As Dave McClure and Geeks on the Plane are touring Moscow, Tallinn and Zagreb this week, I have finally written this post summarizing the result of a year-long research project exploring the Russian and Eastern European startup ecosystem. The results will hopefully help those who weren’t invited to join the GOAP crowd to get a better sense of what is happening in the former socialist countries from Slovenia to Russia.
There is a lot of action in Eastern Europe, but for lack of time I simply cannot tell all the stories. Instead I have pulled together names and links, and created a few social media lists to connect startup entrepreneurs, accelerators, and investors in Russia and Eastern Europe on Facebook, Twitter and Google+. You can find these lists below.
Over the past decade the region has seen quite a few global tech and Internet success stories already. Russian Parallels and IPG Photonics, Hungarian LogMeIn, Czech AVG and Avast, Romanian BitDefender and Soft32, Serbian Nordeus, Lithuanian GetJar, Latvian Ask.fm, Polish Filestube, Estonian Skype … The list goes on but outside of their respective home countries there is little awareness of exactly how much innovation the post-socialist region has already produced.
So, whilst certainly far from complete, here is a Facebook list of Russian / CEE success stories that will be regularly updated with new success stories that hit my radar.
#Estonianmafia hash tag, coined by McClure last year, continued to make headlines in tech blogs and the general press, as the phenomenon of the unusually high number of global startups in a small country inhabited by 1,3 million people drew further attention to Estonian Internet businesses. On Twitter I found over a hundred Estonian startups and entrepreneurs, and together with Latvia and Lithuania the Baltic Rim accounts for nearly 220 Twitter startup handles. It did not come as a surprise, that McClure and GOAP made a stop-over in Tallinn this week.
Other Eastern European startups may not have seen the same level of publicity, but across 20 countries I found over 800 Internet businesses that are growing at various speeds.
To get connected with the regional startup ecosystem, adding Google+ circles is probably the easiest way. Here is a Google+ circle for Russian startups, and two (here and here) for Eastern European entrepreneurs and their companies.
There are more than 1200 Twitter handles across these three lists: Russia, Eastern Europe 1 and Eastern Europe 2. The feed may end up being an alphabet soup, as many users tweet in their local languages.
The Facebook lists includes only Russian and Eastern European startups’ fan pages, as subscribing to individual founders was often not an option. With Facebook lists, including updates from the list into your newsfeed is optional. Finally, there is a Facebook group called New Europe Startups.
Most of the CEE countries have more or less active startup communities with the exception of Bosnia & Herzegovina, Montenegro, Albania and Moldova, where I did not identify any startups.
On my Facebook list of startup accelerators, incubators and co-working spaces in Russia and Eastern Europe there are 50+ entities, with Estonia leading again based on the number of support organizations per country (Startup Wise Guys, Gamefounders, Garage48, Tehnopol and others). The oldest accelerator appears to be Hungarian European Entrepreneurs Foundation founded by Peter Zaboji. Most of the other accelerators have been launched in the course of 2011-2012. I am not sure there is space for more, although Croatian and Serbian entrepreneurs might disagree.
Inevitably, the list includes Seedcamp, which has been backing Eastern European startups from 2007 starting with Slovenian Zemanta (and also because Seedcamp’s Carlos Espinal’s Twitter handle is @cee, which should have been mine!). HackFwd has been backing many Eastern European teams primarily from the Baltic Rim, whilst Jon Bradford of Springboard is on board with nearly every Eastern European startup accelerator and the Russian TexDrive.
New venture funds are opening up in Russia, with the rest of the Eastern Europe lagging behind. Global funds such as Accel, Index, Mangrove Capital Partners, Balderton, Tiger Global Management, VenTech, Intel Capital, Atomico, Kima Ventures, e.ventures and others are making big bets in Russia. Their latest investments included Avito, Ivi.ru, Ozon, Ostrovok, KupiVip, LaModa and many others. German EarlyBird, Danish Sunstone, Swiss Redalphine, and German Point Nine Capital have backed Eastern European companies in the past. Others, such as Vienna-based SpeedInvest and the Nordic Creandum are monitoring the local startup scene.
Increasingly, Eastern European startups get investors’ attention as well; backed are SocialBakers, Prezi, GrabCAD, TransferWise, Brainient, Farmeron and others.
The list of venture investors in Russia is led perhaps by Runa Capital based on the number of deals the fund has announced over the past year; Esther Dyson, the veteran of investing in Russia and CEE; and ru-Net, based on the size of the fund. Most notable Russian venture investors include (in alphabetical order): ABRT, AddVenture, Almaz Capital Partners, Baring Vostok Capital Partners Ltd, Finam Capital Partners, Foresight Ventures, Frontier Ventures, Imi.vc, Itech Capital, Kite Ventures, Leta Group, Modernus Capital Partners, N Lab Ventures, Prostor Capital, Runa Capital, RuNet, RUSNANO, Russian Ventures, Russia Partners, Ruvento Venture fund,Softline Venture Partners, Start Fellows, Synergy Innovations, and VTB Capital.
In Central and Eastern Europe the number of players is much smaller and they often make investments outside of their home countries. Seed-stage venture funds include Credo Ventures (Prague), RSG Capital (Ljubljana), Day One Capital (Budapest), MTVP (Tallinn), RubyLight (Riga), 3TS Capital Partners (Vienna), Neveq (Sofia), Xevin Investments (Warsaw and Bucharest).
In Poland the supply of seed capital appears to be better than in the rest of Eastern Europe. Seed investors include (in alphabetical order): AIP Seed Capital, Giza Polish Ventures, HardGamma Ventures, IIF FundInnovation Nest, IQ Partners, SATUS Venture, SpeedUp Group and Xevin Investments, although there are others that might have escaped my radar.
An emerging trend is the investment activities of the local serial Internet entrepreneurs. A number of successful Russian and Eastern European Internet entrepreneurs are investing in the new projects, leveraging their experience in building Internet companies, existing Internet traffic and cash flow. One of the better-known startup factories is Fast Lane Ventures, co-founded by Oskar Hartmann (Russian private shopping club KupiVIP).
In Poland, Arek Senko, the co-founder of Red Sky Group, the owner of Filestube search engine is now involved in more than 30 Internet projects. Latvian Draugiem Group, the owner of the successful local social network is working on a dozen projects as well.
Tom Cupr, the founder and CEO of the largest Eastern European daily deals company Slevomat Group, has set up venture arm Slevomat Ventures, which has already made its first investment into the food ordering portal PizzaTime. Also in the Czech Republic Tomas Matejcek and his partners at Miton.cz build Internet companies following a number of successful exits.
Some Eastern European funds, such as the Ukrainian TA Venture or Estonian Ambient Sound Investments back global rather than local companies. Russian late stage investor ru-Net also has a US arm called RTP Ventures, which funded Fab.com amongst others. And then there is Yuri Milner, who despite his global focus has created StartFellows, a seed-stage grant program for Russian entrepreneurs, together with the founder of Vkontakte Pavel Durov.
Google+, Twitter and Facebook lists
In conclusion, here are once again the lists of entrepreneurs, startups, accelerators and investors in Russian and Eastern Europe. To meet some of them, pay attention to the region’s startup conferences, many of which are taking place in the next couple of months. The list of local events can be found here.