Talent and infrastructure are the keys to global tech success
Konstantin Zapolianski, Senior Investment Director at Zubr Capital, recently spoke to the Cyprus Mail about Cyprus’ growing potential as a destination for technology and digital industries.
With the ICT sector contributing up to 15 per cent of the country’s GDP and generating approximately €4 billion in revenue in 2024, Cyprus is positioning itself for further growth.
Zapolianski shares his insights on the investment appeal of the island, the challenges it faces, and strategies to strengthen its position as a thriving tech hub.
Cyprus as an investment destination
Zapolianski believes Cyprus stands at a critical juncture, with an opportunity to double the size of its tech sector within a few years.
“The country has strong fundamentals—strategic location, a skilled workforce, and a supportive regulatory environment—but needs to take decisive steps to attract global tech investment,” he explains.
He outlines three possible models for further development.
The Singapore model involves attracting multinational tech giants through infrastructure investment and talent recruitment.
The Israel model focuses on fostering a startup-driven economy with strong venture capital backing.
Meanwhile, a Dubai-style hybrid model combines both approaches, attracting both corporations and startups simultaneously.
Strengthening the tech ecosystem
With approximately 30,000 ICT specialists, Cyprus has nearly doubled its tech talent base over the past decade.
However, Zapolianski notes that numbers alone are not enough. “It’s about fostering an innovative and productive ecosystem,” he says, citing Estonia’s success in producing 10 unicorns with only 45,000 ICT professionals—far exceeding the output of larger markets like Poland.
Zapolianski emphasises that innovation and productivity within the ecosystem matter more than sheer numbers. The rise of AI-driven companies with small but highly skilled teams achieving rapid revenue growth demonstrates this trend.
Companies such as Cursor, an AI Code Editor, and Eleven Labs, an AI Audio Platform, both reached $100 million ARR within two years.
To accelerate growth, he suggests attracting global tech corporations, such as Microsoft, Alphabet, and Meta, which would require significant investments in high-tech business parks. He highlights successful examples such as Z-Park in Beijing, Bangalore IT Parks, Dubai Internet City, and Dubai Silicon Oasis.
The planned Pentakomo Technology Park in Limassol is a promising initiative, but its development needs to be expedited. Additionally, improvements in social infrastructure, such as affordable housing and international schools, are essential to attract global talent.
Building a strong startup ecosystem is equally important. Zapolianski stresses the need to provide IT entrepreneurs with business expertise, risk capital, and a supportive startup atmosphere.
The country must also address its lower-than-average proportion of STEM graduates, currently at 11.2 per cent compared to the EU average of 25.4 per cent.
Expanding postgraduate programmes in AI and robotics, strengthening research collaborations with European and US universities, and increasing investments in R&D (currently 0.69 per cent of GDP, well below the EU average of 2.3 per cent) would help close this gap.
Additionally, he stresses the need for affordable housing, international schools, and other social infrastructure to attract and retain top global talent.
A thriving business and startup ecosystem
According to Zapolianski, Cyprus already has a well-established IT sector, with key verticals including gaming, B2C applications, digital media, fintech, corporate IT, and IT infrastructure. Major companies operating in the country include WG, Nexters, Easybrain, Palta Group, The Soul Publishing, Exness, XM, eToro, Amdocs, Indrive, Servers.com, as well as a growing number of innovative startups leveraging AI and blockchain technologies to drive digital transformation.
The country also boasts a strong tech community, led by Techisland, which facilitates collaboration among 300 companies employing 20,000 people.
Events such as Reflect Festival, which attracts 10,000 attendees, 1,000 startups, and 250 investors, further position Cyprus as a growing hub for technological innovation.
Additionally, Cyprus has seen growth in its startup ecosystem, with 130 startups and scaleups raising capital since 2016.
The country’s startup ecosystem is also gaining traction. “In 2024 alone, 23 startups raised €67 million,” Zapolianski notes.
“However, venture capital investment remains at just 0.2 per cent of GDP—below the EU average and significantly lower than the US and Israel.”
Nevertheless, interest from VC firms is growing, with GEM Capital, The Games Fund, 33East, Kinisis Ventures, Flashpoint, Prytek, Flint Capital, TA Ventures and Zubr Capital actively investing in Cyprus-based startups.
Local accelerators, including IDEA Innovation Center, ARIS, Cyprus Seeds and CyRIC (Gravity Ventures), provide early-stage support, but Zapolianski suggests bringing in a globally recognised accelerator to further boost the ecosystem. “Attracting an accelerator with a world-renowned brand would significantly increase Cyprus’ visibility and draw high-potential entrepreneurs,” he advises.
Big role in supporting innovations is also played by Research and Innovation Foundation, which is providing government support to innovative startups and facilitates collaboration between scientific and business community.
Attracting investment and scaling startups
To enhance its attractiveness, Cyprus must focus on developing incubators and accelerators that offer business support and investor access.
“The early-stage financing ecosystem remains underdeveloped,” Zapolianski says. He suggests that Cyprus consider a state-sponsored Fund of Funds similar to Israel’s Yozma programme, which successfully kickstarted the country’s VC ecosystem and mentions the establishment of Cyprus Equity Fund in cooperation with European Investment Fund, as the good foundation for such initiative.
In terms of securing Series A and B investment, he advises Cypriot startups to focus on innovation, develop globally scalable products, and build teams with top-tier talent. Having a differentiated product, particularly in AI-driven applications, is critical, as well as establishing strong go-to-market expertise.
He emphasises the importance of leveraging Cyprus’ growing tech ecosystem, seeking strategic partnerships, and accessing global funding networks.
He also emphasises promising Cypriot startups such as Placy, which is revolutionising real estate with AI, and Zing.Coach, an AI-powered fitness coaching platform, showcasing the potential of local innovation on an international scale.
While B2B SaaS solutions from Cyprus have yet to establish a dominant presence internationally, Zapolianski believes this could change through the formation of cross-regional teams that combine European founders with Cyprus-based R&D talent.
By leveraging Cyprus’ emerging startup ecosystem, strong IT infrastructure, and strategic geographic location, businesses could develop innovative solutions tailored for international markets.
Additionally, fostering collaboration between local accelerators, government-backed funding programmes, and industry stakeholders could provide the necessary support for B2B SaaS startups to scale and compete on a global level.
Investment challenges and long-term outlook
Despite its strengths, Cyprus must address several investment challenges. “Limited AI and data science talent, the need for additional business support for tech startups, and the early-stage nature of its venture capital industry present hurdles” Zapolianski said.
Strengthening the local talent pool through targeted educational initiatives, fostering collaboration between universities and industry leaders, and implementing structured government-backed funding programs could help bridge these gaps.
Yet, the country’s excellent tax regime, supportive immigration policies, strong professional infrastructure, and international business mindset provide a solid foundation for future growth, offering an attractive environment for investors and entrepreneurs alike.
Looking ahead, Zapolianski is optimistic about Cyprus’ potential.
“With the right public-private partnerships, educational initiatives, and policy reforms, Cyprus has all the ingredients to become a leading digital transformation hub,” he concluded.