In Moldova, a Tech Community Emerges – But Gentle Growth is Key

Moldova

Anca Albu, a Romanian-American, but London-based, social innovation expert, came to Moldova in November to kick-start its startup ecosystem. Despite its considerable economic disadvantages, she claims it has plenty of potential to do well in the field: “Moldova has a great technical background because of the USSR. I think it’s similar to Romania (whose scene Red Herring recently profiled) but with a twist, because it’s a bicultural country with the Russian culture.

“That can be an advantage and I tell people,” adds Albu. “They can sell to west and east where they are. But not many people know it.”

Moldova is a country of 3.6 million people, sandwiched between Romania and Ukraine in southeastern Europe. Roughly coterminous with the historic region of Bessarabia, it became the Moldavian Soviet Socialist Republic (MSSR) in 1940, the ninth-most-populated of the USSR’s 15 constituent republics. The MSSR was known for its fresh fruit, produce and wine, the latter of which has grown to become a key component of its post-independence economy. Heavy industry dominated business east of the country’s Dneiper River.

But it’s not just wine that has been in the red in post-USSR Moldova. Following independence Moldova quickly fell into conflict with its industrial east, whose politburo was backed by the Kremlin.

After nearly five months of violence the conflict ended with the de facto formation of the Pridnestrovian Moldavian Republic, also known as Transnistria, which remains a puppet of Moscow to this day. Its vast, Soviet steel and textile mills are hugely subsidized with gas and other exports from Russia. Moldova is currently Europe’s poorest nation with a GDP per capita of just $3,800.

Transnistrians are mostly Russian-speaking, in contrast to Moldova’s national language of Romanian. But many of the country’s population speak at least both languages, with a good number fluent in English, or other western European tongues, too. This, alongside a Soviet push for technical expertise from Moldova, has resulted in a large number of locals well-placed to excel in tech.

Moldova’s geography has made political progress difficult at times, with a big schism between those who’d like closer ties with Europe, and EU membership, and those favoring a cleave to neighbors Ukraine, and their former hegemony in Russia. Elections swing from one to the other almost every term, and pushing laws that help the local economy can be fraught. And that’s not to mention recent turmoil that has seen thousands flood the streets of the capital, Chisinau, and up to an eighth of the country’s GDP go missing in a massive banking scam.

Anton Perkin in CEO of Chisinau-based IT solutions firm FusionWorks, which was founded in 2011. The company is also general partner of GeneratorHub, Moldova’s first coworking space, which opened in 2014. He would prefer to look west for the future, which he says would, “result in salary raises and then to the rates for clients, which can make Moldova not that good for outsourcing, but to help integrate into the EU startup market.”

Outsourcing remains Moldova’s leading tech activity. But there are a handful of companies making ripples in the region. Highlights include game developer Spooky House Studios and Fentury, a Canadian-incorporated personal finance app. DeveloperMD is Moldova’s biggest IT community with 4,000 members, and events that attract hundreds are held every few months.

Albu held a summer camp for 16-20-year-old girls last year, training them to code. “Now they’ve started their own developing chapters,” she says. “They’re very passionate and they help each other a lot. Also, it’s the poorest country in Europe so if you want to build something new, this is an ideal place to go.”

Salt Edge is another promising firm, which is also Canada-based. Co-founder and CEO Dmitrii Barbasura says that low wages and high technical skill is helping push things forward: “Similar to Ukraine during its rise as an international outsource market, Moldova can offer the world a variety of tech specialists in different domains,” he says, noting locals’ Soviet-inculcated “agile and inquisitive minds.”

Still, the country’s perilous political and economic climate has, like many post-Soviet states, led to a considerable brain-drain. Most firms are also set up elsewhere, something that concerns Albu. “Some of the startups have setups in Delaware, or Canada, so it’s a very foggy thing that needs to be cleared up,” she says.

Infrastructure, too, is rarely up to scratch. Simple things like roads and utilities in Chisinau often reflect its developing status, while the city’s size hampers quick growth. “Moldova is a small country, and there are just 700,000 people living in Chisinau,” adds Perkin. “This is one of the reasons big IT companies are not coming here.”

Investment is, too, lacking. “Unfortunately, during different startup events you’ll find lots of developers, managers, mentors, but no investors,” says Perkin. “Investors exist, but usually each company or startup is seeking for them individually using their own channels.”

Building a more coherent community is the key, claims Albu. Like many of its neighbors creating an entrepreneurial spirit has been difficult and slow. “I think my goal would be to set up a common goal, because there are a lot of egos involved,” she says. “So working on that aspect is the biggest challenge, in speaking to key players about the common goals for the Moldovan economy. And opening a discussion with the community, and hearing what people need. Because now it is very top-down, and there is not feedback asked from the community.”

There is, however, a dialogue with the government, which has implemented some tax breaks for tech firms. “I think there is a possibility to work with them and get set up with startups,” says Albu. “They do have a lot of policies to make it easier, but the procedure and mechanism is very different.”

Her main fear, she adds, is that Moldovans get carried away with the cooler aspects of tech, without building a solid foundation for the industry. It shows that there is a big drive to capitalize on Moldova’s talents. But “if they’re not careful they could have ten coworking spaces and no infrastructure. This is what I’d like to avoid.”