A new report released jointly by Google, Atomico, and Dealroom shows the phenomenal growth and potential of the region’s tech startups. Although it is not the first place for investors to look for new investment opportunities, the whole CEE region is seeing a dramatic increase in investment and growth, which could rival that of other parts of the world.
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Roots in the heart of Europe
What is so unique about one of the year’s top IPOs at the New York Stock Exchange? It just so happens that UiPath was founded in Romania and therefore has its roots in the CEE region. It was a significant achievement for the company that deals with robotics process automation, enabling users to automate various aspects of business processes.
The company already has several high-profile customers like CVS Health and Chevron. In April of this year, the tech company went to the next level with a USD 35 billion valuation on the NYSE. This may all seem normal in the scope of IPOs, but it is a sign and testament to the booming startup ecosystem (and talent pool) of central and eastern Europe.
Cumulatively tech companies from CEE are valued at more than EUR 186 billion.
The good news does not stop there. Investment from VCs has seen a sharp increase within the last decade. If it continues at this rate, it may well break the record set in the previous year as investment capital heads towards a projected target of EUR 5.4 billion.
Many firms and businesses struggled as the world headed into the global COVID-19 pandemic at the beginning of 2020. Yet, the CEE region has remained resilient. Not only that, it has seen the birth of 34 unicorns in the past few years, which has garnered the attention of investors to take a closer look at the incredible potential of this dynamic region.
It is hard to believe that the region only had six unicorns back in 2015, another testament to the rapid rise and investment across several countries and companies. Within the unicorns on the list, Poland leads the pack with 8, followed closely by Estonia with six and the Czech Republic with four unicorns.
Although the Baltic region has been known as a thriving hub for tech startups and has produced the likes of Bolt, Skype, and Vinted, the wider region boasts some powerful companies that have made giant leaps not just in domestic markets but also onto the global stage.
UiPath from Romania remains one of the biggest success stories, but there are plenty more. InPost from Poland has also made a name for itself and has ambitious goals in CEE and other markets, namely the UK. With CD Projekt Red, Poland has seen the rise of one of the world’s most successful and valuable gaming companies. Not only that, but it has also replaced Ubisoft as Europe’s largest gaming company in Europe. There are other companies too that are hungry for success, and more investment will surely follow.
Though is this just the work of the COVID-19 pandemic? Was this simply a flash in the pan for most of these tech successes?
To fully understand where this remarkable performance has sprung from -and where it will lead- one must consider several factors.
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A tradition of excellence
The new influx of cash is not the sole reason for the region’s success.
Indeed, there is still potential for more unicorns and IPOs in the coming years. However, one must recall that the success of these tech companies is no accident or mere coincidence.
The region – notably Poland – has been the home of highly skilled developers and programmers for several years. In many rankings by various organisations, Poland finds itself in the top 5 nations which produce the best-skilled developers and programmers, followed by Hungary, the Czech Republic, Romania, and Ukraine.
All of these nations are renowned for highly skilled IT talent who have built the foundations for the rise of today’s tech unicorns.
What’s also at play here is the entrepreneurial nature of many dedicated team members who have made these companies, often from scratch and with their own money—bootstrapping accounts for one-third of the region’s unicorns. At the same time, that number is only seven percent for the rest of Europe according to a recent report.
The region is still far away from the likes of Silicon Valley or other major startup ecosystems worldwide. Yet, with some significant successes, continued investment, and an abundance of highly skilled professionals, this just marks the beginning of the rise of the CEE’s tech boom.
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