Go East: Central and Eastern European Startups Scenes

When it comes to the startup scene in Europe, London and Berlin may be the best known, but like the industry itself, everyone’s on the hunt for the Next Big Thing. In Central and Eastern Europe, though, it’s not just one Big Thing—cities from Budapest to Bucharest and from Krakow to Moscow are hotbeds of activity for promising new companies. Even within countries, it’s common to find several startup clusters; Poland, arguably the startup leader in Eastern Europe, has seen new ventures spring up in Warsaw as well as Krakow and Poznan.

Regardless of where you go, startups are hard at work inventing the future. According to Tomasz Czapliński of LMS Invest, what sets it apart is that the region boasts “really open-minded people who are now learning and trying to start their own business; who think in unconventional way in terms of ‘old’ businesses.” As founders and developers often come from an engineering background, typically working at large companies before striking out on their own, startups are more focused on technical solutions rather than the social and mobile companies that are so popular in the US. Startups also have an advantage in that although their employees are highly skilled, they are still less expensive than their competitors in Western Europe.

Several companies, including Prezi from Hungary, Parallels from Russia, and a little calling service you may have heard of from Estonia have already found international success, and the formation of networks and incubators is certain to lead to greater achievements in the near future. Of course, as the startup culture is still relatively new to the region, entrepreneurs face several challenges:

• Funding: Although companies have attracted foreign investment, funding is lacking, so it’s essential to build up strong domestic VC firms
• Expanding: Founders must think internationally from the beginning or risk getting stuck in a mid-sized market
• Recruiting: Young people have traditionally opted for secure jobs in government and the corporate world; failure must be made culturally acceptable

CeBIT may have ended for 2013, but as the founders and investors of startups in Central and Eastern Europe will attest, these first steps are only the beginning. As Czapliński noted, the most important thing to know about the region is that it’s full of “people still looking for solutions that make their lives easier.”

Our thanks to Tomasz Czapliński for the interview.