In business, a unicorn is a company that achieves a valuation in excess of $1 billion in less than three years. With this in mind, we need to be honest with ourselves. We will not get a massive stream of unicorns in the near future coming out of the CEE region. Instead, we will be able to foster many great tech companies with a valuation of over $200-300 million. The reason for this is that most unicorns are B2C companies focused on local markets.
It is almost an impossible mission to build a large B2C company in such a fragmented region such as CEE, where populations and the resulting marketplaces are small. Poland could possibly be a good place for B2C unicorns, but it requires a local ecosystem and entrepreneurs willing and ready for cross-border expansion into their culturally similar neighbor countries. I think that CEE, with its engineering talent, is better positioned for the B2B deep tech market, and companies in this sector need to be global from day one.
However, building a B2B unicorn is somewhat challenging, since any deep tech company requires much more time to prove its technology and grow as a result. For example, some of my colleagues consider UiPath to be a CEE unicorn. UiPath is a global software company that developed a platform for Robotic Process Automation. In March 2018, UiPath received a $153 million investment from top tier VCs Accel and Kleiner Perkins Caufield & Byers, valuing the company at over $1 billion. UiPath was founded in 2005 by Romanian entrepreneur Daniel Dines. It is lucky that Daniel’s technology was able to maintain its leadership for so long, since only in 2015, with the help of seed funding, UiPath started its international expansion. In 2017, the company had 590 employees and moved its headquarters to New York to be closer to its international corporate base and rose to 700 customers from only 100 previously.
It’s a great story, but is it a unicorn? I have a different conclusion: B2B companies need to move to the global market much earlier rather than focusing on competing in the local market. Finally, I want to emphasize that CEE has potential, not only because of its engineering talent pool, but also since the investment and start-up ecosystem in the region has matured during the last decade. Take as an example our experience at Almaz Capital. We are a global venture fund. Our mission is to bring CEE companies to the global marketplace via Silicon Valley, where our HQ is based. We have almost 1,000 CEE investment candidates in our pipeline to choose from. Furthermore, as evidence of our commitment to the region, we decided to organize and run the CEE Tech Tour event. It is an exciting time and the CEE region is poised to take its place on the global innovation map.
EETT President, co-founder & managing partner