Central and Eastern Europe is poised to be the world’s next major technology hub. With high technical literacy, proximity to key markets, and strong momentum with unicorns such as Bolt, ElevenLabs, and Grammarly, it’s easy to see why. But, despite the regional momentum, founders and business leaders in CEE still face unique challenges that present formidable barriers on the path to building a successful startup.
One major challenge is attracting foreign investors. While there was a short period between 2019 and 2021 where the region saw an influx of foreign investment into the startup ecosystem, those numbers have since leveled off. Consequently, founders are facing difficulties in securing the type of investment needed to scale globally. As a result, one of the main conversations founders and business leaders are having is whether to move their business outside the region.
We will explore some of the pros and cons of relocating, and offer insights to help startups in the CEE region make more informed decisions.
Potential for economic growth in CEE
The decrease in funding to the area could be perceived as a sign of slowing innovation, but the reality is that the reduction has more to do with geopolitics than the success of startups. This shows there is value in participating in a market that is well-positioned for significant growth over the next few years.
Speaking during a session at this year’s NVIDIA GTC conference, prominent Polish Venture Capitalist Dominik Andrzejczuk outlined the striking similarities between the rise of Silicon Valley, Israeli technology ecosystems, and current market trends in CEE. Andrzejczuk’s compelling arguments suggest that the early success of Silicon Valley and Israel will be replicated across CEE and lead to similar exponential growth. These variables include a culture of entrepreneurship, a high density of skilled workers, and significant initial investment from the public sector.
Andrzejczuk also draws parallels to Shanghai, which saw explosive growth in the early 2000s, resulting in a vibrant and competitive global ecosystem. This growth presented substantial opportunities for those who actively participated in it.
For CEE startups, it’s likely that continued focus and increased investment in the region will yield significant returns, capitalizing on the region's rapid growth.
Seeking investment elsewhere
Aside from expertise, access to sufficient capital remains a critical catalyst of innovation. Thus, founders with exceptional ideas may feel compelled to seek investments from beyond the CEE region to inject capital into their startups. One of the easiest ways to do that is by relocating the company headquarters to a region that has a greater flow of capital, such as Germany, the United Kingdom or the United States. It’s understandable that some VCs prefer to invest in more established ecosystems.
There are other major benefits for startups relocating to a major technology hub. For example, established hubs often have a large pool of experts, including engineers, marketers, operations managers, and executives. Moving to these hubs could provide startups with access to much needed expertise, making it easier to hire top talent and build high-performing teams. Organizations looking to scale quickly may find talent hot spots particularly enticing.
These technology hubs also provide useful environments for startups to scale their customer base quickly. Large multinational organizations and global brands often base their headquarters in mature markets, which represent a range of potential customers. Direct proximity to these organizations allows startups to expand their reach, secure strategic partnerships, and drive revenue growth at scale.
Even in a digitally connected world, physical location matters. Shifting to established hubs allows startups to position themselves as industry leaders, innovators, or disruptors within their target markets. Therefore, enhancing their visibility and credibility among customers, investors, and partners.
Support for success
Whether a startup decides to stay in the CEE region or not, it’s important that they take advantage of the available programs to help them become successful in the technology space.
NVIDIA Inception is a free program designed to help startups evolve faster through access to free cloud credits, cutting-edge technology, and NVIDIA experts. Enrolled startups also gain additional advantages, including opportunities to connect with VCs, co-marketing support, and exclusive pricing on NVIDIA’s cutting-edge software, hardware, and more. These benefits empower startups to build solutions faster on the industry-leading AI platform.
What sets the Inception program apart is its inclusivity. It is open to technology startups at all stages, regardless of their funding status or focus area. There are no application deadlines or cohorts, and using NVIDIA technology is not a prerequisite. Program flexibility allows startups to tap into benefits at their own pace and according to their unique needs.
Moreover, the NVIDIA Inception program offers invaluable exposure to the venture capital community, opening doors to potential funding opportunities and strategic partnerships. With NVIDIA’s support, startups can confidently navigate the challenges of growth and emerge as trailblazers in their respective fields.
