CEE startups – efficient, resilient and growing fast

Central and Eastern Europe has long be hailed as a talent-rich, capital efficient, entrepreneurial land of opportunity. In our third annual look at the state of the CEE ecosystem, in partnership with Google for Startups, Atomico and Credo Ventures, we check in on how that opportunity is being realised, against tumultuous geopolitical challenges on the doorstep.

CEE is exceeding at value creation

CEE is one of the fastest growing regions for VC funding in Europe, growing 7.6x since 2017. Combined enterprise value of CEE startups has quadrupled in the last five years, now totally €190B, after global highs in 2021. And while average funding per startup is decreasing globally, it’s increasing in CEE.

Among CEE countries, Croatia , Lithuania and Ukraine have grown fastest since 2017 in combined enterprise value. Since 2017, Croatia grew by 16.6x to €10B, Lithuania 15.7x to €4.7B, and Ukraine 9.3x to €23.3B.

CEE is among the most efficient creators of value in Europe. 2021 and 2022 have been the strongest years for unicorn creation in CEE, producing 36 and 44+ respectively, more than doubling the number of unicorns since December 2020.

VC activity in CEE has already surpassed every year prior to 2021 (€6.1B). At the current rate, the region is on track to break its yearly venture capital investment record and raise €6.2B.

CEE startups are ranked among the highest in Europe for jobs created per Euro of venture capital invested. The experience in scaling efficiently can be an advantage in aiming to minimize the effects of a market downturn.

Building off the success of Enterprise Software

CEE has made a name for itself as a pioneering region for Enterprise Software, with the sector taking up a significantly larger chunk of VC activity in the region. CEE Enterprise Software startups have a combined valuation (€80B) exceeding all of their Fintech (€30B), Transportation (€19B) and eCommerce (€19B) counterparts combined.

Building off the sector’s success, CEE’s Software Development legacy is feeding a new generation of startups, as tech talents become founders at an increasing rate. Selected startups (co-)founded by former employees of 20+ Software Development studios, IT outsourcing companies and R&D offices of large European IT consultancies in CEE.

As the continues ecosystem maturing, CEE is now home to promising startups in many other segments including disruptive technologies such as Gaming, Web3 and Crypto.

VC funding has grown 5.6x since 2021 for CEE-based Crypto and Web3 startups. While Web3 and Gaming startups are mutually-reinforcing in CEE, leveraging renowned expertise of the region. Estonia (€1.3B), Slovenia (€427M) and Serbia (€289M) concentrate over 70% of combined value of Web3 startups in CEE. With over €2B in exits since 2020, CEE has created a winning streak in Gaming.

Want to discover the most promising up-and-coming CEE startups in these sectors? Explore CEE’s landscapes for Web 3 and Gaming startups by using Dealroom Signal: a powerful algorithm helping VCs, Corporates and Governments find the most promising up-and-coming startups.

• Web3 startups to watch out for in Central and Eastern Europe.
• Gaming startups to watch out for in Central and Eastern Europe.

Ukraine, the resilient underdog

Ukrainian startups are showing incredible resilience in spite of the war and recession, with enterprise value growing 3.3x since 2020.

The country is a breeding ground for successful startups and is home to 1.5k active startups based in the country. Another 600+ startups were founded in Ukraine, or by Ukraine-based founding teams and/or by alumnus of Ukrainian universities.

But Ukraine’s tech ecosystem is more than the sum of its startups. It’s shown incredible resilience and continues to provide livelihoods to Ukrainians at home and abroad, as well as innovations to the world. Ukraine is also home to 285,000+ IT professionals, 500+ foreign startups with recent job openings in Ukraine, and hundreds of service providers and software development studios.

Ukraine Support Fund by Google for Startups

"When the war started, we opened our Google for Startups Campus doors to Ukrainian founders who arrived in Warsaw. The one strong feedback we got was that, on top of funds, they need visibility to show the world that Ukraine is still standing. This strong resilience shows in the numbers that we can see throughout this report."

To help Ukrainian entrepreneurs maintain and grow their businesses, strengthen their community and build a foundation for post-war economic recovery, Google announced in March a $5 million Google for Startups Ukraine Support Fund.

Selected Ukraine-based startups will receive up to $100,000 in non-dilutive funding as well as ongoing Google mentorship, product support, and Cloud credits. So far 33 startups were selected, with more to be announced before the end of year.