Fundraising in Central and Eastern Europe - Netokracija CEE

Fundraising in Central and Eastern Europe

Here are the good news: you don’t have to go to the Silicon Valley to get funded. Not even London or Berlin. There is plenty of capital to be found in the CEE. You just have to know where to look. And the bad news: if you know where to look, and still can’t get funding that means your current idea/startup is just not good enough. And if you can’t raise funds in the CEE, the odds are very high you won’t in Berlin or London either. It is better to fail fast and move on to something new.


Here are the good news: you don’t have to go to the Silicon Valley to get funded. Not even London or Berlin. There is plenty of capital to be found in the CEE. You just have to know where to look. And the bad news: if you know where to look, and still can’t get funding that means your current idea/startup is just not good enough. And if you can’t raise funds in the CEE, the odds are very high you won’t in Berlin or London either. It is better to fail fast and move on to something new.

This is the second post of the mini series focusing on the startup investment lifecycle. I strongly recommend reading the introductory post, which explains the investment lifecycle in general, before continuing with this post that analyzes the cycle through the scope of the Central and Eastern European region. Aside from a few examples for illustration, the post doesn’t include our more comprehensive list of investors for each phase of the cycle. If you would like a recommendation or get access to some names on the list relevant to your region/sector, feel free to get in touch.

The investment cycle in the CEE

Perhaps the most frequently asked question related to fundraising that I get is where to fundraise. Let’s revisit the investment cycle graph for reference. I have included adjusted CEE curves to illustrate some of the differences between the CEE region and more established markets.

CEE investment

Angels & FFF: I guess we have to start with what is in my opinion the most complicated investor class to find for entrepreneurs, at least in the CEE region. On one hand everyone has family, friends and fools. We can match Silicon Valley in that regard. But I guess it is also part of our CEE nature that we feel a bit awkward asking our family or friends for money (maybe because most of them don’t have much to give). But we certainly can’t match Silicon Valley when it comes to professional angel investors. It’s not that we don’t have people who have enough money. But very few of them are open to invest in startups, and only a handful really have the risk tolerance required for an angel investment, which is solely about people and their vision. And even the vision might change form and shape a bunch of times before any product is created, if it ever will be.

Therefore my piece of advice is to avoid any angels that require financial models or lengthy business plans. How can someone at this stage ask for financial projections if the entrepreneur doesn’t even know what the product will look like? Look for someone with whom you had good chemistry and who you believe can make business critical introductions for you. Also, this might be the only circumstance when gambling habits could be viewed as a positive personality trait.

Examples of great business angels in our region: Esther Dyson – in October 2011, she invested in Apiary right after she heard Jakub Nesetril’s 15-minute presentation (the product at that stage was the presentation) and had a small chat with him afterwards. My regional favorites also include Eduard Mika, Karel Obluk or Juraj Duris, but essentially everyone who invests in our local entrepreneurs and doesn’t harass them as soon as something is not going according to plan.

It is undeniably hard to find good angel investors in the CEE region. Accelerators and incubators provide one route: aside from offering angel money themselves, they also offer access to numerous mentors out of which many are angel investors. Accelerators are beginning to jump out all over the place, just in the Czech Republic we have StartupYard, Wayra, StartCube or Node5 to name a few. Another way to identify smart money angel investors is to Google successful entrepreneurs from the field that your startup operates in, and trying to approach them (an introduction from your network works a lot better than a cold call, but even that is worth trying). Don’t forget to utilize other online sources such as AngelList or Seed-DB.

Seed Funds: the grass gets greener as we start mitigating some of the super early stage risk. I guess most of us, CEE investors are still a bit cowardly. There is a sizeable amount of seed money available in our region, also thanks to seemingly deep pockets of the European Union.

Looking solely at Central Europe, we don’t have too many seed funds with private institutional investors. There are foreign funds, which are very active in Central Europe, including Point 9 Capital or Index Ventures’ seed fund. Credo Ventures has also allocated part of its fund to seed investments, so now even companies at pre-product phase get access to our 30+ investors including Avast or AVG Technologies and our fund managers.

As discussed in the previous post, I believe the key criteria (aside from ever present and super important chemistry) for choosing a seed investor is who you believe can add the most value to your product, source crucial technical hires and open doors to first trial customers. These are the key issues that a startup faces during the seed phase.

Venture Capital: the grass might even get some blooming flowers if the startup can secure first paying customers (Credo defines “first paying customers” as having around USD 10,000 in monthly  revenue). There are quite a few a funds, either based in the CEE or being active in the region via its office abroad, that are able to make a Series A investment.

The game in Series A, B and beyond is all about scaling your business model and driving revenue. Therefore choose an investor which in your opinion can open doors to customers and help build out your sales force. One piece of advice on structuring a venture capital investment: don’t be afraid to invite multiple investors as co-investors to the round, especially if each can bring a unique skill set to the table. 2-3 seems like a manageable number, having 5+ major investors in a round tends to do more harm than good in our experience.  Three out of Credo’s four investments last year included co-investors, and we are very happy to have them on board.

Both VC and seed funds have a fairly strong web presence, so it shouldn’t be too hard to find relevant players. Nevertheless, if you are looking for an advice on a specific fund or would like an introduction, drop me a line.

Public Markets & Private Equity: the grass is actually overgrown in this segment, especially when it comes to private equity. A few of the smaller shops have closed because there was simply too much capital available on the market. If you make it to this stage, don’t worry about finding a private equity investment. It will usually find you.

The situation is a bit worse when it comes to public markets. I haven’t heard about too many companies having the ambition to IPO in Prague, Budapest or Hungary. Maybe Warsaw. I have heard of a couple of companies wanting to IPO on NASDAQ or NYSE, and to my knowledge one from the Czech Republic or Slovakia actually made it: AVG Technologies.

So this is my overview of the CEE startup investment lifecycle in a nutshell. The next follow on question after “where to find my investor” is typically one regarding valuations and investment sizes. And that’s precisely what the next post is going to tackle.


Leave a Reply

Your email address will not be published.



John Biggs at TechCrunch Balkans in Sofia: There is a Way Out of This Media Black Hole!

The first TechCrunch Balkans meetup in Sofia begun with a loud whistle from Dilyan Dimitrov, founder of the Bulgarian accelerator Eleven, the host of this event. It was startup time! That is right, TechCrunch Balkans, organized by Netocratic, is being held throughout this week – we will have lectures, panels and the most important thing – pitches in front of John Biggs!


Combine Technical And Marketing Knowledge Within Your Startup Team

You've probably heard about Bellabeat, FlyKly, or Layer? Well, three years ago they didn't exist! Now they are at the top of their industries, but how did they do it? Was it enough only to have the right idea or did they also need to have knowledge to conduct business in today’s competitive environment? Specifically, what kind of knowledge do startups need to succeed and not repeat the many mistakes of the 90% of startups that fail?


Slovenian ‘Booze’ Startup Flaviar Raises 400.000 $ from Speedinvest!

Slovene-British startup Flaviar announced today that it raised a seed round of 400k $ from American fund Speedinvest. This one year old company ships monthly tasting packs of 5 sample spirits (whisky, rum, gin, vodka, etc.) to their members, each month with a different theme.

What you missed


Infobip’s Developer Relations Team Wins Two “DevRel Oscars” in London

Development Relations team of global cloud communications platform Infobip won two prestigious awards at the DevRelCon London 2023.


Through a series of developer meetups, Infobip came to the front of technological transformation in Africa

The first Croatian unicorn organized a series of successful developer meetups, which confirmed its leading position in this fast-developing continent.


What are Croatian designers of creative business spaces doing in the Emirates?

Croatian consulting company DC&T, specializing in creative, efficient, and humane office space design, is setting out to conquer the world markets. First step: Dubai.


One the best European developer conferences is coming to Miami

Shift in Croatia attracted thousands of developers and thus made its way to the very top of developer conferences in Europe. Now they are ready to cross the borders of Croatia and come to the USA. Applications for Shift Miami are starting soon!


Infobip (W)intership: Not only for software developers, and not only during summer!

More than 115 mentors will work with 130 interns at 7 Infobip's regional offices in 2023 edition of their internship programme. Last year 87% of interns got - job offers.


How does IT Consulting create experts who know how to integrate IT into all business spheres?

Keeping in mind how much the IT industry influences all other industries but also everyday life, it's surprising how little is said about IT consulting, which is practically the bridge that connects the two. That's why we sat down with a junior and two seniors on different career paths - to explore this profession with those who practice it, love it, and live it.