Websites for subsidy Research
Austrian Business Agency (ABA)
Listing of available subsidies, large and small.
Provides aid packages to startups.
Austrian Research Promotion Agency
Funding for startups to increase Austria’s innovation performance, especially in the energy and space sectors as well as in technology transfer.
Federal Ministry of Labor, Social Affairs, and Consumer Protection
Information on Labor Market Support Schemes from the Austrian Public Employment Service.
Community for Startups
An independant, non-profit association that acts as a first-stop-shop, multiplier and common voice for founders and startups in Austria.
Local and Regional Funding
Vienna Business Agency
Promotes and advises Vienna-based startups with innovative production ideas.
Wiener ArbeitnehmerInnen Förderungsfonds (WAFF)
Helps small and medium-sized Viennese companies implement innovative projects; subsidises salaries and employee training.
Austrian Federal Economic Chamber
Offers member startups personalized consulting on the steps for setting up a business.
Insurance Authority for Business (SVA)
Information about registering for Austrian Social Insurance for the self-employed and freelancers.
Austrian Social Insurance (ASVG and GSVG)
Insurance Authority for Employees
Information about registering employees for Austrian social insurance.