Last week, Cyprus — the Mediterranean island and European Union Member State — got another dedicated VC fund: 33East. The VC announced a first close of €26m to invest in early-stage founders and startups with a connection to Cyprus.
Its aim is to provide capital, support and a strong network to help drive Cyprus' transformation into a hub for entrepreneurship — and LPs include the European Investment Fund (EIF), the Government of Cyprus, the National Recovery and Resilience Fund and the Bank of Cyprus.
The investment is waiting. Should founders consider Cyprus?
A vision for 2035
Right now, Cyprus is home to over 800 tech companies — with cities like Limassol and Nicosia emerging as startup hubs.
One reason for the growth in these areas was an influx of global talent led by the introduction of the Digital Nomad Visa in 2021, which allows non-EU citizens to live in Cyprus for over three months for remote work.
In line with the Cyprus Vision for 2035, the country has positioned itself as a dynamic and resilient economy.
Marios Tannousis is CEO of Invest Cyprus, the National Investment Promotion Agency dedicated to attracting foreign direct investment into the country. With ten years to go, he says Cyprus is on track for “Vision 2035”, a long-term strategy to “transform Cyprus to one of the world’s best places to live, work and do business”.
“Cyprus is emerging as a thriving hub for startups,” says Tannousis. “In line with the Cyprus Vision for 2035, which focuses on green transition, digital transformation, research, innovation and entrepreneurship, the country has positioned itself as a dynamic and resilient economy.”
Information and communication technology (ICT) and fintech sectors have become key contributors to Cyprus' economy – they collectively account for 15% of its GDP. Cyprus ranks fourth among EU countries in ICT development too.
The country’s energy sector is also experiencing growth, in part thanks to Cyprus’ commitment to the EU’s Green Transition and renewable energy. The exploration of natural gas reserves has driven significant investments in energy infrastructure.
“Other areas of notable investment opportunities are in healthtech, life sciences and biotech,” adds Tannousis. “With an advanced healthcare system and increasing demand for digital health solutions, Cyprus has become a hotspot for startups innovating in these fields.”
Support networks and competitive tax
As the National Investment Promotion Authority, Invest Cyprus serves as a crucial local partner, providing comprehensive support for businesses and investors.
“Our expertise in navigating the local market, regulatory landscape and business environment allows us to offer tailored guidance, facilitating a seamless onboarding experience for investors and businesses,” says Tannousis.
Being a full member of the EU, as well as the British Commonwealth, Cyprus plays a pivotal role in ensuring adherence to stringent EU legislation.
For example, Invest Cyprus works with the government’s Business Facilitation Unit, the Ministry of Finance, the Deputy Ministry of Research, Innovation and Digital Policy and the Migration department. These partnerships ensure investors and startups comply with both local regulations and EU legislation, facilitating connections with the relevant authorities, as well as offering ongoing support.
“Being a full member of the EU, as well as the British Commonwealth, Cyprus plays a pivotal role in ensuring adherence to stringent EU legislation, which sets high standards for corporate governance, financial integrity and accountability across industries,” says Tannousis.
Cyprus' competitive tax regime is another strong draw for entrepreneurs. With an attractive corporate tax regime of 12.5%, businesses benefit from reduced tax burdens.
The IP box regime – which offers preferential tax treatment on income derived from intellectual property such as patents, software and other innovative assets – and the absence of capital gains tax on securities offer further support too.
Support networks
In addition to the supportive regulatory and legal frameworks, Cyprus offers startups funding — such as the PRE-SEED programme, which, in partnership with the Research and Innovation Foundation (RIF), provides funding to startups in their early stages — and networking opportunities like startup events, hackathons and local meetups.
“Accelerators like Cyprus Seeds, Velocity Business Accelerator and TechIsland provide early-stage startups with essential funding, mentorship and scaling support,” says Anja Arsalides, senior investment advisor at Invest Cyprus, adding that Invest Cyprus collaborates with TechIsland, the largest tech association in Cyprus.
Building a life in Cyprus
As well as low business costs, Cyprus is an attractive place for entrepreneurs to live. The country has a high quality of life, with modern infrastructure, high-level healthcare and a family-friendly environment.
While the local market may be small, Cyprus’ strategic location at the crossroads of Europe, Asia and Africa offers a unique advantage.
“While the local market may be small, Cyprus’ strategic location at the crossroads of Europe, Asia and Africa offers a unique advantage. Emerging sectors, such as fintech, healthtech, life sciences and biotech, provide ample investment opportunities,” concludes Arsalides. “By tapping into these prospects and leveraging the available support systems, founders can position their startup for sustainable development and success.”
