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Editor’s Note: This article captures a significant development for Central and Eastern Europe’s (CEE) tech ecosystem, as the International Finance Corporation (IFC) invests €15 million in Cogito Fund II to support early-stage tech enterprises. As part of a larger €125 million initiative, this investment will drive fintech and climate-tech innovation across CEE markets, offering crucial financial resources to startups at a pivotal growth stage. Managed by Cogito Capital Partners in Poland, the fund addresses an investment gap in Series A and B rounds, aiming to strengthen a regional economy ripe for technological advancement. This support from IFC, especially amid challenging global fundraising conditions, underscores a growing commitment to building a dynamic CEE tech ecosystem. Insight from other regional players like Bek Ventures and Maki.vc further reveals a strong momentum in CEE’s tech landscape, positioning it as a global contender in fields like AI and deep tech.

Industry News – Artificial Intelligence Beat

Strategic Investments Propel Tech Innovation in Central and Eastern Europe

ComplexDiscovery Staff

The International Finance Corporation (IFC), a member of the World Bank Group, is strategically investing up to €15 million in Cogito Fund II to bolster innovation among early-stage tech enterprises in Central and Eastern Europe (CEE). This investment forms part of a larger €125 million fund primarily targeting Series A and B companies, focusing on fintech and climate-tech sectors. Managed by Poland’s Cogito Capital Partners, the fund seeks to provide crucial financial support to technology companies, fostering innovation and job creation across the region.

Poland serves as the central hub for Cogito Fund II, though its reach extends to the Czech Republic, Hungary, Slovakia, Romania, and the Baltic states. Over the past five years, CEE’s startup ecosystem has flourished, with the combined value of startups skyrocketing by 2.4 times to €213 billion. However, as these enterprises progress into maturity, the late-stage investment market remains underdeveloped, creating a financial void that Cogito aims to fill. “The successful first close of our next fund underscores the robust performance of Cogito Fund I and our experienced team,” commented Sylwester Janik, Managing Partner at Cogito Capital Partners.

This injection of capital comes at a pivotal time, with the CEE region experiencing turbulent fundraising conditions. Ary Naïm, World Bank Group Country Manager for Poland and IFC Manager for Central and South Europe, highlighted the essential nature of dynamic venture ecosystems and equity financing in propelling CEE economies. “Together with Cogito, we aim to accelerate digital transformation and build a regional ecosystem that aligns innovation, skills, and financing,” he said.

Simultaneously, The Recursive’s comprehensive AI landscape report reveals a thriving AI investment climate in CEE despite a broader venture capital downturn. Investments since 2021 have reached €5 billion, with CEE capturing €593 million by August 2024 in AI-specific funding alone. Poland, Greece, and Croatia are leading this AI surge, contributing over 75% to the region’s AI fund influx.

Globally renowned investors are recognizing this potential, with key players such as Andreessen Horowitz and Toyota investing in CEE startups, underscoring the region’s emerging status as a future AI hub. While venture capital and strategic acquisitions by major tech firms continue to propel the sector, industry insiders note a lag in high-quality startup creation relative to the abundant available funding.

Bek Ventures’ strategic €250 million fund initiative supports early-stage tech firms in a similar manner, with a heritage of backing innovators like Romania’s UiPath and Bulgaria’s Payhawk. Maintaining a tight portfolio through long-term investments, Bek Ventures emphasizes personalized engagement with founders, reinforcing the firm’s commitment to tech talent in the region. “Our strategy helps us maintain top performance and provides our founders with time and attention,” a spokesperson stated.

Meanwhile, Maki.vc is also making strides in nurturing early-stage enterprises, focusing on deep tech and consumer-oriented startups across the Nordics and Northern Europe. Their third fund, totaling €100 million, prioritizes significant environmental and social impacts within the deep tech sphere, highlighting investments in pioneers such as Distance Technologies and QMill.

Both Bek Ventures and Maki.vc’s targeted approaches signal a broader trend towards strategic, selective investment with an eye on long-term growth, resonating with CEE’s increasing significance in the global tech landscape. As financial backing from these ventures fuels tech innovation, sustaining CEE’s technological rise remains integral to attracting talent and investment to the burgeoning sector.

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Alan N. Sutin

Alan N. Sutin is Chair of the firm’s Technology, Media & Telecommunications Practice and Senior Chair of the Global Intellectual Property & Technology Practice. An experienced business lawyer with a principal focus on commercial transactions with intellectual property and technology issues and privacy

Alan N. Sutin is Chair of the firm’s Technology, Media & Telecommunications Practice and Senior Chair of the Global Intellectual Property & Technology Practice. An experienced business lawyer with a principal focus on commercial transactions with intellectual property and technology issues and privacy and cybersecurity matters, he advises clients in connection with transactions involving the development, acquisition, disposition and commercial exploitation of intellectual property with an emphasis on technology-related products and services, and counsels companies on a wide range of issues relating to privacy and cybersecurity. Alan holds the CIPP/US certification from the International Association of Privacy Professionals.

Alan also represents a wide variety of companies in connection with IT and business process outsourcing arrangements, strategic alliance agreements, commercial joint ventures and licensing matters. He has particular experience in Internet and electronic commerce issues and has been involved in many of the major policy issues surrounding the commercial development of the Internet. Alan has advised foreign governments and multinational corporations in connection with these issues and is a frequent speaker at major industry conferences and events around the world.