We talk to startups and investors, you get the value.
CypRus_IT is a Russian-speaking IT-community (“Under no circumstances “Russian”!” — specifies our interviewee) in Cyprus. A million people are living on the island, and only 235 thousand people — in Limassol, where CypRus_iT hosts meetings. However, it didn’t prevent Oleh Reshetnikov from forming one of the world’s largest Russian-speaking IT-communities there. In the interview for Startup Jedi, Oleh told us, why Cyprus is that good for IT-companies, what startups can find there, and what nuances you have to know right before moving to the sunny island.
We talk to startups and investors, you get the value.
About five years ago, I moved to Cyprus with my family in search of “the climatic safe house”. Back then, I didn’t know anyone here, and there were no regular IT-meetings on the island. So, I started my own “movement” to get settled on Cyprus, meet new people and help others to build connections. That is how CypRus_iT Party appeared. It is not a party, but regular meetings of the Cyprian Russian-speaking IT-community.
They are free and open for all interested. Every Wednesday in Limassol, in a restaurant called Do Wine and Dine, “techies” (in the widest sense of this word) gather starting from 7 p.m. Founders of the large companies, top-managers, simple programmers, marketers, startups founders are among the guests — everyone, who wants to broaden their networking and communicate with interesting people. These meetings are not only for extraverts: introverts with common interests also feel fine here.
It is an informal networking — communication “without ties”. Sometimes we have mini-pitches, small self-presentations from participants in the open mike mode. Recently, we started testing a meet-up format.
We have been gathering for three years so far, the 150th meeting will take place soon. Almost 2000 people have visited CypRus_IT Party. In total, meetings have gathered up 7800 people already. Among them, there have been founders and employees from 950 companies from all over the world, freelancers and entrepreneurs. Most of them are residents of Cyprus. But among our guests, there are always many people who come to chill, manage deals and just visitors.
For me personally, “the theory of six handshakes” turned into “the theory of three handshakes”
The theory of six handshakes is a sociological theory according to which any two people on Earth are separated by no more than five levels of common acquaintances (and, accordingly, six levels of connections). The wider your circle of contacts is and the more influential your acquaintances are, the fewer links you will need to shake hands with, say, Elon Musk or Xi Jinping.
Thanks to the CypRus_iT Party people do not just get acquainted, but also start joint initiatives and conclude contracts. It happened that people were coming to chill near the sea, to have some rest from the work, and on our meeting got acquainted with partners, started new projects and stayed to live on the island. And it is not specifically the IT-industry: the similar case we have with the producer of premium-class presents.
CypRus_iT has channels on Telegram and YouTube. There we share project news and announce meetings, post interviews and mini-pitches of the participants.
There are a dozen of IT-companies from post-soviet union countries working on the island — the majority of them are from Russia, Belarus and Ukraine. By the way, after the adoption of the “HTP 2.0” Decree, some part of companies from Belarus moved back to Minsk.
A typical business-resident of еру country can be described as follows:
it is a company, that is orientated on the international market;
in the office, there are working either founders, top-managers, or the whole company, including development and sales departments. In the second case, the intellectual property is also registered on Cyprus;
most likely, that they are developing games, financial or advertising tools, media-projects, applications or software.
The majority of companies work in Limassol (the population is 235 thousand people) or in the capital — Nicosia (330 thousand people). In general, a million people are living in Cyprus. The island is relatively small — it is 26,5 times bigger than Minsk, or 3,5 times bigger than Moscow.
Large cities are located close to each other and it is very convenient. For instance, the distance between Limassol and Nicosia is just 83 km, between Limassol and Larnaca — 63 km. The most distant cities are Pafos and Rizocarpaso — the distance is 266 km by road. There are two largest international airports on the island — in Larnaca and Pafos.
At one time, Cyprus was known as “the capital of offshores” but it didn’t relate to IT-companies. It concerned corporations from the real sector and their branches.
1.The English law
In full, this law exists in three countries. Those are Great Britain — cold and expensive, Malta — which is as big as Limassol, and Cyprus. English law allows IT-companies to transfer intellectual rights in a safe and convenient way, structure incorporative deals, manage operations with warrants and equity, etc.
2. Tax optimization
For example, income tax can be reduced to 2.5% in completely transparent and legal ways. A number of other payments will be added to it, but it will still be profitable.
3. Bank and fintech services
Rumors that Cypriot banks are dangerous for international money are exaggerated. In recent years, the rules of operation for financial institutions haven’t fundamentally changed. Of course, they were a little more loyal to foreign capital before, still, there were no precedents for doing otherwise. But gradually this attitude has changed a little. They were affected by anti-Russian sanctions, operations with “toxic” money, the global trend of identifying their customers KYC (Know Your Customer), and “anti-laundering” laws. And the Cypriot banks simply began to thoroughly carry out their instructions, which were in force before. And since the processes have not yet been debugged, payments took longer, and some were canceled for no reason. This caused a wave of panic around the fact that Cypriot banks allegedly became unfriendly to foreign capital. Not at all — they began to work as they should.
I haven’t seen a case when a company moved from Cyprus because of problems with the bank. Even if somebody is dissatisfied with something, it is possible to remotely open a bank account in any other place in the world. What is more, many fintech companies appeared, and they affect payments as diligently as banks but without the exhausting paperwork and even faster. For example, CardPay and ECOMMBX are working from Cyprus, using EMI-license (Electronic Money Institution license — Startup Jedi), and here we can talk about high reliability of such services. For sure, you won’t end up in financial isolation.
4. The understandable regulative base for processing employment or guest visas
If you are an IT-company, then by investing a specific sum of money in your company (it differs regarding each separate case) you can receive the permit for employing foreigners — including non-EU residents. The essential condition is not to create competitive conditions for the Cypriot labor market. In other words, you should not try to attract employees from other countries, if you can employ the specialist with similar skills on Cyprus. So, you won’t be able to bring an office manager from Russia. But an experienced team-lead or senior developer — easy!
That’s why specialists of a higher level are often brought to Cyprus. The limitations are not only in specialization but also in the money paid: according to the law, a non-EU specialist must have a salary no less than 2000 euros. A junior won’t be paid this much. There are exceptions but it will be more rational to hire a specialist for a large amount of money — that would be more effective. For these two reasons, the level of specialists in IT-companies is very high here.
Don’t think that it is easy to be a competitor to the locals. There are many bright minds in Cyprus, who are good at networking, marketing and business. They are descendants of ancient Ellis — greeks, who once reclaimed shores of the Mediterranean sea, so they are pretty good at entrepreneurship.
It is pretty hard for a foreign startup to emigrate to Cyprus. You have to receive guest (visitor’s) visas, and the basis for their issuance is money in the account and a stable income outside Cyprus. A minimum of 10 thousand euros will be required for the main applicant and another 5 thousand for each family member. If you are a family with one child, then you must transfer at least 20 thousand euros to your account with a Cypriot bank and justify that you have a steady income in another country. This is a high clipping threshold for many startups.
Closing a work contract and staying in Cyprus to make your startup will fail. Such a person has only a month to find a job and sign a new contract, or leave the island. This clearly shows the two sides of the Cypriot visa policy. On the one hand, it is soft, but on the other, it strictly cuts off people without money and work.
A startup can try to receive a Cypriot startup-visa. In the framework of an experimental program, the government grants a one-year-visa to startups, that can develop a business-economy and create new working places. Starting from March 2019 to March 2021, Cyprus will issue 150 such visas. The conditions for obtaining a Cyprus startup visa are described here in detail.
English law tools and money are available in Cyprus. An obvious question arises: can startups emigrate to Cyprus to get investments? Yes, they can. But the startup ecosystem here is at the dawn of development. Representatives of international venture funds, business angels from local companies appear on the island. There are investors in Cyprus, but they are very picky. You need to come here either with a very good and already working idea or with a startup that is consonant with local companies: game-dev, fintech, media. Projects in these fields are more likely to attract investments. In any case, you should understand that Cyprus is far from Silicon Valley.
Talking about startups in general, not only about the ones from the former Soviet Union countries, there are international programs of grants and investments in Cyprus. However, there are many nuances: from the compulsory founder’s UE-residence to the ambiguous investment conditions. Recently, the government has launched a new program: 12 million euros for 300 startups. Everything would be fine, but the prospects of the project and its benefits for the Cypriot market are estimated by representatives of state bodies. This is a bit strange, as entrepreneurs and government agencies often think differently.
There are a few accelerators in Cyprus: IdeaCy, ARIS, Gravity, Chrysalis Leap, Kinisis Ventures. There are working business-incubators and innovative centers: CyRIC, EnergyLab, RISE, C4E. The venture industry is less developed, and it is only represented now by the community of business angels CyBAN and by governmental structures: Invest Cyprus, Launch in Cyprus, Cyprus Investment Funds Association, CYPEF (Cyprus Entrepreneurship Fund). A non-commercial organization Cyprus Seeds supports innovative scientific researches, gives out grants and helps attract investments.
In December 2019, together with Rocket DAO we did a pitch-session for two startups from Belarus — Caer Sidi and GamePad. Projects’ representatives pitched in the framework of the regular meetings of the IT-community. I do like the Rocket DAO approach: they selected and brought two quality startups here, that instantly became of interest to the audience. We will repeat this kind of event for sure. We can see how interested are funds and accelerators. On this kind of pitches, startups can make a name for themselves, and the local audience can get to know about new projects and possibilities that they offer.
What should a startup do to have a pitch on CypRus_iT Party:
Good networking is the most valuable that the startup can find on CypRus_iT party. If people are in search of useful connections — they definitely find it here. Often, companies found partners and clients in our IT-community. A shining example — Yevheniy Besshchasctnov, the CEO of Blinger.io. He gave speeches on “open mic” several times, and everybody knows him. Quite possibly, Yevheniy has already received all the contacts he needed. But from time to time he comes and communicates with his partners and friends. That’s correct: you cannot get acquainted with a person and wait that through the years of silence, your contact will maintain solid and unbreakable. Networking is the muscles. You train them — they grow. You “skip out” — they mummify.
Cyprus is not a tropical paradise, it has its own minuses. However, they are not critical and they can be solved either by negotiations and felicity of phrase or additional expenses. Below, there are 12 pieces of advice that may come in handy to IT-entrepreneurs, startuppers and “digital nomads”.
1. Two main problems of the island: it is hot in summer and cold in winter. There are no frosts, but the buildings are not insulated, with simple wooden windows and without central heating. You can warm yourself up with air conditioners, oil heaters. Or you can rent a more expensive house, where there is diesel heating and batteries in the rooms. Not only the rental of such housing, but also its operation will cost more: during the winter, you can burn out a ton of diesel fuel, and this will cost 850 euros. The lifestyle without heating at all, wrapped in sweaters, will not work out. Recently, we left for several days and turned off the heating completely. Then there was cooling, and the air temperature in the house dropped to 12 ° C. A life hack: the closer to the sea, the warmer: the sea keeps warm for a long time.
2. It’s sunny here, and this affects the effectiveness of your work. It’s winter now but the sunrise is around 6 am. I usually get up before dawn. You can go for a stroll near the beach before the working day during winter time, or you can swim for a while in summer. Well, you can swim even now, in winter, the water temperature in Limassol is 17–20°С. And just an hour away by car, there is Olymp mountain on which you can find 2–3 metres of snow and conifer trees. There is also a small ski resort. In just a few hours, you can swim in the sea, go skiing for some time and start your working day.
Cyprus is an island, and even when it’s raining, clouds appear not for a long time. It doesn’t happen that bad weather lingers for a week: if it’s raining today, then most likely it will be sunny tomorrow.
3. Cyprus is occasionally covered with dust-clouds. It comes from North Africa (yellow) or from the Arabian Peninsula (grey). This is natural dust, but it can irritate the mucous membranes and cause an allergic reaction in those who are prone to this. Here it is important to correctly assess the degree of danger: in any large Russian city, and even more so in an industrial centre, an allergic reaction can occur without dust visible to the eye.
4. The fast internet is expensive. Take into consideration, Cyprus is a small island connected to the world Internet with a pair of submarine cables. Several monopoly operators set high prices, taking advantage of the lack of serious competition. The average home Internet costs 20–50 euros per month.
5. Mobile communication is one of the most expensive in Europe, there are no “unlimited offers”. Some issue SIM cards in the UK and EU countries. Surprisingly, they are cheaper for a single European roaming than the services of Cypriot operators. Local mobile Internet can be connected for 15 euros per 4 GB.
6. ADSL-internet is available almost everywhere on the standard template: 10 Mbps of inbound traffic / 1 Mbps of outbound traffic. There are also tariffs for 100 Mbit and higher, but they are very “biting” for the price, they should be connected only in offices. For the work of 1–2 people, a “tourist” sim-card and additional Internet tariffs are enough. All this can be connected quickly and even without a passport.
7. There are a few co-workings in Limassol. You can work there, in simple cafes or hotel lobbies. Many awesome hotels are open on the seashore: you order a coffee on the terrace of one of them and work for your pleasure. Here is a list of large co-workings in Cyprus.
8. The main notice board of the whole Cyprus — Bazaraki.com. Here you can rent an apartment, find a car and furniture, sell things, etc.
9. Many products and services that are cheaper “on the continent” will be more expensive on the island. For example, the simplest haircut is 10 euros. But this is not for all: prices in Limassol restaurants are comparable to Moscow or lower. A grocery basket is comparable to Moscow and St. Petersburg, but many vegetables and fruits are grown here all year round. Right now there is a season of strawberries and citrus fruits — everything can be bought ripe and for a reasonable price. Therefore, Cyprus is a paradise for healthy lifestyle supporters and vegetarians.
10. The cost of rental housing has increased dramatically over the past four years: a rise in prices provoked a massive relocation of IT-companies’ employees. “One-room” costs 500–700 euros. But the Cypriot “one-bedroom” is different from the usual “one-room flat”. Here it is a bedroom + living room + hall — a “three-room flat” compared to our standards. The price also depends on the area, condition of furniture, quality of the repair. Families with children should choose “two-bedroom flat” with two bedrooms and 2–3 bathrooms. Such an apartment costs 1–1.5 thousand euros.
11. Add utility charges to the rent — it includes electricity and water. Beginners are often surprised, but electricity tariffs, like gas station prices, are tied to world energy quotes. This is fair! Raw materials are getting more expensive — expect electricity tariffs to rise. It goes cheaper — prices will be revised and reduced. Now the 95th gasoline costs about 1.2 euros per litre — at different gas stations, the price tag varies slightly. During my life in Cyprus, I saw prices of 95th gasoline from 1.05 to 1.4 euros per litre.
12. Medical insurance is compulsory — a migration visa will not be opened without it. Usually, the insurance covers visits to the therapist, treatment and complex operations in private clinics. Except for dentistry: tariffs with the possibility of dental treatment will have to dip into your pocket. I am glad that in Cyprus people get sick less often than in mainland Europe, and especially in the post-Soviet countries: the mild climate and the quality of the products affect us in a good way.