Hungary is often dubbed the heart and “spice” of Central Europe, a country rich in history, culture, and intellectual capital. Yet when it comes to the startup scene, the buzz feels more like a low hum compared to the vibrant noise in neighbouring countries like Poland or Estonia. The question is not whether Hungary has talent, but why that talent isn’t translating into a booming entrepreneurial ecosystem.
A promising landscape… on paper
On paper, Hungary should be fertile ground for startups. Budapest offers a great standard of living, at a relatively low cost – especially compared to Vienna or Prague – a highly educated workforce, and an EU membership that opens doors to European markets. Government and EU-backed funding schemes like the Széchenyi Plan have injected billions of forints into venture capital. And the talent is here: each year, thousands of engineers, mathematicians, and developers graduate from local universities, most of the time with capabilities that you’d find in Berlin or Tel Aviv.
But there’s a missing spark. Or rather, too many sparks leave before they could start a fire.
The brain drain dilemma
One of the most pressing barriers to startup growth in Hungary is the ongoing brain drain. We have discussed this in detail in our previous article: young professionals, many of them highly educated, are choosing to build their careers abroad. Often in countries where they perceive more merit-based opportunities, less political instability or interference, and stronger innovation ecosystems. According to stats, Hungary has one of the highest rates of outward migration among educated youth in the EU. The startup sector feels this acutely, with founders, developers, and early employees preferring to start their businesses in Berlin, London, or Amsterdam.
Cultural baggage: a reluctance to leap
But it’s not just about leaving, it’s also about not starting. Hungary’s historical context offers some clues. Decades of centralised control during the socialist era – which (i.e. centralisation) has been reignited once again in the last 15 years – discouraged risk-taking and private initiatives. While the country has been (at least on paper) a democracy for over three decades, the cultural scars linger. Entrepreneurship is still seen by many as risky and unglamorous, often associated with uncertainty and burnout rather than freedom or innovation. Unlike in the U.S., for example, where failure is often a badge of experience, in Hungary, it’s still considered something to hide and be ashamed of.
So what could help?
- Education reform for innovation: Embed entrepreneurial thinking in education early on, not just in university incubators but at the high school level. Teach problem-solving, experimentation, and resilience. And since it’s 2025 – how about AI, as a subject of its own?
- Telling better stories: Celebrate local startup successes and normalise failure. Hungary needs its own startup mythology, not just case studies from Silicon Valley. Yes, there is Munch, but there are only so many times that you can tell that story before it becomes repetitive – in my opinion, it already has.
- Policy stability and transparency: Both investors and founders need predictability. A stable, transparent legal and tax environment would go a long way in retaining and attracting capital.
- Diaspora engagement: Hungary’s expat professionals are a huge untapped resource. Better programs to engage them, may that be through mentoring, angel investment, or even just soft landings for returnees, could do a lot to help bridge the talent gap.
- Cross-border collaboration: Look to the Baltics, Poland, and Austria. Hungary doesn’t have to invent everything from scratch. Learning from, and partnering with, more mature ecosystems could create exponential value. After all, the Austro-Hungarian Empire was one of the most successful times in Hungary’s history. Collaboration can do a lot to create innovation and bring forward that ‘can do’ business mindset.
A region on the rise – if Hungary chooses to join it
The broader CEE region is rising fast. Estonia has more startups per capita than almost anywhere in Europe. Poland is attracting major VC players, and it’s slowly but firmly reaching up to the size and relevance of Germany. Romania is also booming with business, many of them reaching across the region (Emag, Digi). Yes, Hungary still has time to catch up, but it needs to act.
There’s potential here. Not in some abstract, idealistic sense, but in real, measurable ways. The ingredients are present. What Hungary needs is a mindset shift, smarter support, and a commitment to stop losing its best people to other countries’ startup dreams.
The spark is there. But it needs oxygen, and the courage to let it burn.
