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The State of Venture Capital in CEE 2024

November 28, 2024

From a handful of pioneering funds to a diverse landscape of investors, the Central and Eastern European region has emerged as a significant player in the European venture capital scene. Based on extensive research conducted by our investment team over the summer months, complemented by industry insights from various market reports, we present a comprehensive analysis of the current state of venture capital in CEE.

Key Findings from Our Research

A Growing and Maturing Ecosystem

Our analysis of close to 200 venture capital funds across 12 CEE countries reveals an evolving investment landscape. The ecosystem’s maturity is particularly evident in its geographic distribution. Poland leads the pack with 39 active funds, followed by the Czech Republic with 22 funds, and Turkey with 16 funds. This concentration of capital in certain hubs, while potentially creating disparities, also indicates the development of sophisticated venture ecosystems in these markets.

Source: Eleven’s CEE VC Landscape List

The Rise of Specialized Funds

While the majority of CEE funds maintain a sector-agnostic approach, we’re witnessing an interesting trend towards specialization. Particularly noteworthy is the emergence of sustainability-focused funds – our research identified over 15 dedicated vehicles targeting various aspects of sustainable development and impact investing. This includes funds like Tech 4 Impact in Bosnia and Herzegovina, Purpose Tech in the Czech Republic, and Tilia Impact Ventures, signaling a growing recognition of the importance of sustainable investment in the region.

Early-Stage Focus and the Growth Gap

It’s no surprise that there is a strong concentration in early-stage investing. Over 70% of active funds focus on Pre-Seed and Seed stages, with only about 25% participating in Series A rounds. This creates a noticeable gap in growth-stage capital, with very few funds capable of writing checks larger than €10 million.
This distribution has important implications for the ecosystem’s development. While it ensures strong support for early-stage innovation, it might force successful startups to look westward for larger funding rounds, potentially leading to talent and company migration from the region.

The New Generation of Funds

The past three years have seen remarkable activity in fund formation, with over 45 new funds launched between 2021 and 2023. This new generation of funds brings fresh perspectives and often more specialized investment theses. Whether focusing on specific technologies like AI and blockchain, or targeting particular sectors like sustainable energy or digital health, these newer funds are helping to diversify the region’s venture capital offerings.

Market Context

The growth we’ve observed in our primary research aligns with broader market data. According to Dealroom’s “Central and Eastern European Startups – 2024” report, the CEE region has more than 26,000 startups. Their combined enterprise value has more than doubled from €89 billion in 2019 to €213 billion in 2023, growing at a faster rate than startups in other European regions.

The European Investment Fund’s report provides additional context, noting that CEE-based VC funds have been particularly successful in attracting international limited partners. The report highlights that approximately 40% of capital in CEE-focused funds now comes from international investors, compared to just 20% in 2018, indicating growing confidence in the region’s venture ecosystem.

The State of European Tech 2024 report by Atomico provides further insights into CEE’s global positioning – four times as many North American investors are backing CEE startups in 2024 compared to 2015. These foreign investors are instrumental in connecting European startups with further global capital, expertise and new market opportunities.

When compared to Western European markets, however, CEE shows distinct characteristics:

1️⃣ Valuation dynamics – CEE valuations remain more conservative than Western European counterparts – average Series A valuations in CEE are approximately 30-40% lower than in Western Europe. This valuation gap presents opportunities for international investors seeking better terms.

2️⃣ Investment velocity – Deal pace in CEE has been more stable compared to Western Europe. While Western European deal activity dropped by 35% in 2023, CEE saw only a 15% decrease. The region’s resilience is attributed to its lower dependency on mega-rounds and more sustainable growth patterns.

3️⃣ Capital efficiency – CEE startups demonstrate notably higher capital efficiency, typically achieving similar revenue milestones with 40% less capital than Western European peers. The region’s lower operating costs and strong technical talent contribute to this efficiency. However, sales and marketing scaling often requires similar budgets to Western counterparts.

Opportunities and Challenges

As the CEE venture capital ecosystem continues to evolve, several key opportunities and challenges emerge that will likely shape its development in the coming years. Our research, combined with market insights, points to several critical areas that deserve attention.

Opportunities 🔽

✔️ The Growth-Stage Funding Gap

One of the most significant opportunities in the CEE venture ecosystem lies in addressing the growth-stage funding gap. Our research reveals that while early-stage funding is abundant, with over 70% of funds focusing on pre-seed and seed stages, there’s a notable scarcity of growth-stage capital. This creates a compelling opportunity for new funds specifically targeting Series B+ rounds, international funds looking to establish CEE-focused growth funds, or existing funds considering up-market strategies.

The gap is particularly acute in tickets above €10 million, where local startups often must look westward for funding. This presents an opportunity for first-movers to capture high-potential deals with less competition than in Western European markets.

✔️ Geographic White Spaces

The current concentration of venture capital in certain hubs (Poland, Czech Republic, Turkey) leaves several promising markets underserved. Our analysis shows particularly interesting opportunities in:
📌 The Balkans region (concentrated fund activity in Greece, Romania, and Bulgaria)
📌 Second-tier cities outside primary capitals
📌 Cross-border investment corridors connecting emerging hubs

These underserved markets often feature strong technical talent, lower valuations, and less competition for deals – a potentially powerful combination for early movers.

✔️ Sector-Specific Expertise

While generalist funds dominate the current landscape, there’s growing demand for sector-specific expertise, particularly in Deep Tech (leveraging the region’s strong technical talent pool), Sustainability (building on growing ESG focus and EU green initiatives), and Digital Infrastructure (supporting the region’s digital transformation). Focused investment theses can deliver strong returns while adding crucial expertise to the ecosystem.

Challenges 🔽

✔️ Limited Exit Options

Despite the ecosystem’s growth, exit opportunities remain a crucial challenge. Some of the main factors contributing to this are limited local M&A markets, few strategic buyers with regional headquarters, and nascent IPO markets in most CEE countries.

This challenge requires creative solutions, including building stronger connections with international strategic buyers, developing secondary sale capabilities, and strengthening regional stock exchanges.

✔️ Market Fragmentation

The CEE region’s diversity, while a strength, also presents challenges:

📌 Multiple regulatory frameworks
📌 Different business cultures and practices
📌 Varying levels of ecosystem maturity
📌 Language barriers and local market nuances

Successful funds will need to develop strategies for navigating this complexity while maintaining operational efficiency.

CEE's Ecosystem Future at an Inflection Point

As we look at the Central and Eastern European venture capital landscape in 2024, we’re witnessing a market at a crucial inflection point. The numbers tell a compelling story, but beyond the figures lies a more nuanced narrative about an ecosystem coming of age. The region has moved past the simple characterization of being a “cheaper alternative” to Western Europe and is increasingly recognized for its technological innovation, capital efficiency, and ability to produce global champions. Several factors make this moment particularly significant.

First, we’re seeing a new generation of fund managers emerging. Many of these are former operators and entrepreneurs who have experienced the full startup journey and are now reinvesting their knowledge and capital back into the ecosystem. Their practical experience and global networks are helping to bridge the historical gaps in scaling expertise.

Second, the region’s technical talent pool, long recognized as one of its key strengths, is now being complemented by growing business and marketing capabilities. This combination is a prerequisite for building globally competitive companies, not just excellent technical solutions.

Third, the increasing specialization of funds – whether in deep tech, sustainability, or specific vertical markets – suggests a maturing ecosystem that can provide not just capital, but genuine value-add to portfolio companies. This specialization, combined with the continued presence of strong generalist funds, creates a more complete funding landscape.

However, this is not a story without its challenges. The growth-stage funding gap remains significant, market fragmentation continues to create operational complexities, and exit pathways need further development. Yet these challenges also represent opportunities for those willing to take a long-term view on the region.

Conclusion

For limited partners, corporate investors, and global funds looking at the region, the message is clear: CEE’s venture capital ecosystem has moved beyond its emerging market status but still offers emerging market opportunities. The combination of maturing fund managers, strong technical talent, capital efficiency, and reasonable valuations creates a compelling investment thesis.

For entrepreneurs in the region, the expanding and diversifying sources of capital, combined with growing operational support from funds, provides more options than ever for building ambitious companies. The challenge will be to leverage this support while maintaining the capital efficiency that has historically characterized CEE success stories.

As we look to the future, it’s clear that CEE’s venture capital ecosystem is entering a new phase of development. The foundations have been laid, initial success stories have emerged, and a new generation of funds and entrepreneurs is ready to build on this base. The question is no longer whether CEE will become a significant player in the global venture capital landscape, but rather how quickly this evolution will take place and who will be the key players driving it forward.

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This report combines primary research conducted by Eleven Ventures across 187 venture capital funds in CEE with insights from leading market reports and industry analyses. While we believe this provides a comprehensive view of the current state of venture capital in CEE, the dynamic nature of the market means that new developments are constantly emerging. This report is based on a more comprehensive list that our team compiled including data like fund size, sector focus, and investment stage. Our goal is to keep this file a living document, so if you want to update your fund’s information, don’t hesitate to ping us either on LinkedIn or via email (hello@11.vc).