AI isn’t a passing trend — it’s a technology that is fundamentally reshaping industries worldwide. In Central and Eastern Europe, it’s creating huge opportunities for startups while prompting investors to rethink how they allocate funds, says Cristian Munteanu, Managing Partner at Early Game Ventures. In his interview with Vestbee, he shared why now is the best time for the AI-driven startup to build, how AI is making B2C attractive to investors again, and the key challenges the CEE ecosystem still faces.
There is one huge trend, not just in Central and Eastern Europe but likely worldwide — the new wave of AI applications and AI startups.
The best part about AI is that it is needed everywhere. That means we are looking at AI not as a vertical, not as a technology dedicated to one industry or another. It is a horizontal that will certainly help the development of different startups across all industries.
Now is the perfect time for a startup to begin building something AI-powered in any industry of their choice. The opportunity is absolutely huge.
That being said, there is something extremely important here: with AI becoming more and more relevant and accessible in terms of resources, B2C is once again appealing to investors. In the past few years, most VC funds stated that they wanted to invest in B2B companies. Right now, the B2C companies of the future are being built.
Another opportunity here is AI voice agents. With this voice technology, it is now easier for an Eastern European startup to launch a B2C product and market it directly to Western countries, including the US and North America. Language is no longer a barrier; go-to-market strategies are much simpler today. AI, acting as a marketer, does an amazing job and delivers great results. I would say that this is one of the largest and most important opportunities for startups in “new Europe”.
When it comes to the challenges or opportunities in CEE, several things are missing. The most important — pension funds.
They are the crucial institutional investors in the venture capital asset class. This is not just a problem in Romania or Bulgaria, but across the region — I would even dare say it's a problem across Europe. I was reading a report on institutional investors in German unicorns. The surprising result was that more American pension funds were invested in them than local ones. This issue is even more pronounced in CEE, where pension funds are practically absent, making it difficult to build an industry without a solid foundation.
Another thing CEE misses is real support from venture capital funds beyond the capital invested. Practically all regional VC funds are small — I’d estimate the average size at around €50 million. With such small funds, managers simply don’t have the resources to support companies beyond investment. Funds like Andreessen Horowitz provide various services to their portfolio companies: from hiring to go-to-market support. But in CEE, fund managers can’t afford large teams and tools or share their limited resources. Surely, everyone is willing to help, but it becomes frustrating if you don’t have the resources.
All these problems are derived from this larger issue that Europe needs to address: pension funds becoming active players in the venture capital and private equity industry. To have local money and to invest pension funds, the government in each country must intervene and practically allow this. We are talking about careful investment — just a small fraction, around 2-3%, of all assets under their management.
In Romania, for example, this amount at the disposal of pension funds exceeds what the venture capital or private equity market can absorb. But again, it all depends on the government. I’d cascade this to the European Commission because Europe’s capital market is highly fragmented. In my opinion, this should be a priority for European policymakers: creating a truly functional, unified capital market across Europe. As you can see, it's not something that entrepreneurs can do; everything comes down to political will.
At the same time, looking at the VC landscape in the region, we notice a limited number of funds that can act as lead investors.
Why? It’s due to fund size and the limited mandates of fund managers. This is one reason founders start looking for financing outside the region. Until recently, they looked toward Western Europe, but more and more are now bypassing it entirely and going directly to the US for lead investors.
My team investigated what happened with the Series A rounds of unicorns born in CEE over the last decade. Our internal findings showed that most of these rounds, for the best companies in the region — the ones that became unicorns — were led not by European or Western European VC funds but directly by US-based venture capital funds. This is something I see becoming a trend in the market recently, and it’s a pity because we are missing out on the best investment opportunities.
In 100% of the cases, Early Games Ventures is the lead investor. We don’t need any other investor to confirm our decisions.
In my opinion, it’s very important to take a leap of faith when you make the first investment. Remember, this is venture capital. Bad investors are killing the venture part and getting traction capital. Everyone asks for traction, even at the pre-seed or seed stage. But we don’t mean traction as in revenue. I’m not asking early-stage companies how much money they make — I want to see their progress in product development, team building — other non-monetary kind of traction.
I want to be the first investor in a company that will be huge — before they make their first euro. If I invest when they’re making €10 million per year, I’m already late. To identify these companies, we are scouting the market with this bold approach, looking for founders tackling big problems.
More than 90% of the companies we talk to are AI companies. It’s now even difficult to find a company that’s not AI-based. There are only a few non-AI-centric companies, but when it comes to software, everything is about AI. And it makes a lot of sense to be like that. Looking at this from a competition perspective, I believe there is a big chance and opportunity for VC funds that invest in the pre-seed and seed stages. A key factor is having boots on the ground with local partners in CEE, as they provide access to good deals early. It's difficult to invest in pre-seed from a distance.
AI opportunity is huge, but there are many "me-too" businesses, building the same thing, the same way, for the same customer at the same price.
The question that investors are asking themselves is, “How do I know that this is going to be the winner of the category and not just one of the other two thousand companies building the same thing?” Technology is no longer the differentiator, so the answer is the quality of the founder and their ability to create a product that is amazingly easy and beautiful to use. As a result, user experience becomes more and more important.
The second thing is virality. I think this is what will make the difference between the winners and the losers in specific categories in the future.
I’m not just referring to B2C models, but also B2B ones. For example, I was recently pitched by a startup building an AI agent to help real estate agents present properties better. My first question was, “Why are you using an agent to help an agent?” You have such powerful new technology, but it seems like you're still thinking in the old way. AI has the power to completely remodel the industry. An AI agent could replace a human real estate agent, not just work for him. In my discussion with the founders, they admitted, “We never dared to imagine something like this.” This kind of courage is still needed in CEE.
We need to understand that we are capable of really changing industries, even if we start from Eastern Europe. You don’t have to be in Silicon Valley to change the world; you can do it from here.
