500 Emerging Europe raises €70 million for start-ups in Central and Eastern Europe

Istanbul-based venture capital firm 500 Emerging Europe has raised more than 50 million euros for its second fund, which aims to close 70 million euros, to invest in start-ups from Central and Eastern Europe (CEE) – from the Baltic states to Turkey.

VC, formerly known as 500 Istanbul, has decided to change its name to reflect its shift of focus to the wider Central and Eastern Europe region.

It is another example of an international venture capital firm raising capital with the express aim of investing in startups in Central and Eastern Europe, despite the tense geopolitical situation and bleak economic outlook. This week American VC ffVC It announced a $50 million fund to support Ukrainian entrepreneurs, while the Spanish company Demium is also Double over the area.

500 Emerging Europe will invest in very early stage projects, writing checks of up to €1m for equity stakes of between 5 and 10%. It also plans to open an office in a Central and Eastern European country in the coming months.

demographic paradox

So far, the company has mostly focused on Turkish startups, but it also has a history of investing in the broader Central and Eastern European region, supporting companies such as the Polish Technology Village Network and Hungarian software training platform Avatao.

With the new fund, 500 Emerging Europe wants to strengthen its position in the region, with half of the investments still targeting Turkey and the other half in Central and Eastern European countries, particularly Poland, Romania and the Baltic states.

Enis Hulli, the company’s general partner, says the guiding idea behind the new fund was something he calls “the population paradox” – the phenomenon in which countries with smaller populations produce more rhinos. He believes this is because startups cannot rely on their own small local markets, but have to sell immediately globally. There are a lot of those markets in Central and Eastern Europe.

“Emerging Europe has the potential to create more unicorns than France, Germany and the UK combined, easily, just because these companies will go global from day one,” he says. It also helps, he says, that among the region’s primary investors, 500 Emerging Europe has an unparalleled relationship with Silicon Valley through its parent company, 500 Global, which is based there.

Hulli also believes that geopolitical challenges in the region are already strengthening the case for investing there.

“Everything that is happening geopolitically in the region is not only generating more entrepreneurship, but also pushing entrepreneurs to be more global and hedge their local risks,” he says.

The fund will invest in startups from any sector — but Hulli says the best founders in the region tend to follow global trends, such as gaming or machine learning.

“We have eight investments in infrastructure for development tools, of which five are for machine learning processes. So it’s not about having a big thesis for machine learning processes, rather the great entrepreneurs during this time see this big trend coming,” he says.

Look at talent, not geography

Despite this new geographic focus and new name, Hulli says the new fund’s thesis is not “emerging Europe” but actually “emerging talent”.

“The basic thesis of the fund is the emerging talent thesis. This is different from investing in emerging markets. If you look at other funds, like in Africa or Southeast Asia or Latin America, people want to invest in that region, because they believe in that region. Not That’s the case with Central European funds. They believe in talent in that region, but they want that talent to build global companies,” he says, stressing that the company cares just as much about local startups as the ones he founded. diaspora.

We are not trying to find the best talent in this region. We are trying to find the best talent from this region globally.”

Zosia Wannat is a Central and Eastern European Screening Correspondent based in Warsaw. She tweets from Tweet embed

Correction: A previous version of this article stated that this is the third Emerging Europe 500 fund

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