Central and Eastern Europe’s startup ecosystem is experiencing unprecedented transformation as investors recognize the region’s untapped potential. The convergence of world-class research institutions and emerging technological capabilities has created fertile ground for innovation. Deep tech companies are leading this charge, demonstrating remarkable resilience against market volatility. What’s happening in CEE could reshape Europe’s entire technology landscape within the next decade.
Deep tech emerges as an effective hedge for market volatility
The determination of the Central and Eastern European start-ups in the face of market challenges has attracted huge investments. A total of €15.1 billion was injected into the European deep-tech industry in the year of 2024, since it is viewed as a haven for investments. The companies are involved in applying scientific and engineering innovation to products, which later demands further investments for the development of intellectual properties.
Historically, deep tech start-ups lack the typical short development cycles characteristic of conventional tech start-ups in terms of developing substantial revenue streams. Deep tech start-ups encompass a broad category of industries, including biomedical tech, robotic technologies, and material science. One of the major stabilizing factors in deep tech start-ups is their foundation on scientific innovation rather than market trends.
Unlike the traditional tech sectors, which suffered massive reductions of as much as 60 percent in their funding allocations, the deep tech sector saw a decrease of just 28 percent, an indication of tremendous resilience in the sector. As a result of such impressive performance, the deep tech sectors now account for a third of total European venture capital investment. Some 48 percent of scale-ups have shifted their HQ abroad. The destinations include the United States with 56 percent and other European countries with 39 percent; 24 percent moved their HQ to the United Kingdom.
The CEE area presents 275+ promising ScaleUps in various sectors
The startup scene in Central and Eastern Europe has evolved to a large degree, boasting over 275 scale-ups that have received Series A or higher funding. Poland, Romania, and Estonia stand out in terms of overall startup density, and of these, Estonia boasts the highest proportion of population to scale-ups. Startup ecosystem value collectively represents a staggering €243 billion overall enterprise value.
Startups in the CEE show remarkable bootstrap strength, achieving the value of a billion dollars with relatively low funding from outside sources, in comparison to those in Western Europe. These factors can be attributed to the talent present in the region, combined with low operational expenses. Out of the 57 unicorns in the CEE, “80 percent of the companies have received funding from venture capital/growth equity investors during their lifetime.” Successful companies retain their roots in the CEE despite moving their headquarters to outside locations.
Investments accelerate despite challenges in funding
The total amount of venture capital investments raised by companies in CEE is €2.3 billion for 2024. The reason for this is that there are substantial increases in both Breakout and Late Stage investments. More than €1 billion of new entrants have been experienced by the CEE in entering this pool of investments. The second-highest total amount of venture capital investments for CEE has been achieved.
Key investment trends include:
- Early-stage funding – €566 million raised across seed and Series A rounds
- Breakout investments – €784 million in Series B and C funding rounds
- Late-stage capital – €505 million for growth and expansion financing
- Defense technology – Over 100 startups addressing security and dual-use applications
The Central and Eastern European startup scene is on the cusp of a dramatic growth spurt due to the increasing popularity of the deep-tech and AI spaces. While possessing cutting-edge technological knowledge, the region’s lower costs, as well as a track record of success, make it a foundational piece of the European innovation landscape. A successful growth investment phase is all that is needed for the region to go from emerging market to established tech hub.
