Insights for investors new to working with CEE founders

By Vital Laptenok , General Partner at F1V

As an investor, I am a big believer in entrepreneurs from Central and Eastern Europe. The businesses they build are often scrappy, adaptable and able to survive even in tough conditions.

Look at Ukrainians: In my fund’s portfolio, there are 19 Ukrainian companies, and none of them have shut down since the war began in the country. In Kharkiv, a heavily bombarded Ukraine city, there were 511 tech companies before February 2022. Only 11 of them had closed down as of February of this year, TechCrunch reported .

But there’s more than just resilience to the people who do business in this part of Europe. I've observed many innovative go-getters who bring value to whomever they work.

I am biased; I lived in Kyiv for 10 years, where I founded an IT company, and my venture capital fund has invested in nearly 70 CEE startups. But hear me out while I sing a song of love for CEE entrepreneurs and share what investors should expect when working with founders in this region.

Getting The Job Done

In my experience, many CEE entrepreneurs, including Ukrainians, Poles and Estonians, aren't fond of singing their own praises and are rather straightforward. In business, this means their focus is on getting the job done. The entrepreneurs I've worked with aren’t the ones to talk much; they are the ones who lean down at their laptops and finish the task.

Underselling, But Giving A Truer Picture

I've also found that entrepreneurs in this region are often not the type to boast or sugarcoat things. If they have an opinion, they won't shy away from saying what they have to say.

There is, of course, a disadvantage to this type of honesty. When CEE startup founders talk to investors, some might undersell themselves. “I was just lucky” is common to hear; “I know the product is raw” is also common. There’s such a contrast when I hear how U.S. founders sell their ideas to me. They are confident and assertive, even when they are pitching a lemonade stand. But CEE founders, I believe, tend to give you a fuller, truer picture.

No Arrogance Approach

Nearly everyone I know from CEE is self-aware. Many grew up during tough times, with economic challenges and political changes. These experiences made them think deeply about their strengths and weaknesses early in life, which helped them stay grounded and adaptable.

Self-aware people tend to ask for feedback, not just from those above in the hierarchy but also from those who report to them. I believe leaders who are self-aware are more proactive, make better decisions and are better communicators.

Doing More With Less

Many people in CEE live within their means. It's possible to live your life there without a credit card. In fact, in 2019, the credit card penetration rate was below 30% in CEE countries. In 2012, less than half of the firms in Eastern Europe had bank credit, according to the European Central Bank .

And today, Slovenia, for example, is one of just four European Union countries where more than 25% of citizens score highly in financial literacy, according to a 2023 survey by the European Union. Estonia also is among the best performers in terms of financial knowledge.

Financial discipline is a good thing for startup founders and top-level managers. A mindset of careful spending can give entrepreneurs and C-level executives an edge. Being used to doing more with less can help leaders run lean teams and innovate under constraints. It’s not just about surviving; it's about thriving in tough conditions.

Knowing Clients’ Pain Points

In my experience, many local founders in the CEE region have witnessed or personally faced economic hardships and political instability. This gives them a perspective on their customers' needs. These founders understand that customers are looking for solutions that work, not just solutions that look good on paper. I've seen many who don't build companies that offer nice-to-have services; they build companies that address real pains.

Working With CEE Founders

Investors working with founders from the region will need to be prepared for cultural differences. For example, as I mentioned previously, you might see CEE founders undersell themselves, so don’t be surprised if the person you're meeting with doesn’t seem confident or even enthusiastic during a pitch. Let their experience and skills speak for themselves. Ask for business data, and seek hard skills.

Pitching, selling and networking are areas where, as an investor, you can help CEE founders. If they can tap into your experience in these areas, their path to success will be much faster.

To do so, get hands-on. Review the founder’s pitch, and refine it to make sure it’s concise and data-driven. Encourage them to focus on their unit economics, as this resonates well with investors. Introduce them to mentors who’ve successfully scaled in similar markets. And, open doors to your own network. Personal introductions can be game-changers, especially in regions where trust and relationships matter as much as product quality.

If you’re new to CEE, talking to industry players and VC funds can also be helpful. It’s a difficult region to get to know quickly, and a guide or two can be great to have.

The best investors aren’t just money providers; they’re partners who guide and support founders, especially in regions like CEE. If you focus on helping the entrepreneurs you work with sharpen their pitches and expand their networks, the results will follow naturally.

The story was originally published on Forbes Council on Oct. 16, 2024 titled "Insights For Investors New To Working With Central And Eastern European Founders ."

Subscribe ?to our LinkedIn newsletter to get one useful article every week via email and on LinkedIn. We promise each story to be insightful and take less than 5 minutes to read.

?? Photo by Alice Kotlyarenko on Unsplash.