December 22, 2022

CEE bucked the trend and kept growing in 2022 — despite the war in Ukraine

For central and eastern Europe, 2022 was all about more funding, more fundraising — and the terrible effects of the war in Ukraine

Zosia Wanat

5 min read


For central and eastern Europe (CEE), 2022 was another record year for startup funding and VC fundraising — but it feels like the success of the ecosystem could have been even greater if it wasn’t for the wider economic slowdown and the war in Ukraine. 

Up until mid-December, startups from CEE have raised $3.2bn, according to Dealroom — an increase from 2021, when funding reached $2.9bn. This included a couple of megarounds, such as a €628m Series F for Estonian mobility scaleup Bolt and a €220m Series D for Czech grocery startup Rohlik, but the vast majority of the funding was at pre-seed and seed.

The value of deals done in the region is also growing the fastest in Europe — increasing 7.6x since 2017, in comparison to 3.8x growth across the rest of the continent, according to a 2022 report on CEE startups from Dealroom, Google for Startups, Atomico and Credo. 


This is all good news — but after a record-breaking 2021, expectations for 2022 were even higher. 

In Poland, 2021 funding reached a record €792m (more than the two previous years combined) and in the first quarter of 2022, it reached 30% of this value (€251m). But after that impressive start, VC activity started to slow down. Polish startups raised €549m in the first three quarters of 2022, according to a report from Polish state-owned fund of funds PFR Ventures. It’s looking unlikely that by the end of the year the total transaction value will have broken last year’s record. 

The slowdown is also seen when it comes to the number of new unicorns across the region. In 2022, eight CEE companies have so far reached the symbolic valuation threshold of $1bn — including Ukrainian AirSlate, Lithuanian Nord Security and Bulgarian Payhawk — which is almost half the figure in 2021, when 15 companies became unicorns. 

Economic crisis creeping in

This slowdown in VC activity is of course not specific to CEE.

In mid-2022, when startups around western Europe and the US were laying off their staff, and investors were slashing the valuations of companies like Klarna and Stripe, it was hard to spot any signs of the crisis in the CEE tech ecosystem. The average funding per startup actually increased across the region, while it fell sharply across the world, according to Dealroom. 

There are several reasons for that: the region’s ecosystem mostly consists of smaller, early-stage startups, often operating in the more resilient SaaS sector, which didn’t immediately feel the first effects of the crisis. Valuations in CEE have  also traditionally been much lower and less-overblown than in the west.

But at the same time, the region isn’t crisis-proof — it’s already grappling with Europe’s highest inflation rates and skyrocketing energy prices. Some of its bigger startups, like Poland’s booking platform Booksy and Latvia’s Lokalise, a localisation software, have had to make layoffs, while local VCs have been warning that fundraising in the coming months might get more and more difficult. 

VCs on fire

The lack of VC funding has traditionally been the number one problem for the region’s ecosystem, but it doesn’t seem to be an issue anymore: 2022 saw a flurry of regional VCs raising new funds. Some of them have more of an international focus — such as Poland’s OTB €150m deeptech fund and Market One Capital’s €80m marketplace fund — while some focus more on the region, such as Poland’s bValue’s €72m fund for later-stage CEE startups, and Tallinn-based Change Ventures’ €49m seed-stage fund for the Baltic region.  

Several VCs in the region have now raised several funds (like Poland’s Inovo’s third €100m fund and Czech Credo’s fourth €75m fund) — a sign that the market in the region is maturing.

There’s also more and more interest from international investors which are finally ready to double down on the region. Case in point: Istanbul-based 500 Emerging Europe even changed its name to express its interest in CEE.

Ukrainian effect 

Economics aside, there was another factor that shook CEE to the core, on a practical and emotional level: the Russian war on Ukraine. 

Since February, the war has upended the operations of the growing and buzzing Ukrainian tech scene, with the country’s infrastructure destroyed and many entrepreneurs fleeing or joining the army. In August this year, 91% of Ukrainian founders were in need of financial support. Coming into autumn and winter, as Russia continues bombarding Ukrainian cities, and more and more startups are struggling with power blackouts. 

[One] factor shook CEE to the core, on a practical and emotional level: the Russian war on Ukraine

The effects of the war have also taken a toll on the countries neighbouring Ukraine. In the first months of the aggression, many regional VCs and startup communities completely halted their everyday operations in order to help millions of Ukrainian refugees, including the country’s numerous entrepreneurs and IT professionals. 

The aid ranged from practical help with finding accommodation and workspaces, to supporting Ukrainian startups financially — Google for Startups and Microsoft provided some companies with equity-free grants, while VCs from the region started to look more intensively at the Ukrainian ecosystem to find new investments. FfVC, a Polish-American VC firm, launched a new €50m fund targeted solely at Ukrainian founders. 

A good example of how compassionately the CEE community supports their Ukrainian peers was the controversy around a prize awarded to a UK startup with Russian founders at the Slush tech conference. After a flurry of criticism, coming mostly from the Ukrainian tech community, the award was revoked. While the majority of western founders and investors didn’t understand the organisers’ decision, the tech scene from Ukraine and other CEE countries were very vocal in their stance that companies with any links to Russia shouldn’t receive international recognition.

Zosia Wanat

Zosia Wanat is a senior reporter at Sifted. She covers the CEE region and policy. Follow her on X and LinkedIn