Today, The Recursive released the second edition of its Report on the state of AI in CEEoffering the most comprehensive view to date of the artificial intelligence landscape in Central and Eastern Europe. With insights from more than 1,350 startups, investors and industry players, the report covers key funding, specialization, talent and regulatory trends in the region’s rapidly evolving AI ecosystem.
Stable investment in AI despite venture capital slowdown
Despite a general slowdown in venture capital in the region, AI investments in CEE have shown resilience. Since 2021, €5 billion has been invested in CEE-based AI companies. By the end of August 2024, AI-specific funding reached €593 million, with additional capital expected to meet or exceed last year’s €850 million. Poland, Greece and Croatia are leading in terms of total investment in AI this year, collectively capturing more than 75% of AI funding in CEE.
Increase in venture capital funding
Venture capital funding continues to flow strongly into the CEE region. Around 30 venture capital firms are focusing on investing in startups from Bulgaria, Poland, Romania, Hungary and the Czech Republic. Major players like Digital East Fund, OTB Ventures, Presto Tech Horizons, are leading the way, joined by other more regional venture capital firms considering CEEs. New capital from the newly launched funds amounts to around €1.4 billion, with a number more being raised.
Growing Western interest in CEE AI startups
The CEE AI ecosystem is increasingly attracting attention from Western investors, with notable deals highlighting the region’s appeal. This year alone, global giants like Andreessen Horowitz and Toyota have invested in CEE startups, including Poland’s Eleven Labs and Croatia’s Gideon, respectively. The Saudi Public Investment Fund and Y Combinator have also made strategic investments in Croatian companies, while European investors like Atomico, Point Nine Capital and Lakestar have joined the list of those betting on the potential of AI the region.
Rise of Vertical AI: Industry-Focused Solutions on the Horizon
Following global trends, the CEE region is showing early signs of specialization in industry-specific AI solutions. For example, AI media production companies in the region have raised over €120 million in 2024, including subsequent funding from startups like ElevenLabs, Colossyan and Creatopy. Meanwhile, AI in healthcare has seen similar levels of funding, but spread across around 40 early-stage startups. According to investors surveyed by The Recursive, healthcare, cybersecurity and finance are expected to become critical verticals for AI innovation in CEE.
Acquisitions: a growing sign of maturity
Although major acquisitions have not yet taken place, international technology leaders like IBM, Intel, WP Engine and CultureAmp have made strategic acquisitions in Bulgaria, Greece, Poland and Serbia. This acquisition activity speaks to an evolving startup ecosystem that is beginning to attract serious attention from global players.
Why the EEC could be the next AI hub
Although venture capital interest in the region is strong, the creation of high-quality startups is not keeping pace with available funding. Many CEE VCs are now investing in diaspora founders or even companies outside their original scope. For CEE countries to truly capitalize on their potential, governments and ecosystem leaders will need to prioritize attracting global networks, resources and talent – a challenge that remains underestimated.
However, CEE’s tech talent, profitability and vibrant underdog culture provide strong incentives for Western founders considering the region as a base for their AI projects. High-profile expats, like Google Maps co-founder Lars Rasmussen, who has called Athens home for more than three years, reflect a growing trend of founders moving to CEE startup hubs.
The CEE region’s AI ecosystem is at a pivotal moment, with strong momentum and growing interest from global investors. For more information, The Recursive’s full report on the state of AI in Central and Eastern Europe is available to download.
