Papadopoulos agrees. “People are not rational… it’s an emotional thing, it’s a trust thing. It’s easier to build trust if you have the same language and experiences.” He also believes the founders he works with want to help create better opportunities for other Greeks.

When he was offered the investment, Kanakakis was already looking to build an overseas hub that would be well-situated for visiting clients in both Europe and the Middle East, so the opportunity “made sense”. His company now has seven employees in Greece – some of whom were previously working overseas and wanted to return home – and he hopes to have 25 by the end of the year.

However, he describes the process of setting up a subsidiary in Greece as “extremely painful. If I were a new entrepreneur, I do not know if I would go to all the trouble.”

No drain, no gain



A similar, more mature VC model may already be established in Israel. After enduring tough economic times through the 1970s and early 1980s the country has developed in to a tech and innovation hub. Some of this growth was spurred by the government’s Yozma Fund, which invested in Israeli and Israeli-linked companies and helped kick-start the country’s venture capital ecosystem. The industry that has grown around it is highly focused on playing ‘brain drain’ to Israel’s advantage. There are around 60,000 to 100,000 Israelis living in Silicon Valley and more than 100 Israeli-run start-ups in the area, and a whole host of organisations have been set up to draw Israeli tech talent to the US and match firms with American investors.

“We don’t have a local market to sell in to,” explains Yaron Samid, founder of TechAviv, an international network of Israeli founders. “So once an Israeli tech company gets to a certain stage it will look to build a front office in the market it is servicing – which is usually the US – but will leave their engineering teams in Israel. These offices then directly learn the latest and greatest techniques coming out of the Valley.

“Often founders will move to the US, Asia or Europe, once they’ve sold their company they’ll return to Israel and start their next company there. People are very patriotic and like the lifestyle we have here.”

Some academics argue that countries can naturally profit from human capital flight when workers return with new skills. For example, University of Pennsylvania political science professor Devesh Kapur has argued that Indians in Silicon Valley shaped the structure for India's own venture-capital industry, as well as helping Indian software companies break into the US market. “If people return, it will balance the drain out, as they will bring with them not just professional skills, but social and personal skills,” agrees Mouriki. The VC model could potentially accelerate a pattern that can occur organically.

However, Kapur is sceptical about the extent to which VC could help developing countries’ economies. “It's still very small for most countries, you have to have a sophisticated tech sector and human capital – there has to be fertile ground already for any VC industry to take off,” he says.

This model also isn’t right for every entrepreneur, Kanakakis says: “By stipulating that you have to spend a certain amount of money in Greece, you are forcing a company to make a business decision. And it may not be the right time for them to make that decision.”

Marathon has already invested in five companies with another two in the pipeline, and has created 20 technology jobs in Greece. It plans to fund 20 companies in total over the next four years. “If we’re successful, we’ll have two or three companies employing around 1000 people each,” says Papadopoulos.

Kanakakis adds: “I’m cautiously optimistic. I hope projects like this spark changes in mindsets, which then spread.”

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