More success at enticing global investors the second time around is being experienced by tech entrepreneurs in central and southeastern European, many of whom already have experience of launching their own businesses.
Failing to rank among Europe’s top dozen countries for investment and lagging western and northern European countries, as well as decades-old tech hub Israel, until recently, the region’s tech start-up scene was stagnant.
But that’s changing fast. Buoyed by a growing number of deals, investment in central Europe, while still modest, had jumped more than tenfold since 2012, by last year. And 2017 is on track for even stronger growth.
Founders of companies have absorbed lessons and are now able to generate more heavyweight investment even while an early wave of companies often lacked the international know-how and market savvy to develop into global businesses.
“A lot of the bigger guys are now starting to take a look at the region,” said Credo Venture’s Andrej Kiska, whose Prague-based fund started in 2010 and has since co-invested with global venture capital firms Index Ventures, Accel and Baseline Ventures.
“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.”
Take Warsaw-based medical appointment booking platform DocPlanner, founded by serial Polish entrepreneur Mariusz Gralewski.
To help fund international expansion in Latin America following its merger a year ago with Spanish rival Doctoralia, it had closed a new round of $15 million, the company said oln Wednesday.
In its six core markets of Poland, Spain, Italy, Turkey, Portugal and Mexico, the medical booking company is making 340,000 appointments per month and now employs 300.
How entrepreneurs such as Gralewski are attracting global investment is underlined by the new funding. With international investor Target Global, Germany’s ENERN Investments and London-based One Peak Partners leading the latest round, DocPlanner has raised $46 million to date.
“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,” Gralewski said.
“The funding in the region is not comparable to when we were trying to raise money for my first company.
A low cost base that allows entrepreneurs to do more with less as companies grow and a long tradition of producing graduates strong in maths and computer science are some of the advantages that countries in the region offer for start ups.
According to data from funding research firm Dealroom.co., up from just 15 million euros four years before, last year, central and eastern Europe start-ups raised a total of 177 million euros ($199 million).
According to Dealroom.co data., in first quarter of 2017, 4.5 billion euros raised in Europe and Israel and hence the amount is a drop compared to that money. But an increasing number of global investors looking at the region is evidenced by the growth.
Dealroom.co data shows 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, Poland, Estonia and Romania are attracting the biggest funding rounds.
(Adapted from Reuters)