The past ten years have seen rapid growth in the number of start-ups within Central and Eastern Europe (CEE). Yet, CEE faces various barriers, some of which are not related to funding or access to capital, to fully realise its potential as a global hub for innovation. Despite widespread assumptions that founders are held back by small markets, political risks or limited funding, the real obstacles lie elsewhere. IT entrepreneur Serhii Tokarev explains what is slowing down the region’s growth.
What makes the CEE market different?
The start-up world in Central and Eastern Europe is really booming. Since 2014, its total value has increased 15.5 times, outpacing Western Europe. Money is flowing in too: start-ups pulled in over €1.15 billion back in 2025. Poland is a big part of this, with 280,000 developers and some big names like ElevenLabs and Docplanner.
“Other markets in the region also play a significant role. Romania has over 202,000 specialists and a start-up ecosystem worth €19 billion, with UiPath and eMAG standing out in particular. The Czech Republic continues to build capacity with the support of CzechInvest and a technical talent pool of around 130,000 specialists. And Ukraine, despite the war, has the largest reserve of technical specialists in Europe — over 340,000 developers and around 2,500 active start-ups,” notes Serhii Tokarev.
The main advantages of the CEE startup ecosystem:
- Qualified personnel. Computer science, mathematics and engineering have all been recognised as an essential part of the local community. Local devs are great because they’re quick to learn and use new tech, which businesses around here really appreciate.
- Results-oriented culture. Investors familiar with the region emphasise the pragmatic approach of founders. Startups from CEE are able to create, test and improve products with limited resources.
- International mindset. As local markets are often small, startups from the region are geared towards working with a global audience from the outset.
- Cost efficiency. Low labour costs allow startups to build strong teams while spending capital more slowly than companies in Western Europe or the US.
Misconceptions that distort the image of the CEE market
Even with many improvements, some old, mistaken ideas still give people the wrong impression of Central and Eastern Europe.
Myth 1: CEE is purely an outsourcing market
Although IT outsourcing in Ukraine amounted to approximately $6.4 billion in 2024 and remains an important part of the industry, the region’s development is not limited to this area. Innovative product companies, including Grammarly and ElevenLabs, are making a significant contribution.
Myth 2: The region is not attractive to investors
Actually, the numbers tell a different story. The amount of venture capital in Central and Eastern Europe has doubled. Poland alone got €2 billion in investments just this year. Many investors emphasise that there is capital in the region, and the real problem is the lack of start-ups that are mature enough or have the potential to scale up.
Myth 3: Political instability
The level of risk in CEE countries varies significantly. Ukraine’s tech scene is still going, even with martial law because of the neighbor’s attack.
What Central and Eastern Europe is missing
Tokarev is convinced that the real obstacle to development is not a lack of capital, but the redistribution of talent. In addition, many successful founders leave the region and do not maintain sufficient contact with their local ecosystems. According to Serhii Tokarev, a long-term solution is to create a supportive environment for education and mentoring, similar to his support for education initiatives in the STEM industry in Ukraine. The structured programs for community-driven mentoring and career advice have proven to increase the strength of the talent pool in that community and thus retain future innovators.
In Ukraine, over 90% of large companies are moving their headquarters abroad. Businesses in Estonia, which has been consistently rated among the most stable places to do business within the European Union, are relocating to other locations. It is sad because the entrepreneurial community often loses these founders’ available knowledge, experience, and valuable networks when their companies leave.
But things can get better. Serhii Tokarev suggests three key steps that can really help:
- Founders should maintain ties with their home ecosystems, even after moving.
- Entrepreneurs who relocate should consider returning — along with their capital, experience, and international contacts.
- Some founders may establish their own venture funds, stimulating innovation within the region.
Money is important, but stuff like mentorship, founder engagement, and sticking around for the long haul are what’s really going to help Central and Eastern Europe become a big, global startup hotspot.
