In 15 recent VC-backed exits, the region of Central and Eastern Europe (CEE) generated $5 billion in liquidity back to investors. Two countries accounted for 6 of these exits: Bulgaria and Hungary. 18 months ago Financial Times profiled Sofia, the capital of Bulgaria: a population of nearly 2 million, an estimated VC funding pool of €100m, corporation tax rate of 10% and a capital gains tax rate of 10%. The article concluded that “the tech sector is growing and is the main focus of the country’s start-up activity, with the capital Sofia at the centre”. This is precisely why Neo Ventures, a European firm with a team spread across technology hubs such as Palo Alton, London and Singapore, chose to set up our third fund in Sofia.
Most recently, the FT highlighted the CEE venture capital arena in The Danube Valley: central Europe’s answer to the Silicon Valley. Among the features of the Danube Valley, FT noted, are “entrepreneurs having access to a strong pool of talented engineers who can produce ambitious projects at a lower cost”, and the speed of “pushing products out to global markets faster than their western rivals”. Neo Ventures’ founders were an early entrant in this market in 2007, investing in a half a dozen startups out of a predecessor fund, Neveq I. Venture capital investment amounted to €0.5bn in 2015, a low 3% of the amount spent in the industry across Europe but growth prospects are quite sigificant, with both private and institutional LP money backing a larger number of emerging general partner teams.