Tech entrepreneurs in central and south-eastern Europe, many of whom have experience of launching businesses, are now having more success at enticing global investors the second time around. Till recently, the region’s startup scene was stagnant, failing to rank among Europe‘s top countries for investment.
That’s changing fast. By last year, investment in central Europe, while still modest, had jumped tenfold since 2012. While an early wave of companies often lacked the international know-how and market savvy to develop into global businesses, their founders have absorbed lessons and are now able to generate more heavyweight investment.
“The bigger guys are starting to take a look at the region,“ said Credo Ventures’ Andrej Kiska in Prague. “First-time founders have gained experience and are starting their second and third companies with higher ambitions.“
Take Warsaw-based medical appointment booking platform DocPlanner, founded by serial Polish entrepreneur Mariusz Gralewski. Earlier this week, the company closed a round of $ 15 million to help fund expansion in Latin America. The new funding underlines how entrepreneurs such as Gralewski are attracting global investment.
“We have a first generation of entrepreneurs who quickly sold companies and were able to start new ones after building up trust and experience,“ Gralewski said.
Countries in the region offers a host of advantages for startups, including a long tradition of producing graduates strong in maths and computer science and a low cost base that allows entrepreneurs to do more with less as companies grow.
Last year, central and eastern Europe startups raised a total of 177 million euros ($ 199 million), up from 15 million euros four years earlier, according to data from funding research firm Dealroom.co. The amount is a drop compared to the 4.5 billion euros raised in Europe and Israel in first quarter of 2017, but the growth is evidence of an increasing number of global investors looking at the region.
Poland, Estonia and Romania are attracting the biggest funding rounds, while the Czech Republic is home to some of the most mature, best-funded tech companies, including security software firm Avast, fashion retailer Internet Mall and NetRetail Holding, Deal room.co data shows.
In April, Romanian robotic form-scanning software company UiPath announced it had raised $ 30 million in fresh venture funding, making one of the largest early-stage tech investments to date in central Europe.
Luciana Lixandru of Accel, which led UiPath’s latest funding round, said seed money was scarce in the region five to seven years ago but now companies can find both startup capital and bigger funding batches needed to grow globally. “What sets the region apart and helps plant the early seeds of an interesting ecosystem is the wealth of technical talent,“ Lixandru said. “CEE has a tradition of strong maths, sciences and engineering universities, and thanks to more funding and more innovation, the region is now able to retain this talent as opposed to losing it to jobs abroad.“