Romania’s OECD accession could change funding approach for local startups

With Romania having initiated procedures to join the Organization for Economic Cooperation and Development (OECD), the local startup ecosystem could soon be approached by a wider range of investors, which would enhance the international visibility of the Romanian entrepreneurship community.

By Ovidiu Posirca

The OECD has access to massive troves of economic information that can help startup founders get a grasp on the development picture of an economy

The Romanian startup industry has been growing constantly for the past three years, with total funding volumes more than tripling to around EUR 116 million in 2021, according to a How to Web report. Authors added that the figure pointed out that the rise has been constant in recent has the potential to reach EUR 200 million, according to fund representatives who spoke to Business Review.

Against this backdrop, the OECD in January began to discuss accession with six candidate countries, including Romania, Bulgaria, and Croatia. There is no deadline for the completion of the accession processes and a final decision will be made by the organisation’s council following a complex review.

Romania is already adhering to six of the eight essential standards for accession, according to PM Nicolae Ciuca. They cover several areas including corporate governance, taxation principles, and information exchange of economic data. The OECD said that changes to the candidate countries’ legislation, policy, and practices will be required

to bring them in line with the organisations’ standards.

If Romania were to obtain OECD membership, it would join other member countries in Central and Eastern Europe (CEE) such as Poland, Hungary, and the Czech Republic. The organisation has 38 member states and works with over 100 countries on economic policy.

For its part, the OECD has pointed out that Romania lags behind most member countries in ensuring access to high quality education, healthcare, housing, and transport. The country’s overall economic productivity is still at around two-thirds of the OECD average.

“Though it might be expected that joining such a renowned organisation would have an immediate impact on the startup ecosystem, I believe that international VCs & startup investors will retain the same levels of reluctancy towards Romanian startups with unproved track records or those that are just local success stories. The responsibility for supporting development in the early stages, before internationalisation, will remain with local players,” says Alexandru Bogdan, the CEO of startup investment platform Roca X.

“Romania’s potential membership in the OECD will not match the impact of success stories such as UiPath or Elrond,” he adds.

POTENTIAL SHIFTS IN FUNDING STRATEGIES

Marius Ghenea, managing partner at Catalyst Romania, says that Romania’s OECD accession would be a major achievement for the entire country, not just for a single ecosystem or industry.

However, he warns that this move could pose some challenges because a lot of the money invested in startups and early-stage businesses in less developed regions of Europe is coming from large international financial institutions. In some cases, they allocate amounts based on specific geographies and, as soon as a country reaches a certain level of economic development, they move out to target less developed economies.

“And this is true not only for risk capital investments in growth startups, but also for other economic support programmes that could move their targets away from Roma-

nia. In reality, our country still needs a lot of this type of support coming in, whether or not it becomes an OECD member,” Ghenea tells BR. A new financing opportunity comes from the new EU-backed Plan for Recovery and Resilience (PNRR), with a total budget of

EUR 30 billion. Around EUR 400 million out of the PNRR funds will be used to create 20 equity funds with support from the European Investment Fund. The funds will focus on riskier early-stage firms and target larger players in the infrastructure and energy fields.

Elsewhere, Romania’s potential OECD accession is seen as a guarantee of the development of entrepreneurial firms.

Bogdan Alamasi, cofounder and CEO of startup crowdfunding platform Ronin, says that an unpredictable and confusing business environment cannot properly support startups and their development because it’s still keeping investors away.

“We expect the OECD accession process to normalise all of these issues, shed much more light on the Romanian startup ecosystem, and provide investors with the confidence that innovative startup founders in Romania now have a higher chance to succeed,” Almasi tells BR, suggesting that startups could get more funding and visibility once Romania joins the economic organisation. Through its global approach, the OECD has access to massive troves of economic information that can help startup founders get a grasp on the development picture of an economy or a certain industry. “The OECD’s strong infrastructure can provide a great way to approach high-potential markets, but the results will most likely be visible a few years down the road,” says the CEO of Roca X.

ROMANIA MAINTAINS GROWTH MODE

After a significant economic dip in 2020 due to pandemic lockdowns hitting businesses, Romania’s GDP bounced back in 2021, essentially recovering all the losses from the previous year. The OECD forecasts that Romania will continue to grow by 4.5 percent through to 2023, while the inflation rate is set to drop to 3.6 percent by the end of next year.

The organisation notes that Romania needs to enact reforms to cut down its budget deficit, which is estimated to reach 5.3 percent next year, down from 8 percent in 2021.

“An improved business environment and a strong rule of law environment helping to attract investment will be key to boosting growth and income levels further and get Romania back onto its path of economic convergence with OECD countries,” the organisation said in a statement.

E-commerce increasingly driven by experience and entertainment-led influence marketing

The year that has just begun heralds significant challenges for the brand-consumer relationship, in the context of major changes in the consumer’s mindset and behaviour. As pointed out by Ogilvy’s 2022 Influence Trends report, for the third year in a row since the outbreak of the most powerful contemporary global event—the pandemic—, the communications industry and its tools are in need for reinvention if they want to be relevant for the new reality.

By Romanita Oprea

Ana Sisu, Ogilvy Romania

Influencer marketing has been one of the fastest growing areas for several years now, with an increasingly important role in the communications mix. Today, in the new context that is taking shape, with the emergence of the metaverse, brands need to truly understand the mechanisms of various platforms, the behaviour and culture of users, and the available conversational tools.

“At Ogilvy, we see influencing as a science in itself, as it’s based on experimentation with the goal of long-term results and efficiency. We did B2B campaigns with influencers before it became a trend, we’ve had campaigns where we challenged influencers to write their own briefs as co-creators of content, and we tried out using pets as influencers even back when there was still no significant appetite for such twists. Today, we are again at the point of experimentation, with new communication channels, new topics, and implicitly, new opportunities for brands. We are looking for the concepts with the greatest potential to create a connection and a conversation with the public and to ensure ROI for clients. Our interest in innovation and exploration of new technologies have already allowed us to pilot creative hacks on different platforms together with local influencers, and to move the experiences that were suspended during the pandemic into the digital space,” says Ana Sisu, Head of PR & Influence at Ogilvy Romania.

INFLUENCING RE-EXAMINED

The need to stay in contact with audiences has been paramount for brands, and since more things were happening in the online realm, influence marketing provided them with a consistent solution for conversation. We all spent considerably more time online than we used to before covid, and this hasn't completely reversed despite many people returning to work recently. As a result, businesses have had to upgrade themselves to get people’s attention in the most genuine way. “They’ve also had to deal with another reality, a more profound one: the need for authenticity, real time alignment to new mindsets and cultural aspects (including diversity and inclusion), and, of course, new consumption habits. So, we are now talking about an emerging influence marketing in terms of social media-tainment or about the metaverse. Storytelling has evolved too, with emerging formats that are tailored for social media feeds,” Ana Sisu adds. As movie theatres struggle and TV viewership declines, the entertainment industry is rethinking the ways in which it reaches and serves audiences.

In this context, Ogilvy talks about transformative trends for the industry and a rethinking of influencing, from being an insignificant “add-on” to communication campaigns to being integrated into all phases of a campaign in a unitary manner. Influencer briefs need to be aligned with the broader strategy of a campaign and the content must be set up in a way that’s trackable, so that the return on investment can be assessed against true business results.

In this context, one of the most important trends discovered by Ogilvy is that experience is the new e-commerce. Creating a memorable consumer experience has become essential in e-commerce, and influencer marketing

is largely based on entertainment. Consumers are more likely to act when brands provide an experience that goes beyond a static product post on social media.

According to Ana Sisu, we’ve always been aware of the fact that experience is a key factor in all forms of retail, and not just in e-commerce. After years of highly segmented customer engagement, without a unifying experience that can lead to better long-term relationships, today we are re-addressing the marketing funnel as a whole, with each layer connecting to the other, for a more seamless interaction. “And by doing that, we are getting back to addressing real people, not just looking at data points in a conversion matrix. People need to be seduced into a product and today, more than ever, the seduction process must be a valuable experience. Entertainment is a key factor in creating this relatable experience and the explosion of platforms such as TikTok stand as living proof.”

REAL ENGAGEMENT AND EXPERIENCES

Furthermore, Ana Sisu notes that the most successful influencers understood this aspect and started to cultivate their communities through genuine engagement, ensuring a transfer of “feeling” between their followers and the brands, thus humanising brand interactions. For example, throughout the pandemic, content creators took on the mission of spreading important information and fighting against the huge wave of fake news, alongside posts promoting various products. And consumers are more interested in exploring a brand or product that is being promoted by a genuinfluencer with a real opinion rather than an aspirational influencer with a product in their hand.

Elsewhere, Simina Zidaru, managing director and creative director at Tribal Worldwide Romania, says that based on the results of some of her team’s recent campaigns with a great pool of influencers, she can state that they definitely deliver. “And if we’re talking about entertainment, the numbers are even higher. Storytelling remains king in our industry, so it all comes down to this basic rule that applies to us all, including influencers. If they create great quality entertainment, people will watch. If they put themselves out there, are honest, and share real emotions, they can’t go wrong.” At the same time, some influencers have been creating content for real productions and scripts, which Zidaru finds amazing. “It’s no longer enough to take a picture with the product; you have to integrate it into a relevant, entertaining story. Co-creating with influencers is my favourite thing. The overcrowding on social platforms have led influencers to realise that they’ve got to do things differently, so they’ve started creating content for real. Of course, TikTok’s rise might have also forced them to break some boundaries. All of these have determined the maturity and constant growth of this segment,” Zidaru adds.

Her views are also supported by the latest ProductLead study, which shows that in line with the need for more interactive entertainment and storytelling, influencer marketing will encourage a shift from text and images to video & audio content. With the increasing popularity of TikTok, YouTube performances, and Instagram Reels, we're going to be seeing more video content than ever before. Even Facebook has been focusing on sharing videos. Authenticity and integrity for both influencers and brands is also something that marketers need to watch out for. Brands will be seeking partnerships with influencers who share the same values and sponsor genuine content.

Why are people are so drawn to experiences? Sisu says that experience generates an emotional connection as opposed to just a functional and cost-benefit one. Experience appeals to what makes us human, to our natural need to feel and interact. Today, when it comes to purchasing products and services, the digital world’s evolving influence is unrivalled, and it appeals to experience to obtain the best results.

“The pandemic didn’t start the great digital migration or the rise of e-commerce, but it has certainly helped accelerate them. Social distancing, quarantine, and the new normal are all terms that were rather unknown in the conversation prior to 2020, but they now dominate our daily lives. These new aspects of life have encouraged a migration to digital and social to fulfil our every need, from grocery shopping to food delivery, meet-ups, and more. And with most of us interacting with people and brands virtually comes a greater need to make these connections more meaningful and fill the void of human-less contact. And this is where the experience a brand can offer comes in. You don’t just buy a product or service; you buy an experience that delights

you. The pandemic hasn’t just proven how important connections are in today’s world, but also that personalised experiences can make a huge difference. People are no longer solely satisfied with an excellent product offering; they expect brands to offer them a whole experience, ideally one that’s different from those offered by competitors and can create an impact,” the Ogilvy representative concludes.

“From what I’ve read, the global e-commerce market is expected to reach nearly USD 4.9 trillion in sales in 2021. That means it’s getting harder and harder to get people’s attention. And to be completely honest, it’s even harder to find a real, unique differentiation out there. Services and products, are extremely similar. I guess experience is the only thing left that could make that difference.