the growth of technology
and the innovation ecosystem
Back in spring 2021, a group of Cyprus entrepreneurs were actively discussing the technological and business potential of the island. It was obviously vast but still unrealized. Businesses just didn't know enough about Cyprus and its opportunities.
This group has come up with a list of areas for improvement to address this issue. That’s how the TechIsland association was established. Its initial goal was to help accelerate the tech industry's growth and place Cyprus on the global tech map.
Within just a few months, 137 tech companies employing over 7,000 people in Cyprus joined the association. Together, they released the manifesto explaining their vision, key areas of focus, and goals.
Currently, TechIsland has set an ambitious mission to make the tech industry the most impactful driver of GDP growth, tax revenue increase, and job market expansion on the island by the year 2030.
Founders & Executive Directors of technology companies based in Cyprus
Focus on the development of SMEs
Economic development policies have been focusing on cutting corporation tax and attracting foreign companies and individuals to Cyprus shores as a magic bullet to improve the country’s economic development. It is clear that Cyprus has been built on a small business economy – the SME sector accounts for 99% of all businesses in Cyprus and almost 84% of all employment and 77% turnover in the private sector.
The SME sector will continue driving forward the economy of Cyprus in the upcoming decade. It will be important to continue supporting the inception, growth and survival of small and medium enterprises across all existing sectors via continuous improvement of the policies aimed for the improvement of the SME sector.
Furthermore, it will be desired to create more opportunities for early stage companies from the technology sector to receive support from the public and private sector. It can be observed that companies that embrace technology from their inception have high potential to massively grow thus strengthening the local economy, employ local people and contribute to the development of the country they reside in.
In order to create new and strengthen existing technology companies, it will be crucial to focus on educating the future entrepreneurs, accelerate their ideas and support the growth of the companies via activation of private and public capital.
The goal should be to support both local and international entrepreneurs that are willing to relocate to Cyprus to start and grow their companies from the country.
Strengthen VC & Angel Investing infrastructure
Almost non-existing venture capital and limited allocation of private capital to innovative companies and early-stage companies offers opportunity for establishment of a new system that will attract and directly convert foreign capital to be invested in Cyprus based companies.
The foreign capital will consist of capital from HNWI (high net worth individuals) and institutional investors that will seek new investment opportunities in innovative companies and/or transformative industries. Foreign investors can be attracted by favorable tax regimes, direct capital incentives or other incentives created by the government.
Besides attracting foreign capital to Cyprus, it is also important to mobilize local private capital – primarily the capital of local HNWI and corporations that otherwise don’t seek investments into high-risk assets, such as startups and innovative companies.
Combining public capital provided by public institutions in Cyprus with private capital will provide needed liquidity for innovative companies in all stages of development and existence.
Build globally recognized brand
The accelerating activities pool and growing influence of the technology sector on the economy of Cyprus will need to be recognized locally and internationally.
Right labelling and positioning will be important to enable Cyprus to be recognized for its support and growth of the technology sector globally. Number of examples can be found of countries and cities that have managed to create a globally recognized brand that is considered to be a synonym to highly innovative clusters and ecosystems whose impact can be measured on a global scale. Some of the examples are “Silicon Valley” in the USA, “Startup Nation” in Israel or “Dubai Internet City” in UAE.
Cyprus has the potential to become a “Tech Island”. Given the unique position as an island between 3 continents and the aspiration to become global technology leader, “Tech Island” is a highly relevant brand that can become synonym to Cyprus globally.
Help transform traditional industries
Cyprus has a number of leading industries that have substantially been contributing to its GDP. If digitized and transformed by technology, these industries have a potential to accelerate the growth of the country in the following years.
Combining the domain expertise, infrastructure and scale of local and regional industries’ players with inflow of entrepreneurial and technical talent, private capital and fast paced innovation application, these industries have a potential to advance Cyprus as a global innovation leader and strengthen its position in global competitiveness index.
The transformation will need to be initiated on the base level of existing companies by taking various measures. Among others, these are re-skilling of labour, digitization of processes, innovation and know-how import and creation and acceleration of new digital jobs.
Strengthen entrepreneurial education
GEM report on Total Early-Stage Entrepreneurial Activity (TEA) Index* have shown that Cyprus has incurred an annual decrease of the early stage entrepreneurial activity from 2016. Furthermore, Cyprus’s TEA value has been one of the weakest among all EU countries, which means Cyprus has had one of the lowest levels of early stage entrepreneurial activity.
The country’s entrepreneurial deficit can be justified by a remarkable reduction of Cyprus’ unemployment rates in the past years which led to more job opportunities for entrepreneurs and didn’t force them to start their companies. Besides low unemployment rate, there are also other reasons why Cyprus is ranking low in entrepreneurial activity: limited development of the entrepreneurial skills in schools, lack of role models and missing evangelization of entrepreneurship as a career choice.
*TEA Index is considered as one of the most important indexes of the GEM methodology as it provides insights on new entrepreneurial endeavors that could be later transformed into established businesses and thus it reflects on the country’s entrepreneurial potential. The TEA index includes both nascent entrepreneurs and new business owners.
Better regulatory and legal framework
Cyprus has been successful attracting international companies and global talent for the past years, however it will need to make the environment even more attractive in order to attract the most innovative companies and brightest and most skilled talent.
In near future, there will be a “fight” for global talent and innovative companies between countries from all around the world. Cyprus’ advantage of being a member of European Union, using the Euro as a currency or being ranked as one of the safest small countries in the world makes it stand out to many countries from all around the world with similar aspirations.
Improve and grow critical infrastructure
Accelerate creation of technology parks, rise of tech cities and support a regulatory environment for the rollout of 5G.