Investors are increasingly investing in tech startups in the region whose graduates have strong math, computer science and engineering foundations.
Tech entrepreneurs from south-eastern and central European countries, many of whom have had prior experience of launching their own businesses, are increasingly finding a success at enticing global investors, for the second time.
Of late, the tech-startup scene from these regions were almost stagnant and were failing in rank compared to top European countries in terms of technological investments.
Israel has hogged the tech investment limelight for decades. However, that is now changing.
In 2016, buoyed by a growing number of deals, investment in central Europe, while still modest, had jumped more than ten times their 2012 levels. Their track record in 2017 is on a stronger, steadier path.
“A lot of the bigger guys are now starting to take a look at the region,” said Andrej Kiska of Credo Venture whose Prague-based fund debuted in 2010, has now partnered with global venture capital firms, including Baseline Ventures, Index Ventures and Accel.
“It’s still a small market but it’s growing fast. First time founders have gained experience and are now starting their second and third companies with higher ambitions.”
Case in point: Warsaw-based medical appointment booking platform DocPlanner, which was founded by Mariusz Gralewski, a Polish serial entrepreneur closed a new funding round with $15 million in its kitty. The money will now be used to fund its international expansion in Latin America following its merger a year ago with Spanish rival Doctoralia.
Gralewski turned his dorm room idea into Poland’s dominant social business network, GoldenLine.pl, which he then sold to DocPlanner.
The medical booking company has an employee strength of 300 and makes 340,000 appointments per month in six core markets of Italy, Poland, Spain, Portugal, Turkey, and Mexico.
This new funding round, underscores how entrepreneurs such as Gralewski are attracting global investment.
“We have a first generation of entrepreneurs who quickly sold their companies and then were able to start new ones after building up trust and experience,” said Gralewski.
“The funding in the region is not comparable to when we were trying to raise money for my first company.”
Strong Math and Computer Science Skills
Startups in the region are finding a fertile ground since graduates produced by these countries are strong in math and computer science coding skills.
The region’s low cost base allows entrepreneurs to harness latent capabilities so as to do more with less and in the process feed the growth cycle.
Romania, Poland and Estonia are attracting some of the biggest funding rounds. Incidentally, the Czech Republic is home to some of the most mature, best-funded tech companies, including Avast, NetRetail Holding, Internet Mall and Dealroom.co, according to available data.
“What sets the region apart and helps plant the early seeds of an interesting ecosystem is the wealth of technical talent,” said Luciana Lixandru of Accel, which led UiPath’s latest funding round.
“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.”
Some of the biggest companies in the region are increasing their footprint and financial strength through acquisition.