You might know about deeptech funding frameworks like the one by First Momentum. But they often miss the specifics of regions like Central and Eastern Europe (CEE). As we have passed mid-2024, the deeptech scene in CEE is growing fast. It’s got its own set of opportunities and challenges, which need a different approach. This updated DeepTech Funding Napkin focuses on CEE, giving you the insights you need to navigate this unique landscape.
Deeptech covers hardware, advanced R&D, and scientific innovation. While global investment principles apply, local talent, regulations, and funding trends in CEE play a huge role in how startups raise capital here.
Methodology and Data
This analysis looks at 60 deeptech funding rounds in CEE between January 2023 and July 2024. These rounds include a mix of quantum computing, robotics, and advanced manufacturing companies. The data comes from follow-on rounds with major CEE investors, new investments by top regional VCs. We gathered insights from local investors, startup databases across the region.
Why CEE?
Global deeptech guides, like those from First Momentum, are helpful but often overlook CEE’s unique characteristics. CEE has a strong talent pool, a growing venture capital scene, and a academic environment that can be tricky to navigate. Understanding these local factors is key to raising capital effectively in 2023-2024.
DeepTech Funding Napkin CEE 2024
What We Found
1. Round Sizes, Valuations, and Key Milestones
Deeptech funding in CEE in 2023-2024 shows some clear trends:
- Pre-Seed and Seed Rounds: These rounds are generally small. Pre-money valuations range between €1.5 million and €4.5 million. Startups are usually focused on proving their concept and validating their tech. Revenue is often minimal, but a strong IP portfolio and clear tech roadmap are crucial to getting funded.
- Series A: Series A rounds have grown a bit, with funding typically between €7 million and €18 million. Valuations range from €12 million to €30 million. Startups at this stage need to have moved past the concept phase and should have a working prototype or beta product. Investors want to see market validation and early customer traction.
- Series B and Beyond: Series B rounds are less common but bigger, often between €25 million and €60 million. Companies here should be close to market entry, if not already there. Valuations can top €60 million, reflecting serious progress and market potential.
2. Long Timelines and Big Budgets
Deeptech startups in CEE face long development cycles and need a lot of capital:
- Prolonged R&D: Deeptech projects often take years to reach the market. Investors in CEE understand this and are prepared to support startups through these long R&D phases, as long as they hit key milestones along the way.
- High Costs: Developing deeptech is expensive. Funding rounds, especially after the seed stage, are getting larger to cover the costs of scaling R&D and moving toward commercialization.
3. What’s Important in 2023-2024?
CEE investors are focusing on a few key things:
- Unique Technology: In a competitive landscape, having unique, protectable technology is vital. Investors want startups with strong IP, cutting-edge innovations, or breakthrough scientific achievements.
- Regulatory and Market Strategy: Navigating complex regulations, especially in biotech or advanced manufacturing, is a big deal. Startups need a clear plan for overcoming these hurdles and getting their product to market.
- Clear Path to Market: While innovation is critical, investors also want to see a clear commercialization strategy. This means understanding market needs, building strategic partnerships, and having a solid plan for bringing the product to market in CEE.
Key Takeaways
- Stable Valuations: Unlike other tech sectors, deeptech valuations and round sizes in CEE have been stable or even grown slightly in 2023-2024. This shows that deeptech is a strong, long-term investment.
- More Follow-on Funding: Investors are putting more money into follow-on rounds, especially at Series A and B stages. They’re backing startups that are consistently hitting their milestones and moving toward commercialization.
- Partnerships Matter: Strategic partnerships are crucial. Startups are working more with universities, research institutions, and industry leaders. These connections help them access resources, boost credibility, and move from R&D to market faster.
Conclusion
Raising capital in deeptech in CEE in 2023-2024 means being strong technically and savvy about the region’s unique challenges. The deeptech sector here is maturing, with a growing focus on getting products to market and building the right partnerships. For investors, deeptech in CEE offers stable, long-term opportunities. This 2024 CEE-specific DeepTech Funding Napkin is your guide to navigating this exciting but complex landscape.
