Report: VC investment in CEE has doubled since 2020; Ukrainian startups show “incredible resilience”

Earlier this month Dealroom released the third edition of its annual report on Central and Eastern European (CEE) startups. Its main findings are as follows: 

  • CEE has shown resilience through uncertain market conditions — Combined venture capital investment in CEE has doubled since 2020. The region is on track to break its yearly venture capital investment record and raise €6.2 billion.
  • CEE is among the most efficient creators of value in Europe — 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.
  • CEE has diversified investment into promising new sectors — CEE has made a name for itself as a pioneering region for Enterprise Software and Gaming companies. As the startup ecosystem matures, CEE is now home to promising startups in many other segments including disruptive technologies such as Web3 and Crypto.
  • Bootstrapping plays a prominent role in CEEʼs late-stage successes — Almost a quarter of unicorns born in CEE are not VC-backed. However, with an active domestic early-stage investment industry, CEE startups get VC backing at the same rate as all of Europe, with 23% of startups venture backed.  When they are backed, CEE startups successfully graduate from Seed to Series A at a similar pace and rate compared to the rest of Europe.
  • Startups relocate as they scale — CEE startups are far more likely to do so than European average, although the picture differs by country.

“In last yearʼs report, we saw how the region positioned itself as a solid startup hub, attracting the attention of many local and international investors. This year saw the ecosystem mature and expand its reach by developing and investing in disruptive technologies such as gaming, Web3, and crypto.” — Joanna Nagadowska, VC and Startups Partnerships at Google for Startups

“Whatʼs becoming obvious, and is starting to be seen through the data, is that CEE has emerged not only as a cradle to great human minds helping others in building products, but also a birthplace of the most innovative and efficient companies.” — Sasha Vidiborskiy, Partner at Atomico

Startup resilience in Ukraine

Dealroom’s report features a special section on Ukraine. This country’s startups are “showing incredible resilience in spite of the war and recession, with enterprise value growing 3.3x since 2020,” notes the report. 

With €246 million invested in Ukrainian or Ukrainian-founded startups in Q1-Q3 of this year, Ukraine ranks 6th among CEE countries by VC investment volume — ex aequo with Bulgaria and slightly ahead of Lithuania. Estonia and Czechia top the ranking, each with more than €1 billion in investments. Croatia, Poland and Romania come immediately after these two regional champions, ahead of Ukraine.

Interestingly, Ukraine creates around 85 jobs created for €1 million raised. The country ranks first Europe by this criteria — ahead of Slovakia, Belarus, Slovenia and Serbia (50-60 jobs). With the same amount, Italy, the Netherlands and Portugal generate around 25 jobs, while France and Germany create less than 10 jobs. 

The report features interviews with Preply founders Kirill Bigai and Dmytro Voloshy, as well as MacPaw founder Oleksandr Kosovan, who struggle to work on the same level of productivity amid the war and its painful consequences.

The report also provides fresh insights about  Google’s Ukraine Support Fund, which launched in March with a $5 million allocation for Ukraine-based startups. So far 33 startups were selected.

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Topics: Data & reports, Finance, International, Venture/Private equity
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