Budapest-based start-up eSpirit sought help from European Union Grants Advisor (EUGA) and applied for government funding to develop a new Web-based application. In just over six months, eSpirit received notice that it had secured a grant to cover 100 per cent development costs. The new product will result in significant rise in the company's market share.
Hungarian start-up secures 100 per cent funding for photosmart project
Turcsik Árpád, Managing Director, eSpirit IT Solutions
In recent years, Hungary has accelerated its transformation from a centrally planned economy into a market place that is fast embracing global business trends. And to make this emerging knowledge-based economy a success, Small and Medium Enterprises (SMEs) play a key role in fostering innovation in business and in creating new jobs.
To help the SME sector realise its potential, the European Commission provides, across Europe, an estimated total of €117 billion (U.S.$141 billion) in grants for technology-related investments. Unfortunately, a critical hurdle to funding for small businesses in Hungary is the lengthy application procedure. A company has to participate in a tender process and approach several government officials to get consents for its proposal, resulting in high administration costs. But in 2007, a promising start-up firm based in Budapest found a solution to making successful grant applications and overcame these challenges.
Founded in 2003 by three young entrepreneurs, eSpirit provides IT services for data quality management, software development, and related design, consultation and project management tasks. It delivers high-quality solutions that are based on the latest technologies available in the market, including Microsoft.NET 3.5 Framework and Windows Presentation Foundation.
As a member of the Microsoft Partner Program for Independent Software Vendors (ISVs), eSpirit also receives Microsoft support for developing and marketing its software solutions.
After two years of excellent sales in the Hungarian technology industry, the company teamed with a German firm in 2005 to develop a photo-management application, PictureStar. Turcsik Árpád, Managing Director, eSpirit IT Solutions, says: “We wanted to provide a simple, user-friendly solution for consumers to import images to the computer from a camera, publish and search them on the Internet, and order prints from a photo service provider.”
When launched, PictureStar was to be the first product developed by a Hungarian ISV which is based on the Windows Media Centre - the latest Microsoft product that helps users view slide shows with music, organise photos, and create albums.
However, the PictureStar project came to an unexpected halt in 2006 due to the German firm's limited financial resources. But eSpirit stayed in the game. Árpád says: “We did market research and found that more than 20 Web-based photo service providers in Hungary were interested in adopting our product. It encouraged us to go ahead and make our own application - which we renamed PhotoSmart - a resounding success.”
But attaining the estimated development cost of €50,000 (U.S.$ 79,000) was not easy. “In the past, we had received EU grants which helped our growth and development,” says Árpád. “But this time, we had little hope of help from the government due to the recession in the Hungarian economy.”
After talking to its Microsoft ISV manager, eSpirit heard about the European Union Grants Advisor (EUGA) programme. EUGA is an initiative supported by a number of community partners and industry leaders, such as Microsoft, Intel, and HP, to help increase SMEs' awareness of, and access to, dedicated EU funds.
The first step EUGA took was to choose a suitable grant scheme for eSpirit. INNOCSEKK 2006 aimed to support SME innovation projects and to stimulate the supply and demand of innovation services. To ensure that eSpirit could take maximum advantage of the opportunity, EUGA took responsibility for all the administration work and writing the funding application.
Marcell Toth, EUGA Project Manager, Microsoft Hungary says: “The awarding body, until then, wasn't supporting any IT-led projects. So we put in extra efforts to highlight the innovativeaspect of this project and explaine how the related research and development will help create a new market sector and help boost the country's economy on the whole.”
In October 2006, EUGA submitted the proposal to the EU on behalf of eSpirit. Soon after, Hungary's Ministry of Economy and Transport implemented drastic budget cuts in the funds available to SMEs as a measure to cope with economic downturn. Árpád says: “We were worried about the government's actions and afraid that we wouldn't get the grant at all.”
The situation turned in Árpád's favour in May 2007 when the funding body recognised the innovative nature of the PhotoSmart project with notification of a grant to cover 100 per cent of the development costs involved. Árpád gives the credit to EUGA: “EUGA understands the full scope of the funding opportunities. It knew exactly how to interpret our requirements in the application to ensure it was successful. If it wasn't for EUGA, we wouldn't have received the grant at all.”
The grant paid for the external software development engineers and consultants hired by eSpirit to develop the application. The company plans to launch PhotoSmart with its first partner Web photo-service provider in June 2008.
Árpád says: “This new line of business will help us increase our market share significantly. Within the next four years, we expect to approach service providers all across Europe.”
Árpád and his team feel motivated and have planned a business strategy to take the company to new levels of performance helped by EUGA: “Now, with access to financial resources from the EU, we can develop customised media applications for the new version of PhotoSmart,” he says. “Moreover, we can also support our fast expanding business with in-house product experts.”
Árpád strongly believes that with support from EUGA other SMEs, in countries such as Hungary, can gain a foothold in the global marketplace. “The EUGA programme comprises a highly professional, well-structured team that puts maximum effort into ensuring the companies like ours receive funds to help achieve their aims,” says Árpád.
“EUGA understands the full scope of the funding opportunities. It knew exactly how to interpret our requirements in the application to ensure it was successful. If it wasn't for EUGA, we wouldn't have received the grant at all.”
Turcsik Árpád, Managing Director, eSpirit IT Solutions