Cypriot startups are set to receive a significant boost with €26 million in funding secured by venture capital firm 33East in partnership with the European Investment Fund (EIF).
The fund aims to stimulate investment in the regional market and enhance its global competitiveness, Vice-President of the European Investment Bank (EIB) Kyriakos Kakouris said at its official launch on Thursday.
Permanent secretary of the finance finistry, Andreas Zachariades, underscored the importance of the fund, acknowledging the startup sector as a particularly challenging business landscape.
He pointed out that due to the “high-risk nature of their activity,” startups in Cyprus continue to struggle with accessing financing. Emphasising the need to “support where the market fails,” he highlighted the importance of a funding environment that offers financial support tailored to each startup’s development stage.
“We want to invest in people with an obsession”, 33East co-founder Yiannis Eftychiou stated, underlining the firm’s founder-driven investment approach rather than a market-driven one.
He added that up to two companies per quarter would receive investments.
While 33East noted that a small portion of the fund could even be allocated globally, Eftychiou emphasised that Europe’s startup market should not be underestimated, as it is home to some of the world’s most notable companies.
“Americans are just very good at storytelling – we’re just not as good at selling,” he said, acknowledging Europe’s challenges but also its strength in the global startup landscape.
33East made clear that while maintaining an open approach, early-stage startups with international potential will be their main focus and emphasised that entrepeneurs were welcome to get in touch with them to discuss potential investments.
Given the current state of Cyprus’ startup market, investments are likely to initially concentrate on high-growth sectors like fintech, digital health, and AI.
Furthermore, 33East said they aimed to foster greater integration between the Cypriot and Cyprus-based Russian startup markets, noting that while many Russian entrepreneurs are eager to engage, they remain somewhat isolated.
Asked about incentives for women-led tech startups or eco-tech, Eftychiou expressed optimism that such initiatives will emerge but noted that the market first must mature and strengthen.
33East positions itself as a flexible, entrepreneur-driven investor, backing Cypriot founders and international teams with ties to Cyprus. They offer initial investments from €100,000 to €1 million, with support through series A and beyond. Like many in the industry, companies typically start with a seed round before progressing through series A, B, and C funding.
The fund will be the first of its kind in Cyprus supported by public ressources, including governmental funding of € 19 million from the Cyprus Equity Fund (CEF) and € 7 million from private investors including the Bank of Cyprus with a contribution of € 2 million.
The European Investment Fund (EIF) had selected 33East as the official fund manager of the CEF in April 2023 to support risk financing to companies seeking pre-seed and seed capital for business development.
Cyprus was announced the EUs fastest-growing startup hub in 2024 with Limassol, in particular, emerging as a key hub for startups in Southern Europe, driven by an influx of international tech companies from Russia, Israel, and Ukraine.
Since 2020, Cyprus’ startup sector has expanded fivefold, now ranking 39th globally in fintech and 25th in gaming. Today, the country’s innovation ecosystem includes more than 400 startups and innovative businesses.