By Lucia Colníková, Portfolio Manager & League for Digital Boost Lead at the Slovak Alliance for Innovation Economy (SAPIE)

Although Central and Eastern Europe (CEE) may seem as a humdrum destination for entrepreneurs compared to the huge startup superpowers, the region has been widely acclaimed as a talent-rich destination that has emerged as a cradle to the most innovative businesses. Over the last 30 years, CEE has seen great progress in the field of innovations. Although the current US and western Europe startup scene is dwindling and struggling with layoffs and a slowdown in venture capital (VC) activity, the CEE region doesn’t hold back. The investment in CEE has been booming, and the number of startups in this region is growing. Yet, the CEE countries remain outperformed by some of their Western and Southern counterparts in innovation rankings. And that’s with the European elections of June 2024, the new European Commission will have a unique opportunity to put the startups research and investment on top of the agenda for the years to come.

According to the Crunchbase news, funding to European startups reached $52 billion in 2023 down 39% year over year from $86 billion invested in 2022. As the CEE Startup Policy Report by Startup Hungary reports, the CEE regional startup scene is showing resilience and experiencing growth, even after the negative consequences of the Russian invasion of Ukraine. The region also witnessed the biggest growth so far in terms of the number of unicorns, which more than doubled from 21 to 44 between December 2020 and the end of 2022. VC investment experienced significant growth during the last five years, and the most significant increase happened in the Czechia, as stated in the report. More information about VC activity in the past years, specifically in the CEE region is available at the CEE Startups 2022 report. 

SAPIE has been part of the European startup ecosystem leaders who contributed to the Action Plan to Make Europe the new Global Powerhouse for Startups, where its members stated that the EU is still fragmented with respect to the VC sector or cross border investment, but also that the risk capital invested in North America is approximately five times larger than the level of investment in Europe. The free movement of capital that is monitored and enforced by the European Commission, an increased harmonization of the regulation in different countries, or reduction of various kinds of taxes had been suggested as the ways to foster the ecosystem.  

To have strong startups, it is first necessary to build a strong pro-innovation ecosystem fostering collaboration between governments, large corporations, universities, incubators, NGOs, and other organizations and entities which are embedded in the system. Startups can be at the forefront of a rapid economic development and more sustainable future, but they also need to be heard and invited to the policy table. As a part of the Allied for Startups, a worldwide network of advocacy organizations focusing on improving the policy environment for startups, we signed the 2024 EU Elections Startup Manifesto with suggestions for how startups can be included into discussions leading towards setting up strategies towards Europe’s continued growth and economic success.