Europe’s growth during the 20th Century was, for the most part, dominated by the economic powerhouses of the United Kingdom, France and Germany. Over the past few years, however, these countries have been outpaced by the oft-overlooked markets in the central and eastern regions, such as Czech Republic, Romania, Hungary and Slovakia.
In 2017 Romania was the fastest growing economy in the EU, with an estimated GDP growth rate of 6.4 percent.
Although these countries formerly relied on manufacturing to fuel the public purse, the tide has started to turn towards a wealth of technology companies that disrupt sectors from fintech to food delivery and beyon.
These regions of Europe continue to become more attractive to foreign investment flows as a result of consumer spending growth, better wage rates and increasingly-skilled workforces despite lingering political instability. For Naspers, portfolio companies such as Delivery Hero, Luno, eMag and PayU continue to demonstrate strong growth in their sectors.
One reason for the growth in the Central and Eastern European tech sector is undoubtedly a reduction in barriers to entry; greater access to technology and funding make it easier for budding entrepreneurs to start up. But another characteristic that companies in this market have in common is a staunch focus on the consumer, its behaviours and preferences. Consumers are steering nearly every industry with demands that include an ability to personalise, a tailored experience, connectivity and access across multiple channels.
For example, eMAG’s CEO Iulian Stanciu, takes pride in his team’s eagerness to learn new things and to pick up on new trends, such as the use of mobile devices for shopping and artificial intelligence. Online marketplace and ecommerce platform eMAG uses pioneering technology to offer its customers a unique shopping experience. It’s this customer-centricity that has enabled the company to reach such huge heights — making it by far the biggest online retailer in Romania, with ongoing investments of EUR 120 million this year. Further, growth in the sector in Romania is expected to continue to grow in double digits for the next year, with the Association of Online Stores in Romania (AMRO) forecasting that the industry will double its value by 2020 from the EUR 2.5 billion already estimated.
Cryptocurrency wallet Luno raised a $9M series B funding round in late 2017, led by London-based Balderton Capital and AlphaCode. With this injection of capital, the firm expanded into 35 new markets across Europe, making it one of the world’s most popular Bitcoin platforms. In an interview, Luno’s CEO and Co-Founder, Marcus Swanepoel, referred to Europe’s unprecedented demand not just for for digital currency, but also user-friendly products with an emphasis on security. Since expanding its European footprint, Luno has swelled to over 2 million customers as a result of its offerings, and now aims to focus on educating a range of stakeholders and consumers about the benefits and risks of cryptocurrencies in order to continue to grow.
Investing in European high-growth markets could be seen as a gamble given the political uncertainty that has beset the best part of a century. However, with the talent, infrastructure and entrepreneurial spirit of the region, as well as the increasing support of the European Union, the region has given rise to some of the world’s finest emerging technology companies.
