Romania and Southeastern Europe (SEE) are experiencing a significant boom in AI startups, with many aiming to secure funding of over 1 million euros in order to expand globally. This information comes from the recently published second edition of the RO AI MAP 2022/2023 report, a collaborative effort by Techcelerator and Google for Startups to promote AI startups in the region.
The report’s main objective was to identify and map AI startups in Romania and SEE, as well as gather data about their progress in 2022 and future goals. Compared to last year, the number of identified AI startups in Romania has increased from 100 to over 150, while SEE boasts around 100 startups of its own. More than half of these startups were founded after 2020. Unfortunately, the report also revealed that 10% of the startups from the previous edition have exited the market.
The survey conducted for the report found that nearly half of the AI startups seeking funding in the next two years are targeting amounts exceeding one million euros. These funds would primarily be used to expand internationally, increase team size, and launch new products and services. Approximately one-third of the respondents identified attracting more customers as their main goal for this year, with other objectives including securing a new round of investment, expanding into new markets, and launching new offerings.
Interestingly, over 50% of the surveyed entrepreneurs have already secured investments, with a third of these startups receiving funding rounds ranging from 500,000 to 1 million euros. Additionally, more than 10% of the funded startups attracted amounts between 50,000 and 100,000 euros. Fortunately, less than a third of the participants reported not attracting any investment.
Despite the promising growth of AI startups in the region, founders face several challenges. First and foremost, finding the right employees proves to be a major hurdle. Additionally, attracting the necessary financing and ensuring sufficient cash flow are ongoing concerns. Expanding internationally and dealing with bureaucratic processes in Romania and other countries where they operate are also challenging for these startups.
Cristian Dascălu, the managing partner of Techcelerator and partner of GapMinder, highlighted the resilience of Romanian AI/ML startups and their ability to secure substantial funding rounds. According to a recent study by Activize, out of the 69.2 million euros accumulated by Romanian startups in the first half of 2023, the three largest contributions came from AI/ML enterprises. These contributions include a 35-million-euro Series A funding round for FlowX, a 2.7-million-euro pre-seed for Kubeark, and a 5.5-million-euro late seed round for Veridion, a Techcelerator graduate. This demonstrates the continued success and worth of companies in the AI sector, even those established as recently as 2020.
The survey conducted for the report included responses from 52 startups, with around 80% originating from Romania and the remainder from Greece, Croatia, Bulgaria, North Macedonia, and Turkey. The survey took place between October 2022 and January 2023.
Overall, the AI startup landscape in Romania and SEE is vibrant and growing. With an increasing number of startups and a strong drive for global expansion, these companies are poised to make a significant impact on the international AI market. While challenges remain, the success and potential of the sector are undeniable.
