Romania: Helping businesses come to life

Jorj Pavel Dimitriu interacted with other entrepreneurs while in a business incubator in Brasov

Csaba Kiss, from Sfantu Gheorghe, started his own company - Tribox, a box manufacturing company - with the help of a business incubator. He began with two employees and $10,000 in capital.

He spent three years in the incubator, where he received subsidized rent, free access to business development advice, and the opportunity to collaborate with 19 other startups.

By 2009, TriBox became a self-sufficient business and left the incubator - with 11 employees and annual revenues of $732,000.

“I wouldn’t turn any order down no matter how large or atypical,” said Mr. Kiss, adding that he even has a contract with BMW, the German automaker, to supply a nearby factory with boxes for auto parts.

TriBox is one of 200 businesses that received support from a network of 10 incubators, established with the support of local governments, the Romanian National Agency for Small and Medium-sized Enterprises (SMEs) and UNDP.

Most of the incubators are located in disadvantaged counties in central and northeast Romania. To date, the incubators have helped create 450 new jobs - 47 percent of which have been filled by women.

Ioana Ghila crafts hand-made jewelry. Her business was in an incubator in Mures.

According to research conducted by UNDP, a business that starts in an incubator has a higher chance of surviving its first five years.

Global studies carried out in the early 2000s reveal that 50 to 80 percent of newly established enterprises go bankrupt in the first five years - in contrast with only 13 percent of firms in incubators.

By 2009, the survival rate among small and medium-sized enterprises in incubators in Brasov, Sfantu Gheorghe and Alba lulia was 82 percent. Out of 56 startups that were in incubators at the time, all but one completed the three-year cycle, despite the severe economic slump.

The three business incubators grew in size during the first three years, seeing a six-fold increase in revenues of hosted firms (see graph).

Total revenues of firms in each of three incubators, 2006-2009

The Business Incubator Programme began in 2006 after a request from the Romanian Government. The programme was funded by the Governments of Romania and Japan, local municipalities and UNDP.

The Programme also worked with the National Agency for SMEs, which is preparing to take over management of the network of business incubators from UNDP.

Local municipalities, the key owners of the incubators, say that they can recoup their initial investment after about nine years. They recognize that incubators have helped to revitalize local communities.

The programme has stimulated new income opportunities and helped foster a new entrepreneurial attitude.

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UNDP's work with business incubators in Romania is also featured in volume II of Development Stories from Europe and Central Asia.

The stories capture development work that demonstrates long term, transformational change. Foremost among these are: national ownership, capacity development, knowledge and innovation and partnerships.