Slovakia’s Startup Craze of Hyperloop and Flying Cars Is Helping Make it a European Innovation Capital

An hour's drive from Bratislava, engineers are working up a prototype reminiscent of James Bond's extrication of a Soviet defector from the Slovak capital to Austria in the 1987 film, "The Living Daylights." Instead of a one-man capsule, the 10-foot-high real-life version is designed to haul up to 50 passengers through a Hyperloop tube within eight minutes to Vienna.

C2i, the 11-year-old company started by Patrick Hessel, is one of dozens of on-the-edge firms popping up in recent years in the central European nation that is now seeing entrepreneurs trained abroad return to their homeland. They are taking advantage of cheap land and skilled workers to develop products from the Hyperloop capsule and plasma drills to flying cars.

"There is a startup hype in Slovakia," Hessel, the country's entrepreneur of the year, said from his factory in the Slovak town of Dunajska Streda. "The situation is very different from 10 or even five years ago."

While Slovakia will be in the spotlight after assuming the European Union's rotating presidency when the union is trying to cope with the aftermath of the U.K. vote to leave it, the country also seeks to use the six months at the helm of the bloc to showcase its technological potential. The government's aim is to broaden the country's reputation beyond the world's largest carmaker per-capita and attract high-tech investors.

Following four decades of state-planed economy, entrepreneurship had a slow start in Slovakia after the 1989 fall of communism when many left the country of 5.4 million to pursue education and job opportunities in western Europe. After transforming itself into an automotive hub — with about a million cars a year rolling off production lines at factories owned by Volkswagen AG, Kia Motors Corp, and Peugeot SA — a reverse "brain drain" is taking hold. And they are bringing foreign expertise with them.

"Considering that we are such a small country, we have been able to come up with quite a few innovative products," Deputy Economy Minister Rastislav Chovanec said in a phone interview. "The government wants the country to move in this direction."

With that in mind, Prime Minister Robert Fico's cabinet will host with the European Commission an innovation conference in late October that will highlight nano-, bio- and other advanced technologies. During a visit to Bratislava last month, EU's foreign policy chief Federica Mogherini met with representatives of a company that's designing what may be the world's first flying car.

The yellow and grey hangar in the outskirts of the Slovak capital houses the two-decade-old brainchild of Stefan Klein, an engineer with a pilot license, and Juraj Vaculik, a former Velvet Revolution student leader and an advertising executive. The third generation of the model — with retractable wings, a gasoline engine and a body that can handle highway speed — has spent 7 1/2 hours in the air during test flights and is now displayed in the entrance lobby of the European Commission building in Brussels to underscore Slovakia's focus on new technologies.

The company, AeroMobil s.r.o., is competing with visionaries like Google's billionaire co-founder Larry Page to roll out a flying car, but being first isn't the goal, said Chief Technical Offer Dough MacAndrew, a British automotive expert who has worked for Land Rover and McLaren. AeroMobil's next prototype, which now exists in life-size technical drawings on walls and a wooden mockup of the cockpit, will be the basis for the commercial model that may go on sale in 2018, according to MacAndrew.

"We don't see this as a race," he said. "We see it as a technological journey. Being first would be nice, but not necessary."

While it's easier now to lure talent to eastern European startups, access to financing remains a more complicated issue. Unlike in western Europe and the U.S., where developed stock markets allow for initial public offerings to raise money, Slovak entrepreneurs are more dependent on private investors and EU grants. AeroMobil received a 6 million-euro ($6.7 million) subsidy from from the government to cover research costs.

"The entire region is under-served in terms of venture capital," said Christian Mandl, a Belgium-born managing director of Bratislava-based Neulogy Ventures, which manages a 26 million-euro fund that now invests in 30 companies. "For an investor this means an opportunity. In tech hubs such as London or Helsinki, valuations are much higher."

A euro also goes much farther in Slovakia for developers than in western Europe, Mandl said, and owners of startups are more aware how to stretch their budgets. Neulogy's list of investments includes Boldburg, a sound engineering company, MultiplexDXm, a biotech diagnostics designer, and software developer AgentBalance.

Deep Wells

Closer to the capital's downtown, a team of GA Drilling engineers huddles around white boards and models to sketch out a contact-less system for deep wells with which they want to reshape the world's gas, oil and geo-thermal industries.

Once in production, the so-called Plasmabit, which uses high-powered electrical arcing to disintegrate rock, concrete and metal without physical contact with the materials, will be able to pummel its way 10 kilometers below ground at a fraction of the cost of traditional drilling, according to Chief Executive Officer Igor Kocis. While the company eventually plans to sell the technology to oil and gas heavy-weights like Royal Dutch Shell Plc or BP Plc, one of its main goals is enabling access to deep geothermal energy around the world.

"Our vision is outside Slovakia," said Kocis, whose company is now looking for scientific expertise across the EU to accomplish that vision. "We are challenging global markets to make something completely disruptive."

Returning East

C2i, the Hyperloop capsule designer, also produces carbon fiber bodies and components for the automotive companies such as Porsche and Bentley and light-weight, business-class airline seats. It was founded in 2005 by Hessel, a child of Slovak emigres who was raised in Germany and studied in the U.K.

Hidden behind the production halls, in a gaping warehouse that will eventually be C2i's aerospace division, the carbon fiber capsule prototype has thousands of sensors embedded in its skin. Hessel is developing it for Hyperloop Transportation Technologies, a U.S.-based company seeking to make Elon Musk's futuristic idea a commercial business. It signed a memorandum of understanding with the Slovak government in March and is researching a possibility to link Bratislava with Vienna and Budapest.

Escaping to the west from totalitarianism, although in a less revolutionary manner than Timothy Dalton's trick in the Bond film, was a reality for many for decades. In a sort of cultural reverse-engineering, returning east to start businesses is now becoming increasingly common and Hessel says it has worked for him and others.

"When I came here, I was already a part of the startup scene in the U.K., but found nothing here," he said. "Developing a physical product requires somebody with big-enough vision to be able to raise millions. We are no longer a startup, but I remember those times."

This article was written by James M. Gomez and Radoslav Tomek from Bloomberg and was legally licensed through the NewsCred publisher network.

Source: Slovakia's Startup Craze of Hyperloop and Flying Cars Is Helping Make it a European Innovation Capital