For investors with long memories, Central and Eastern Europe once meant navigating a maze of murky privatisations, brown envelopes and grey suits in smoky boardrooms. The region was seen as a somewhat edgy bet for brave Western capitalists—exciting perhaps, but hardly stable.
Today, however, investment in the region increasingly resembles something out of a Silicon Valley slide deck, complete with buzzwords such as innovation, entrepreneurship and sustainability. The smokiest thing you’ll find now might well be artisanal vegan sausages sizzling on a grill at a start-up incubator’s barbecue.
However, behind the slick slide decks, the region’s transformation is real—and for investors who understand how the rules have changed, there’s plenty of money to be made.
According to a recent report from Dealroom, the Central and Eastern European start-up ecosystem has soared to 243 billion euros in total worth, growth of almost 25 per cent since 2022. With over 3,800 active start-ups and 275 scale-ups, the region is steadily advancing despite challenges such as the Covid-19 pandemic and late-stage funding issues.
Reinventing reinvention
Central and Eastern Europe’s knack for reinvention is nothing new. It’s embedded deeply in the region’s DNA: a survival instinct honed by decades—if not centuries—of geopolitical upheaval.
But today’s reinvention differs fundamentally from the post-1989 scramble for economic relevance. Rather than simply copying Western blueprints or becoming low-cost factories, countries such as Estonia, Poland, Czechia, Romania and even war-weary Ukraine are writing their own scripts.
Take Poland, for instance. Once mocked as Europe’s supplier of plumbers, today it exports software engineers. The start-up ecosystem in Warsaw and Krakow rivals that of better-known Western European cities, driven by entrepreneurs who grew up watching their parents manage small businesses born from necessity.
For these entrepreneurs, resilience is second nature, and bootstrapping isn’t a cool tactic—it’s a family tradition.
Meanwhile, tiny Estonia, already famous for Skype, has turned digital citizenship into a pioneering export commodity. Its unicorn-per-capita rate is becoming an embarrassment of riches. Investors who once scratched their heads over how to find Tallinn on a map now scramble for Zoom calls with Estonian start-ups, hoping to buy into their next improbable success.
Entrepreneurship with attitude
Entrepreneurship in the CEE region isn’t merely about economic growth—it’s a rebellion against mediocrity.
Across Hungary, Bulgaria and Romania, ambitious tech-savvy youths see entrepreneurship as a way to avoid bureaucracy’s dreary grasp. Local start-up events look less like formal networking affairs and more like festivals celebrating defiance against convention, featuring DJs spinning beats alongside pitches about AI-driven agricultural drones or blockchain-based fashion.
Indeed, innovation in the region tends to be less about trendy Silicon Valley moonshots and more pragmatic. This is partly cultural: decades of shortages and rationing bred resourcefulness. Lithuanian fintech start-ups, for example, thrive precisely because they approach money transfers with a refreshing absence of drama—just efficient, cheap and boringly effective solutions to cross-border banking headaches.
It’s innovation stripped of Silicon Valley theatrics, innovation that simply works.
From coal mines to data mines: Sustainability pays
Investors keen on sustainability—once considered a luxury good in the region—have found surprising opportunities. While Europe’s eastern reaches long associated “green” initiatives with idealistic Westerners, today sustainability is a profitable niche rooted in practical necessity.
Take the Moravian-Silesian region in Czechia, historically a gritty coal-mining area. Today, it increasingly hosts clean-tech start-ups powered not just by the European Union’s generosity but by old-fashioned market logic: renewables, recycling and energy efficiency are simply becoming cheaper and more lucrative than dirty, coal-stained industries.
Poland’s coal miners might still protest loudly, but savvy investors are quietly placing bets on solar farms springing up on post-industrial wastelands.
Ukraine, too, despite being embroiled in a brutal conflict, views sustainability less as virtue signalling and more as strategic independence.
Its entrepreneurial class is betting heavily on energy tech as both patriotic necessity and future economic salvation—innovative battery storage solutions, modular housing, and green agriculture products crafted with export markets clearly in mind.
Winning the talent game
Investors betting on CEE have historically chased cheap labour, but today’s smart money is chasing talent—a far trickier beast.
The region boasts one of the world’s highest per-capita concentrations of science, tech and engineering graduates. But these bright sparks are increasingly aware of their worth and willing to bolt to Berlin, Amsterdam or London if undervalued.
Companies that succeed here understand that investment isn’t merely a financial exercise; it’s about nurturing culture and talent retention. Firms like UiPath in Romania, now a multi-billion-dollar automation unicorn, have cracked the talent code by making sure innovation isn’t confined to a shiny head office overseas but permeates local branches and development teams from Bucharest to Cluj.
The lesson? Talent is as mobile as capital—and far more sensitive to feeling valued.
Risks, but not as we knew them
Of course, CEE remains complex terrain. Democracy still stumbles occasionally, populists roar, bureaucracy resists change, and geopolitical shadows linger, most prominently those cast by Russia’s aggression in Ukraine.
Yet these risks are neither novel nor unique. What’s different now is the region’s institutional resilience and entrepreneurial defiance.
Smart investors understand that navigating this landscape requires more than number crunching—it demands cultural savvy, patience, and a sense of humour.
After all, anyone investing in a region famed for Kafkaesque bureaucracy quickly learns that the ability to laugh at absurdity is as essential as financial acumen.
Betting on reinvention
For investors looking East, the old clichés about post-communist drabness are becoming increasingly irrelevant. The region’s countries are busy rewriting their economic narratives, with local entrepreneurs proudly penning chapters filled with wit, grit and ambition.
The region’s investor pitch today might be summed up as follows: we may not be perfect, but we know how to reinvent ourselves better than most.
The CEE playbook no longer revolves around cheap labour or mass privatisations—it’s about nimble innovation, gritty entrepreneurs and sustainability driven not just by idealism but cold, calculated economics.
Old habits die fast in Central and Eastern Europe, and that might just be its greatest competitive advantage.
Photo by Adam Borkowski on Unsplash.
