The VC 'Scramble for Europe' breaks out in the East as a €70M fund breaks cover

There is a fight emerging in Central and Eastern Europe, and all the way down into the South Eastern regions.

Investors such as Inovo, Credo, LauncHub, Vitosha, VentureFriends, and Marathon VC are all VCs of varying sizes who are — as we speak — roaming everywhere from Estonia and Poland all the way down to Greece and Turkey looking for early-stage startups to write checks for.

The gun was fired in this race when, last year, LauncHub Ventures out of Sofia, Bulgaria, headed toward the €70 million for its new fund. And when Vitosha Venture Partners raised a $30 million fund. And again when VentureFriends in Athens raised a €100 million fund.

What happened to Western European VCs in the last 15 years started to happen to Central and Eastern (and South Eastern) VCs about two to three years ago and is now gathering pace. I mean, they even have their tech media ecosystem now, for heaven’s sake.

The latest sign of this trend is the news that 500 Istanbul, formerly a loosely associated fund with 500 Global in San Francisco, had launched a €70 million early-stage fund and is rebranding as “500 Emerging Europe.”

The fund will focus on Turkey, Central Europe, and the Baltics — it's own definition of "emerging Europe." The fund plans to invest in pre-seed and seed rounds with first tickets as high as €2 million and follow-on rounds. The fund has made 14 investments over the last year, as well as its first investment in Poland (additional investments in CEE and Baltics are in the works, I'm told).

Started in 2016, 500 Istanbul began with a $10.5 million fund and invested in 40 companies from Turkey, Hungary, Romania, Bulgaria, Greece, Ukraine and Poland, and has three unicorns in its portfolio. Investments include Polish edtech Village Network and Avatao, a software training platform out of Hungary.

It says its portfolio companies in aggregate generate more than $600 million in revenue and have now raised $1.1 billion in follow-on funding.

In an interview with me, general partner Enis Hulli said: “Given that we love doing $1 million checks at idea stage to top-tier founders (a limited number of them emerge from the region) we mostly compete with UK funds that do pan-European investing. Our differentiation is having an American brand and network, global offices in 20+ locations, portfolio in 70 countries (both U.S. and global expansion support).”

That may be the case but as the past recedes, having those U.S. connections are less interesting, as other VCs in the region will make their own connections to U.S. networks and U.S. VCs.

There may be an era when 500 Emerging Europe will just have to drop the “500” in another rebranding exercise, especially when founders increasingly ask, “Why only 500?”