The CEE region continues to evolve and compete to be at the forefront of the European tech startup scene. Moreover, CEE startups produced over 10 unicorns with a combined value of €30 billion. There’s been a drastic change in the region. That goes for the majority of early-stage startups 5 years ago to companies raising sizable Series A + rounds with international VCs backing them.
Private equity investment in CEE reached €2.7 billion in 2018 to local talents, according to the Invest Europe Association. Furthermore, venture capital investment rose year-on-year by 32% to €160 million. By a number of companies backed in 2018, venture capital registered its second-best year on record.
In recent years, CEE startups in tech-led to huge traction of the market to venture capitals. About 10,000 emerging Eastern European businesses raise their first rounds of funding in the last five years. In the same period, the CEE market has seen more than ten unicorns emerged, with a total valuation of €30 billion.
CEE startups examples in tech
Lots of CEE startups tech companies achieved admirable results in tech space with a huge impact on a global scale. Grammarly Inc. is one of such tech company, founded in Ukraine. The company develops a digital writing tool using natural language processing (NLP) and artificial intelligence for effective writing of the English language. With more than 20 million active daily users, in 2019, the company was able to raise $90 million with a valuation of $1 billion.
We have Russia’s Miro, a digital whiteboard designed to allow distributed teams to work effectively together. The company raised a $50m Series B in April and has five million users worldwide.
Another example is a Lithuanian company, MailerLite that offers advanced automated email marketing campaigns. The company was recognized by SaaS Magazine as the 5th fastest growing SaaS business in the world.
DocPlanner, an emerging Warsaw-based online healthcare platform, is making it effortless for patients to book appointments with the right doctor. In May 2019, it announced raising an amount of $89.8 million series E funding in less than two years after it raised $16.8 million in venture capital.
Warsaw and Tallinn are currently leading the space as the largest tech hub in the CEE region by impressive numbers in venture rounds.
Poland startup ecosystem
Poland is the largest economy with 30% share of total GDP ($1.59T) in the CEE region. That said, polish technology companies are becoming more sophisticated and many have truly global potential.
By invested venture capital, Poland ranks as a second-best in the CEE region. 2019 was record-breaking in terms of the amount of capital invested. As many as 269 transactions totalled over PLN 1.2 billion.
Although the pandemic situation has been trying to thwart our plans, we do believe that 2020 will have also ended with record-breaking results.– said Eliza Kruczkowska &Maciej Ćwikiewicz from Polish Development Fund Group (PFR)
However, the Polish tech startups are facing some challenges. Many great
ideas lie dormant in the universities’ drawers and laboratories. That may be solved with market professionalisation. That said, mature managers with a good track record will be able to find good projects and convince the originators that together they can achieve success.
One of the key challenges is a clear equity financing gap for later and growth-stage companies who are raising B or C rounds. Additionally, the Polish tech companies should improve managerial capabilities in the area of international business.
What should we expect from the CEE region in the future? The diversified workforce has great potential. Moreover, the region includes about one million developers (50% in Poland, Romania and the Czech Republic), offering highly-skilled and educated tech workers. As mentioned in the article, Poland in 2019 is having the breaking record in venture capital investments. CEE startups certainly don’t lack innovation and highly-skilled and educated tech workers. Finally, the CEE region will likely gain more attention from investors outside of Europe.