Crisis Resilience of Startup Companies (The Case of Hungary among the Visegrad Countries with a Focus on the Pandemic)

Abstract

The study examines the crisis resilience of startup companies in Hungary among the Visegrad countries as a result of the pandemic situation. It aims to provide guidance on what support is needed for startups in the post-crisis period to re-launch the economy and to contribute to the region’s economy with positive results. The research was carried out in two stages: first, in 2021 through an online survey, and then, in 2022 in-depth interviews due to the economic crisis caused by COVID-19 and the Russian–Ukrainian war. A mixed research methodology was used, which comprised an online questionnaire administered in the Crunchbase database (n = 97) and in-depth interviews among startup founders and experts of the startup ecosystem (n = 22). The research summarizes the V4 countries’ measures to protect entrepreneurship with a particular focus on startups. The research found that a crisis such as a pandemic did not have a uniformly negative impact on startups. The winners of the economic crisis are startups in IT, healthcare (Medtech. health-tech), e-commerce and digital education, while those who fared worst are startups in tourism and hospitality. The positive impact of the crisis has been a cleansing of the startup ecosystem. Business support measures supported the viable startups and helped them survive.

1. Introduction

Since entrepreneurship is one of the most crucial factors of economic development [1], the latest research on entrepreneurial ecosystems has gained strength; however, it has barely been applied to the Visegrad countries. This research sheds light on the crisis resilience of startup companies in Hungary. It is crucial to stimulate innovative startup activity in Hungary to increase the country’s long term visibility and competitiveness in the Central–Eastern European region [2].

In the 21st century, the sudden changes in the external environment caused by COVID-19 and, more recently, the Russian–Ukrainian war have had an unprecedentedly severe impact on the economy as well as society in general [3]. The crisis has caused significant economic damage worldwide [4]. Since the WHO [5,6] announced the pandemic, increasing public attention has been paid to the dangers of economic and social crises [7]. Cities, counties and countries were placed under total lockdown in a matter of days or weeks. These lockdowns were measures of an unprecedented scale in comparison to those taken during previous pandemics, such as the Spanish flu [8].

Thus, macroeconomic factors influence the development of startups globally [9]. Although all industries feel the consequences of crises, startups, those which are younger than 10 years, feature highly innovative technologies and/or business models and strive for significant employee and/or sales growth [10], are among the most vulnerable among economic actors and are currently still facing a number of unexpected challenges—reduced production and/or demand—from both a corporate and organizational perspective [11]. They strongly feel the negative consequences of the recent events and were exposed to strong external and unexpected pressures for which they were not prepared [12,13]. These enterprises must also currently face the negative consequences on national economies, caused by what seems to be the worst geopolitical crisis in recent history [14].

Thus, resilience research is highly desirable as it addresses the urgency to investigate vulnerable situations in which enterprises act [15,16,17] and as Aldianto et al. [4] stated, the concept of business resilience studies in startups is still limited. Saad [17] calls for more research related to this topic utilizing survey-based methods, to provide more generalizable empirical evidence and to help to create more clarity on blurred issues.

Therefore, recent studies have explored the crisis and shock resilience of Hungarian startups, as well as the impact of the crisis caused by the coronavirus that was raging at the time of the research on startups. Hence, studying Hungarian startups in the Visegrad countries (V4) is relevant for these reasons:

• Startups are very fragile and hard to find. This is particularly true in a post-socialist Central and Eastern European country such as Hungary, characterized by a young startup ecosystem, where, unlike in the Western European and Anglo-Saxon ecosystems, long-term time series are not available for studying startup businesses [18].
• The research area is the V4, as these countries are, because of their historical past, the main reference group for comparative studies [19,20,21,22,23,24,25]. The strengths of the Visegrad countries included the potential of startups, in addition to internationalization and product innovation [2].
• Considering the high failure rate among startups [26] and the atmosphere of the Hungarian startup ecosystem, as well as the economic crisis in recent years, many entrepreneurs starting their business face failure or serious crisis. Thus, investigating the dimensions of entrepreneurs’ resilience and its nature among Hungarian startups is vital.
• Despite the fact that Hungary (4.5), according to Hungary National Entrepreneurship Context Index (NECI)—characterizing the entrepreneurial ecosystem—ranks in the lower-middle segment of the business ecosystems in Europe (the Central and Eastern European region has an average score of 4.2), with Hungary’s entrepreneurial ecosystem scoring the highest within the region [27], the Hungarian startup ecosystem has registered a decline in rank (Budapest, the capital of Hungary, decreased by double digits) based on the Startupblink report [28].
• This study presents the state of startups and the contemporary Hungarian startup ecosystem. It aims to explore the changes in innovative startups as a result of the crisis and to provide direction for the post-crisis economic recovery, which supports innovative startup needs to contribute to the development of the regional economy again with their positive results.

The focus of this research is on the crisis resilience of Hungarian startups, mainly to explore the most typical parameters and characteristics of Hungarian startups and their surrounding ecosystem. The paper aims to investigate the critical events faced by startups’ founders in the context of the COVID-19 pandemic and subsequently, the Russian–Ukrainian war, and how they reacted to protect their startups. Based on this, the following research questions were formulated:

RQ1: What are the characteristics of Hungarian startups after the crisis?

RQ2: How has the coronavirus crisis affected Hungarian startups?

The research aims to prove the following hypothesis:

H1: 

Resilience to crisis and shocks varies in Hungary and the V4 countries.

The first part of the paper summarizes the different interpretations of business resilience with a specific focus on startups. It then presents the study area, the Hungarian startup ecosystem based on the Startupblink international ranking [28] and the business protection measures in the investigated area. The second part examines the crisis resilience of startups through an online survey of startup entrepreneurs in the Visegrad countries and in-depth interviews with experts (N = 22). The study concludes by identifying future research directions based on the findings of the research. The main finding of the paper is that the crisis resilience of startups shows fundamental sectoral differences. The crisis has brought about a cleansing among startups.

The paper is structured as follows: the second part of the study is a literature review. Section 3 presents the study area and the research methodology, and Section 4 presents the results of the survey, the in-depth interviews. Section 5 provides the discussion and presents the conclusion, with several research suggestions.

2. Literature Review

This section presents the main theoretical components regarding the impact of business resilience with a focus on startup enterprises, then the startups surrounding the startup ecosystem (the Hungarian ecosystem) and, last but not least, business protection measures in the V4 countries.

2.1. Resilience with a Focus on Startup Companies

In the 21st century, the biggest challenge of the information age is how we are able to domesticate the ‘unstable chaos’ into ‘fertile anarchy’; the ability that makes this possible is called ‘resilience’ [29]. The concept of resilience was spread in psychology in the 1950s, and in the past decades, it has taken many different forms. Resilience means the ability to be resilient, the ability to cope with challenges [29]. Resilience in general is demonstrated after an event or crisis occurs [30], while business resilience enables organizations to quickly adapt to disruptions while maintaining sustainable business operations and protecting people, assets, and overall brand equity [31]. It also means the capacity for companies to survive, adapt and grow in the face of turbulent change [32]. A variety of research studies use and define the concept of resilience; however, the definition used varies depending on the focus of each article [17,33]. Several articles examine business resilience; however, just a few papers focus on startup resilience.

We conducted a systematic literature review based on the following key words: startup, resilience, crisis, COVID and pandemic in the database Web of Science and Google Scholar.

Table 1. The implications of the crisis for startups.

Major Challenges of Startups	Examined Sector/Industry	Measures to Encourage Recovery	Examined Geographical Area	Literature
Digitalization	Tourism	Economic stimulus packages	113 countries	Okafor et al. [34]
Finance	Software industry	Strategy (metrics)	Literature review	Kemmel et al. [35]
	Several industries	New business model	USA	Kenney et al. [36]
		Policies facilitating access to credit	Italy	Castado [37]
		Policy recommendations for recovery	Canada	Croteau et al. [38]
	(Renewable) Energy sector	Assisting policies and respond to financial needs	Israel	Pilloni et al. [39]
Management	Tourism	Financial measures	Poland	Olsewszki [40]
	Several industries		Indonesia	Aldianto et al. [4]
		Strategy	Poland	Sady [7]
			India	Davis and Thilagaraj [11]
			Germany	Haase and Eberl [33]
		Counseling as personal development attempt	Iran	Yousefian Arani et al. [26]
		Sustainable business reconstruction	Romania	Foris et al. [14]
Networking	Techindustry	Enterprise framework	Global	Budden et al. [41]
Resilience factors	Agriculture	Policy recommendations for recovery	Italy	Paoloni et al. [42]
	Transportation	Networking (collaboration)	Poland	Skala [43]
	Several industries	Lack of research	Literature review	Saad et al. [17]
		Management	Brasil	Mota et al. [44]
		Strategy	Indonesia	Ridho et al. [9]
		New opportunities and directions	Germany	Kuckertz et al. [12,45]
		Policy recommendations for recovery	Hungary	Kézai and Konczosné Szombathelyi [46]
			Hungary	Csákné et al. [27]
Supplier management; Finance	Logistics	Factors affecting supplier selection	India	Sreenivasan et al. [47]
Sustainability factors	Several industries	Strategic management	Czechia	Naděžda et al. [48]
Uncertainty (risk)		Communication	Global	Sharma et al. [13]

Source: Own compilation.

summarizes the major challenges, the examined sectors/industries, the measures and the examined geographical areas of the recent topic.

The literature review highlighted the major challenges of the startups in sectors and industries, as well as the suggested measures to encourage recovery. The issues faced by startups are digitalization, finance, management, networking, risk, sustainability factors and diverse resilience factors. At the same time, the measures to increase the recovery are suggestions and recommendations for financial support, management, strategy, new business models, networking, communication and counselling, which could lead to strengthening the resilience of startups to achieve recovery in the post-crisis period.

It is irrefutable that new companies using digital technologies, i.e., competitors from outside the industry, are emerging in traditional industries, and these startups are creating serious competition, and sometimes even displacing the former leaders of traditional industries by upturning the parameters and characteristics of competition [49]. To sum up, startups can be described as a subgroup of SMEs—young, innovative companies addressing global markets based on technological, process or business model innovation [43,48,50,51]. They differ from large companies in terms of their organizational structure, leadership style, reactions to the environment, available resources and the internal context in which they operate [52,53] especially due to the fact that startup companies lack expertise, resources, funding, and technology [54].

In today’s knowledge-based economy, innovation is seen as the driving force of the economy. The high risk inherent to innovation means that inventions are brought to the market by formalized organizations, mainly startups [55]. In the post-crisis period, the re-launch of the economy should take into account that the development of startups and innovation ecosystems is not just one of many opportunities for society, but an obligation [56]. As the presence of a dominant startup ecosystem can enhance economic diversification [41], it can facilitate the emergence of a more sustainable stock of foreign capital (foreign direct investment) even if startup investment cannot be a serious competitor to a manufacturing project in any category. The importance of startups lies in knowledge sharing and talent attraction. Startups create new opportunities that traditional industries which have collapsed in the crisis are currently unable to provide. Startups can also ensure the presence of the large companies of the future [57]. As the FDI-Center aptly put it: “if you cannot convince Google to locate in your country convince the Google of the future to open its first international office in your country [58]”. “If these companies expand, the investment location will benefit more and more from their presence ([58], p.9)”. In order to achieve these ambitions, i.e., catalyzing knowledge-based economic development and innovation ecosystems, building higher education institutions as knowledge hubs will take on a new, prominent role in the coming years [59]. To sum up the scientific literature, the issue of “startup resilience” is a timely and topical one.

2.2. The Hungarian Startup Ecosystem in the International Rankings in 2021

To answer the RQ1, as first we have to define the startup ecosystem, which is a distinct and defined region where entrepreneurs and support organizations collaborate to create new startups and to help existing startups grow. The term ‘ecosystem’ is most often used to describe the network of ‘people’, ‘organizations’ and ‘resources’ that are used to create startups in the works under review. “By ‘people’, they mean entrepreneurs and investors; by ‘organizations’, they mean investing institutions, large corporations (including, of course, multinationals) and universities; by ‘resources’, they mean the supporting infrastructure provided by people and organizations to help startups to emerge [60]. Although there are several different interpretations of the concept of the entrepreneurial ecosystem in the literature [59,60,61,62,63,64,65,66,67,68], certain elements are present in all of them, such as an entrepreneurial focus (existing and potential entrepreneurs in the ecosystem), the multidimensionality of ecosystem elements (social, political, economic and cultural actors and organizations), the movement, interconnectedness and networking of actors, elements and processes that support the emergence of innovative or growth-oriented firms in a given location [69]. Overall, therefore, the emergence of entrepreneurial ecosystems is a major factor in the realization of productive entrepreneurship [70].

In 2013, the StartupBlink global ecosystem map was created, which provides an overview of the actors in each startup ecosystem. In 2017, the first Global Startup Ecosystem Index was published, which has been updated annually ever since. It is now the largest and most comprehensive ecosystem map in the world, based on an algorithm that analyses tens of thousands of data points. The ranking is based on three main criteria: quantity (how many startups there are), quality (how much influence these startups have) and business environment (how easy it is to do business in a given location based on technology infrastructure, red tape, bureaucracy, etc.). Data providers include local data providers such as accelerators, coworking offices and more than 50,000 registered members, as well as global partners such as the Crunchbase and SimilarWeb databases. In 2021, the ranking looks at the startup ecosystem of 1000 cities in 100 countries by area, sector and level of development. The StartupBlink research center has a long-term goal to support the development of each ecosystem [28].

In the Startupblink (2017–2021) reports, the North American continent accounted for the largest share of cities up to 2020 (41.2% in 2020). This trend changed in 2021—in the overall ranking, ecosystems in the North American continent were eclipsed, dropping to 29.7% in total—with the European continent accounting for 38.6% of cities. However, the North American presence in the top 100 stays stagnant, with 40 cities remaining. The presence of European cities, on the other hand, has continued to grow: in 2020, only 339 European cities (33.9%) represented their ecosystem; however, in 2021, this number had grown to 386 (38.6%). The momentum for European ecosystems is not entirely positive, perhaps due to the coronavirus epidemic. Overall, Europe’s presence in the top 1000 ranking has improved; however, only 11 of 44 ranked European countries have improved their ranking, and 25 declined in 2021 compared to the previous year.

In the Central and Eastern European region, Hungary is in a favorable position to grow its ecosystem due to its geographical location; however, to have a more competitive ecosystem it needs more successful scalable startups such as Prezi, which achieved international success in 2008 and has since had no followers, unlike Romania and Croatia, which have since launched internationally successful unicorn startups [28]. Companies with a capitalization of more than USD 1 billion are referred to as unicorns [36], with Megyeri [71] arguing that the presence of unicorns has a positive impact on the startup ecosystem. They attract more potential entrepreneurs and investors. In addition, as Goreczky [72] argued in his study, an increasing number ecosystems can produce unicorn companies. While in 2013 only four ecosystems worldwide could claim this, today more than 80 startup hubs can boast such success stories. This seems to support the view of a well-known expert in the US startup world that “startup communities can be built in any city, and the long-term economic development of cities, regions, countries, and societies depends on building and sustaining such communities ([72], p.4)”.

Looking at the ecosystems in the Visegrad countries, the Polish ecosystem remains the leader (ranking 30th among the hundred countries examined by the Startupblink report), followed by the Czech (36th), then the Hungarian (49th) and the Slovak (56th) [28] (Figure 1).

Table 2. V4 countries’ rankings on StartupBlink.

Country	Cities	2020	2021	Change in 2021. (100% = 2020)
Czech Republic	Brno	177	235	−58
Czech Republic	Ostrava	385	465	−80
Czech Republic	Plzen		844 (New)
Czech Republic	Prague	80	83	−2
Poland	Gdansk		278 (New)
Poland	Krakow	181	150	+31
Poland	Poznan		220 (New)
Poland	Warsaw	73	78	−5
Poland	Wroclaw	171	168	+3
Hungary	Budapest	87	134	−47
Hungary	Debrecen	530	479	+51
Hungary	Pécs		781 (New)
Hungary	Szeged	786	655	+131
Hungary	Székesfehérvár		959 (New)
Slovakia	Bratislava	148	196	−48
Slovakia	Kosice	521	526	−5

Source: Own compilation based on the Startupblink [28].

details the ranking of the V4 countries’ cities on the global list.

Despite the pandemic and the economic crisis caused by COVID-19, the Hungarian ecosystem has continued to grow, with the number of cities that represent the Hungarian ecosystem rising to five in 2021. After Budapest, Debrecen and Szeged, two more cities, Pécs and Székesfehérvár, now represent Hungary in the ranking of the world’s top 1000 cities with startup ecosystems. Budapest has been in the top 50 of the world ranking for education for several years, 38th in 2021. According to the report, education could be a breakout point for Hungary [28]. As Endrődi and Kovács-Nagy [73] argue, promoting the accumulation of knowledge in high-tech processes and supporting entrepreneurship is essential to achieve this, and it is worth starting in primary school [74].

2.3. Business Protection Measures in the V4 Countries

The next part of the study summarizes the business protection measures in the V4 countries (

Table 3. Business protection measures in the Visegrad countries by 2020.

Measures		Czech Republic	Poland	Slovakia	Hungary
Non-reimbursable grants	State aid	Agriculture, Forestry and Food industry	Aid package for businesses with a 15% drop in income Law known as the “Financial Shield” for SMEs. Financial shield for large companies agricultural sector	rent subsidy for SMEs to increase competitiveness	to increase competitiveness
	Innovation support	Czech Rise Up Program Czech Rise UP 2.0. Technology Program COVID	A grace period for startups to repay loans and capital grants Startup Poland program	Hack the Crisis Slovakia program	COVIDEA ideas and startup competition
	Other business protection aid	50% rental subsidies Support for Sport programs Support for preventing the local cultural Support for cultural and creative industry	microloans reduction in the compulsory reserve ratio price and margin ceilings for products relevant for protection support for workers in the agricultural and food sectors	reducing administrative burdens relaxing labour rules eviction monograph	wage subsidies for job creation
Public loans and loan guarantees		COVID Prague loan program (CZK 600 million) COVID I-III. loan program for SMEs interest-free loan Czech Export Credit Agency loan program Loan repayment facility for farmers	Law known as the “anti-crisis shield” more favorable tax return rules Estonian CIT (corporate income tax) payment system	state loan guarantee schemes a nine-month moratorium on loan repayments	loan payment monograph guarantee schemes (MFB, Garantica, AVHGA) soft loans municipal and other capital funds EXIM mitigation programs 2020 MFB Crown Rescue Package: (MFB Crisis Loan, Hiventures SME Rescue Program and Hiventures Startup Rescue Program)
Grants for tax and social security payments		10–15% VAT reduction (accommodation, cultural, sports and wellness services) 25% reduction in tolls (transport) Excise duty refund on transport Liberation Package I-III (waiving of deadlines for tax returns)		reduction in health, social security and income tax contributions	Wage subsidy scheme for R&D workers tax and contribution exemptions for aviation companies

Source: Own compilation based on [75,76,77,78,79,80,81,82,83].

) based on the following documents [75,76,77,78,79,80,81,82]. Three different forms of aid have been used grants: state aid, innovation aid and other business protection aid; public loans and loan guarantees; and tax and contribution subsidies. Within these categories, different countries provided different types of aid in different areas, such as rent subsidies for SMEs in the Czech Republic and Slovakia.

To support startups, for the first time, the European Commission published on 11 March 2020 a call for an immediate EUR 164 million in funding from the European Innovation Council fund [69]. This immediate funding was open to startups and innovative SMEs working on technologies and innovations that could help combat, treat and test the coronavirus outbreak [83]. According to the call for proposals, the European Commission is looking to startups, among others, to provide solutions to the current healthcare crisis. Then, all governments in the V4 countries launched similar calls to support innovation. Just 3 weeks after the EU call, the Czech Republic became the first V4 country to launch the Czech Rise Up Program I on 2 April 2020, followed by two other programs [79]. In Slovakia, the Crisis Slovakia Program was launched on 3 April 2020 [80]. On 24 April 2020, the Hungarian government launched the COVIDEA oil and startup competition [81]. In Poland, on 4 May 2020, the Polish government announced a PLN 200 million startup funding and the launch of the Startup Poland Program [82].

3. Materials and Methods

In line with the exploratory nature of the research, a mixed methodology was used, including what [84] is called a ‘convergent parallel design’, which consists of the researcher conducting quantitative and qualitative data collection and data analysis simultaneously and independently of each other, and only linking the two methodological strands when interpreting the results [85,86,87,88,89,90,91,92]. The two parts of the research carried out using the two methods are independent of each other (Figure 2); neither serves as an input to the other, so that quantitative and qualitative data collection and analysis can be carried out simultaneously, without having to wait for the other to be developed [86].

The purpose of the coherent parallel design is to better understand a given social phenomenon by using both approaches. As the two methods complement each other well, their strengths add up and compensate for each other’s weaknesses; together, they can provide a more complex picture of the subject under study. In addition, the results from quantitative and qualitative methods can be used to complement, illustrate and support each other, and can also be used for comparison [84,85,86].

The study first uses the methodology of qualitative research in form of an online survey (n = 97) and then the quantitative phase in form of semi-structured in-depth interviews (n = 22).

3.1. The Research Area

The study examines Hungarian startups in comparison to the other Visegrad countries, which are also called the Visegrad Four or the Visegrad Group and have existed since 1991. The group serves as a forum for dialogue and close cooperation between three (later four, with the split of Czechoslovakia) Central European countries: the Czech Republic, Hungary, Poland, and Slovakia [88].

3.2. The Online Survey

The questionnaire survey was conducted online between June and November 2021 among startup entrepreneurs from the Visegrad countries. The questionnaire is part of the V4 Startup Survey 2021 (Section F, G) and aims to assess the crisis resilience of startups. The set of questions used in the questionnaire are validated questions based on the Design Terminal [29] study (Appendix A). Respondents rated the questions on a Likert scale of 1 to 5, where 1 = not at all affected; 5 = very affected). The questionnaire’s sample is based on the Crunchbase database, which has been cited by Block-Sanders [89], Waldner et al. [90], Kemeny et al. [91], Breschi et al. [92] and Banerji-Reimer [93] as a reliable and comprehensive source of information on startup entrepreneurship. Crunchbase is the online startup database of the American startup news portal Tech Crunch; a database that brings together startups from around the world to help them operate. The database was founded in Silicon Valley in 2007 and has grown over the years into a virtual marketplace where investors and interested parties can search for startups. Thus, keeping the database up-to-date is the responsibility and interest of the registered startup companies. The database is modeled on online platforms [94]. As the study adopted the concept of Kollmann and colleagues [10] based on international scientific literature, the Crunchbase database was filtered for startups founded after 2011 with registered offices in the Czech Republic, Poland, Hungary and Slovakia. Thus, the initial sample for the study was startups less than 10 years old, which resulted in a total of 14,610 enterprises.

All companies were contacted directly via email through the Lime survey website [95]. However, as the email availability of many companies was not working, the final sample consisted of a total of 3353 startups. The questionnaire was sent to the startups six times between 9 May and 15 December 2021. It contained, besides the basic demographic questions, nine questions related to the topic: five closed and four open questions. The information was measured on a 5-point Likert scale where a score of 1 indicated not at all important and a score of 5 indicated a very important responsibility.

One hundred and fifty-two respondents participated in the survey but fifty-five contained only partial completions and were therefore disregarded. In total, this resulted in a final questionnaire sample of 97 completions for startups under 10 years old with a ratio of 2.89%. The completion rates were 2.27–3.53% of the final per country. Of the ninety-seven respondents 20 represented Czech (3.53%, 47 Hungarian (3.07%), 24 Polish (2.27%) and 6 Slovak enterprises (3.12%) (

Table 4. The sample of the V5 startup survey 2021.

Country of Origin	CB Registered Startups (Founded 2011–2021)	Sample Startups	Responses	Response Ratio (%)
Czech Republic	2893	567	20	3.53
Hungary	2137	1537	47	3.07
Poland	3973	1057	24	2.27
Slovakia	1099	192	6	3.12
Total	14610	3353	97	2.89

Source: Own compilation.

).

The questionnaire data were processed using Microsoft Excel (Microsoft, (2016), Redmond, Washington, DC, USA: Microsoft) and IBM SPSS (IBM Corp., 2016, IBM SPSS Statistics for Windows, Armonk, NY, USA: IBM Corp.). Descriptive statistics were used to summarize the characteristics of the respondents, to compare startups in Hungary and other V4 countries. Chi-square, Fisher’s exact tests and Mann–Whitney tests were applied. The Mann–Whitney U test (also known as the Wilcoxon rank sum test) tests for differences between two groups on a single, ordinal variable with no specific distribution. In contrast, the independent samples t-test, which is also a test of two groups, requires the single variable to be measured at the interval or ratio level, rather than the ordinal level, and to be normally distributed [96,97]. The characteristics of the sample are presented in

Table 5. Characteristics of respondents and their startups in Hungary and other Visegrad countries (Czech Republic, Poland and Slovakia).

	Category	Hungarian Respondents	Other V4 (Czech. Polish and Slovak) Respondents	Total Responses
		%	%	%
	Female	21.3%	24%	22.7%
Gender	Male	78.7%	76%	77.3%
Age	21–29 years	17%	12%	14.4%
	30–39 years	27.7%	50%	39.2%
	40–49 years	42.6%	30%	36.1%
	Less than 20 years	2.1%	0%	1%
	More than 50 years	10.6%	8%	9.3%
Education	Secondary school	23.4%	14%	18.5%
	College degree (BSc)	31.9%	36%	34%
	University degree (MSc)	34%	44%	39.2%
	Doctoral school (PhD)	10.6%	6%	8.2%
Management Studies	Yes	68.1%	48%	57.7%
	No	31.9%	52%	42.3%
Founded Startup before	Yes	27.9%	34%	28.9%
	No	72.1%	66%	63.9%
Number of Founders	1	15.8%	8.1%	12%
	2	26.3%	27%	26.6%
	3	42.1%	29.7%	36%
	4	2.6%	16.2%	9.3%
	5	7.9%	8.1%	8%
	More than 5	5.3%	10.8%	8%
Sales revenue in 2020 (Euro)	EUR 100,001–EUR 500,000	17.1%	25.7%	21.43%
	EUR 30,001–100,000	8.6%	5.7%	7.15%
	EUR 500,001–1,000,000	5.7%	8.6%	7.14%
	Below EUR 30,000	34.3%	34.3%	34.29%
	Over EUR 1,000,000	8.6%	5.7%	7.14%
	No sales revenue	25.7%	20%	22.86%

Source: Own compilation.

.

Based on the work of Kézai and Rechnitzer [98], respondents were grouped according to their main activity according to the Hungarian Unified Sectoral Classification System (TEÁOR’08) into four groups of activities that are important for urban development. Of the respondents, 49.03% were engaged in science, research and development, 37.3% in market services, 9.3% in media and publishing and 4% in arts (design, creative economy or other artistic activities).

3.3. The Semi-Structured Interviews

The qualitative data collection involved ten semi-structured interviews based on the work of Babbie [99]. The selection of participants was not based on mathematical-statistical representativeness but rather on the richness of potential data and therefore subjects were selected using a snowball method. The selection of suitable interviewees was aided by presentations at local startup events in 2022. In-depth interviews with experts were recorded on a Google Meet platform.

Table 6. Respondents of the semi-structured interviews.

Expert	Position	Startup Location	Hungarian Sectoral Classification of Economic Activities (TEÁOR’08)
1	Founder	Balatonszárszó	2571 Manufacture of cutlery
2	Co-founder	Budapest	6206 Computer operation
3	Founder	Budapest	Non-profit association for the development of the startup ecosystem
4	Founder	Budapest	6201 Computer programming
5	Manager	Budapest	6619 Other financial activities
6	Manager	Budapest	6201 Computer programming
7	Co-founder	Budapest	6201 Computer programming
8	Co-founder	Budapest	5610 Restaurant and mobile food service activities
9	Co-founder	Budapest	6209 Other information technology services
10	Founder	Debrecen	7111 Architectural engineering
11	Founder	Győr	7112 Engineering activities. technical consultancy
12	Founder	Győr	7112 Engineering activities
13	Founder	Győrújbarát	6201 Computer programming
14	Founder	Hédervár	7420 Photography
15	Founder	Hódmezővásárhely	7219 Other scientific and technical research and development
16	Co-Founder	Lovas	9003 Creative arts
17	Founder	Mosonmagyaróvár	1624 Manufacture of storage wood products
18	Manager	Nagytarcsa	6201 Computer programming
19	Co-founder	Pannonhalma	1089 Manufacture of other food products
20	Founder	Pécs	6311 Data processing. web hosting activities
21	Co-founder	Solymár	6651 Wholesale of computers and software
22	Founder	Szeged	7112 Engineering activities

Source: Own compilation.

summarizes the interviewees and their main characteristics.

In accordance with a constructivist approach to interviewing, active interviewing was chosen [100]. The interview subjects and the interviewer create meaning as equal partners, participating together in the creation of knowledge in a so-called travelling interview [100]. The interviewee has the opportunity to ask back and the interviewer, avoiding focusing on their own interpretation, has the opportunity to reinterpret on-the-spot answers that may not be clear [101].

The interview thread was structured around ten questions, which can be found in Appendix B. A transcript of the 45–60 min online interviews was produced and the ad hoc analysis method from Brinkmann and Kvale [101] was used to analyze the transcript. Instead of a specific procedure, we developed our own analysis method that fits the research topic. We interpreted the information given during the interview in the context of what was already known and what became known during the analysis, i.e., the actors’ perspectives met the interpretations of other interviewees and also those of the analyst [101].

We applied an intra coding approach to the analysis, carried out a one-by-one analysis and summary interpretation of the interviews, and then organized the interviews according to eleven non-exclusive categories. The initial categories were derived from the interview questions, and some categories even emerged from the interviews. Finally, the directions were combined to search for and summarize the meanings [102].

4. Results

4.1. The Result of the Online Survey

When asked how their business was affected by the pandemic, Hungarian businesses and those in the other V4 countries—the Czech Republic, Poland and Slovakia—were equally moderately affected by the COVID pandemic and related measures (Fisher = 1.65; p = 0.82).

The survey found that Czech, Polish and Slovak startups had more difficulties in growing (Fisher = 11.64; p = 0.02) and internationalizing (Fisher = 9.12; p = 0.06), while there were no differences in the other factors. There was a strong trend, but Hungarians had more trouble with sales (Fisher = 8.4; p = 0.06). Team development (Fisher = 3.65; p = 0.47), cash flow (Fisher = 6.68; p = 0.15), and profitability (maintaining stable income) (Fisher = 2.82; p = 0.6), were equally challenging in all V4 countries (Fisher = 4.48; p = 0.36). Internal processes within the company were equally challenging, as were financing (Fisher = 2.81; p = 0.6) and product or service development (Fisher = 4.4; p = 0.36). Attracting competent staff is quite polarized (Fisher = 2.4; p = 0.69). Furthermore, there was no difference in the financial barriers (Fisher = 5.95; p = 0.2) to startups with a presence in the V4 countries, such as too little capital, and difficulties in raising capital, which were significant obstacles to their development. Regulations (Fisher = 0.82; p = 0.96), bureaucracy and red tape (Fisher = 1.68; p = 0.83), and lack of access to knowledge (Fisher = 4.03; p = 0.42) or networking (Fisher = 2.84; p = 0.61) and management skills (Fisher = 3.24; p = 0.56) were not a barrier in any country. Attracting (Fisher = 2.67; p = 0.64) and retaining (Fisher = 1.92; p = 0.83) skilled human capital is a consequence of the crisis and, to a lesser extent, a barrier, as the willingness of workers to change jobs has declined [103].

V4 countries were, on average, satisfied with their growth rates (Fisher = 1.94; p = 0.78) thanks to a number of business support measures. They consider that they were moderately affected by the pandemic and related measures. Similar to the results of Juhász and Szabó [104], in addition to the negative effects of the crisis, a number of positive aspects were also uniformly mentioned, such as the time factor (more time to design the product (Z = −0.69; p = 0.49), more time and opportunity to develop new ideas, features, etc. (Z = −0.62; p = 0.53), increased time to design (Z = −0.46; p = 0.65), opportunity to fine tune the schedule (Z = −0.75; p = 0.45). The transformation of the market has also been accompanied by its expansion, which has in turn created new openings (increased market (Z = −0.35; p = 0.73), new opportunities (Z = −0.22; p = 0.82)). Opportunities to seek corporate partnerships (mentoring, assistance) have opened up, encouraging startups to work on further development (encouraged them to seek mentoring, assistance and corporate partnerships (Z = −0.61; p = 0.54), encouraged them to seek potential development opportunities (Z = −1.52; p = 0.13)).

Startup entrepreneurs in the study area also agree on the obstacles created by the crisis caused by the epidemic. In addition to the financial crisis (Z = −0.02; p = 0.99), what stood out was the lack of travel opportunities (Z = −1.39; p = 0.17), the difficulties of teleworking (Z = −0.24; p = 0.81), which in the long term created a significant emotional burden (Z = −1.3; p = 0.19), in addition to the need to constantly re-plan and often to lay off employees (Z = −0.38; p = 0.71), and other circumstances (Z = −1.58; p = 0.11) due to the constant uncertainty.

In terms of firms’ plans to raise capital, foreign start-ups are more likely to consider raising domestic venture capital (Fisher = 5.04; p = 0.03), while there is no difference in the extent to which most firms want to raise some capital (Khi-square = 0.36; p = 0.55), nor in the extent to which they know what capital they would raise (p = 0.49). There was no difference in that almost no one would consider involving a domestic accelerator (p = 1), bank (p = 1), stock exchange (p = 0.24), university incubator (p = 0.49), local government office/municipality/local government (p = 0.24), family and friends (p = 0.24). There were no differences for Hungarian startups compared to other countries, but slightly more people than above counted in the involvement of a foreign accelerator (p = 0.78), local business angel (p = 0.37), foreign business angel (p = 1), community funding (p = 1), strategic industry investor (p = 0.39), European Commission, e.g., Horizon 2020 (p = 0.58) and foreign venture capital (p = 0.79) (Appendix C).

Table 7. Descriptive statistics of the answers to the questions on the coronavirus epidemic in Hungarian and in the other V4 countries (Czech Republic, Poland and Slovakia) (on a Likert scale of 1–5).

Survey Questions	Survey Answers	Startups Based in
		Hungary		Czech Republic, Poland and Slovakia
		Average	Deviation	Average	Deviation
	How has the crisis affected your business?	2.71	1.38	3.18	1.45
How has the crisis affected your business? What positive impact did the crisis have on your startup?	More time to plan the product	2.68	1.42	2.45	1.5
	More time and opportunity to develop new ideas, features, for example	2.5	1.17	2.76	1.44
	More time for design	2.18	1.22	2.3	1.19
	Possibility to fine-tune the schedule	2.29	1.27	2.55	1.33
	Our market has grown	2.79	1.34	2.7	1.59
	Opened up new opportunities	2.93	1.49	3	1.48
	Encouraged us to mentor, assist and seek corporate partnerships	1.96	1.17	2.09	1.1
	Encouraged us to look for potential development opportunities	2.29	1.33	2.76	1.15
What obstacles did you experience during the crisis that negatively impacted your business?	Financial crisis	2.64	1.42	2.67	1.61
	Lack of travel opportunities	2.29	1.33	2.85	1.62
	Lack of travel	3.11	1.69	3.61	1.39
	Difficulties in teleworking	2.04	1.2	2.09	1.18
	Emotional breakdown	2.36	1.42	1.85	1
	Dismissal of employees	1.86	1.27	1.88	1.14
	Other	1.25	0.84	1.58	1.12

Source: Own compilation.

shows the descriptive statistics of the responses to the survey questions on a Likert scale from 1 to 5 (standard deviation and mean values in Hungarian and further V4 breakdown).

4.2. The Result of the Interviews

The crisis, just such as the outbreak of the coronavirus, caused growing uncertainty for societies, economies and businesses worldwide. To obtain a detailed insight into the crisis resilience of startups, we conducted online interviews. The important impacts highlighted by the interviewees are summarized in

Table 8. The impact of the crisis on startups based on the results of the interviews.

Positive/ Negative	Impact	Responses of the Interviewees
+	Flexibility	“If they had reacted in time, they could have survived.” (Expert 11)
+	Timeframe	“Now we have the time and focus to renew the design.” (Experts 1, 4, 7, 17, 21, 22) “More time for fine tuning” (Expert 3, 10, 13, 14, 15, 20) “We have rethought our business model and product.” (Experts 3, 8, 9, 10) “Without the epidemic, demand would have been too sudden, too high and we would not have had time to develop our products/services.” (Expert 4)
+	Creativity	Creativity “I see that the epidemic is inspiring people; everyone was looking for creative solutions despite the increased online presence.” (Expert 11,14,16)
+	Purification of the startup market	“Viable startups survived and venture capitalists helped them when they needed it, while unviable startups did not get follow-on funding.” (Expert 3)
+	Changing consumer habits	“Many people have slowed down and rethought their excessive consumption habits and shifted to a more sustainable lifestyle.” (Expert 1, 8)
+	New opportunities	“Telecommuting, home office, with its impact on the digital economy, has created unprecedented opportunities for businesses.” (Experts 2, 3)
+/−	Sectoral differences	“The winners of the epidemic are IT startups, healthcare (medtech, healthtech), e-commerce and logistics, and digital education startups.” (Experts 3) “The big losers are the tourism and hospitality sectors, he noted.” (Expert 1).
−	Uncertainty	“All entrepreneurs have become more cautious.” (Experts 1–22)
−	Mental pressure	“The biggest difficulty for me has been being closed.” (Experts 1, 3)
−	Uneven competition between gender	“Women are more affected by the crisis.” (Experts 3) “Invisible work for women.“ (Experts 1, 10, 19)
−	Lack of face-to-face presence	“It has been difficult to maintain the small community we have established online.” (Expert 3) “No events and no opportunity to meet in person.” (Experts 1–22)

Source: Own compilation.

.

Overall, the interviews confirmed the results of previous research [4,9,12,17,27,42,43,44,45,46,47,76,105,106,107]. The crisis resilience of startups does not show a consistent picture. Several negative effects such as insecurity, mental pressure, a lack of personal presence, and a higher burden on women are typical. The gender gap may be because women are more likely to start businesses in industries more affected by the crisis, such as hospitality, leisure and retail. Another reason is the “invisible job”, which is seen as a result of the duality of working from home and women’s responsibilities as workers, which was particularly prevalent during lockdown in the pandemic.

The crisis has had several positive effects in addition to its many negative ones, such as the emergence of new opportunities—think of the emergence of online education; flexibility—the need to adapt to a changing environment, and creativity—the need for businesses to offer new, creative solutions to constant change. Additionally, the time factor, which results in more time to fine-tune the product/service. At the same time, the crisis has brought a cleansing among startups, with several business support grants helping viable ones.

Overall, therefore, the hypothesis conjectured that startups in the Visegrad countries were affected by the coronavirus measures in significantly different ways was not fulfilled. Hungarian and Czech, Polish and Slovak startups rated the impact of the coronavirus very similarly, despite the different measures. This is in line with Sass et al. [98], i.e., the economic crisis caused by the pandemic affected the Hungarian economy and Hungarian firms in a similar way in the whole Central and Eastern European region, especially in the Visegrad countries [108].

5. Discussion and Conclusions

The study aimed to present the situation of startups in Hungary and other Visegrad countries. First, it summarizes the concepts of startup resilience and the startup ecosystem, then it uses the international Startupblink ranking [28] to position the Hungarian startup ecosystem and sums up the business protection measures in the V4 countries. Then, it presents the results of the questionnaire survey of startups in the Visegrad countries (N = 97) and the in-depth interviews with Hungarian startup entrepreneurs (N = 22).

The research aimed to put the Hungarian startup ecosystem in the context of international competition. The Hungarian ecosystem is ranked third among the Visegrad countries in 2021 according to the StartupBlink [28] report. At the same time, despite the crisis, Hungary’s position in the international competition has been further strengthened, with five Hungarian cities—Budapest, Debrecen, Pécs, Szeged and Székesfehérvár—now ranked among the top 1000 cities in the world for startup ecosystems. Additionally, the capital has been in the top 50 of the world ranking in education for years.

Similar to the results [4,40,41,43,46,48,104,106,107], the research showed that the crisis, the COVID-19 pandemic, did not have a uniformly negative impact on startups. The winners of the economic crisis caused by the pandemic are companies active in the IT sector, healthcare (Medtech and health tech), e-commerce and digital education. The big losers are startups in hospitality and tourism. In her study, Karsai [109] also assessed that “the persistence of significant state dominance, which catalyzed the emergence of the startup sector after the outbreak of the coronavirus pandemic and helped to counter its effects, may not only help but also hinder the development of the startup sector in the region, as the natural selection mechanism of the market is not able to operate purely”. However, in the present research the respondents considered the positive effect of the epidemic as a cleansing and natural selection of startups. The viable startups survived. To overcome their funding obstacles, startup support programs have been launched in the Visegrad countries, following the EU model, such as the Czech Rise up Program in the Czech Republic, the Hack the Crisis Slovakia competition in Slovakia, the Startup Poland Program in Poland and the COVIDEA Ideas and Startup Competition in Hungary. In addition, different business protection measures have been put in place in different countries. Such measures include non-repayable grants such as state, innovation and other business protection grants, as well as state loans and loan guarantees, and tax and contribution subsidies.

Implications, Limitations and Future Research Avenues

The research is based solely on the most comprehensive dataset of high-tech companies and investors in the US, Crunchbase, an internationally recognized database, according to Pisoni and Onetti [110]. There is no comprehensive, officially available startup data collection in the region under study, i.e., neither in Central–Eastern Europe nor in the V4 countries. The quantitative V4 startup survey was a questionnaire survey conducted by direct email to the companies filtered by the startup definition based on Kollmann et al. [10]. The willingness to respond from the contacted startup enterprises was around 3% completion rate, due to the constantly changing environment, i.e., constant challenges and re-planning, as the interviewees stated.

The study concerns Hungary, which does not represent the entire V4 startup sector. The population of startups surveyed by countries is not large enough to allow statistical analyses to be conducted at an acceptable level of reliability divided by each country, so we concentrate on Hungary and the other V4 countries, which may not be methodologically satisfactory for many scholars. Perhaps this is an exciting area of research for scholars.

Another interesting topic that could be extended as a further line of research to the cities of the Central and Eastern European region is to examine which cities served as startup hubs before and after the pandemic in the region, and where and what measures supported the development of business communities, thus strengthening the entrepreneurial ecosystem approach, or were linked to industrial development, which would support the catching-up of the CEE region with its Western counterparts. Since, as Sass [111] has noted, the V4 countries are significantly below the EU-27 average, and this problem of economic catching-up has long been a crucial issue.

The results of the research can provide a basis for future startup entrepreneurs thinking about innovative solutions to a problem; for practitioners looking to develop their network of contacts; and for local leaders to consider what innovative startups, seen as drivers of the local economy, can be given space to join innovation support programs. After all, as highlighted in the OECD [112] study, innovation is as vital for rural areas as it is for urban economies. Their goals and challenges are the same: increasing productivity and improving the quality of public services [112]. It also provides guidance to policy makers on how to identify and support these businesses, thereby increasing the competitiveness of the area. As a policy recommendation, we call for collaboration between municipalities, public and private partners, startups and investors to jointly develop a city startup ecosystem and associated smart regional hubs adapted to changing circumstances and local conditions.