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Study: Romania is attracting more and more foreign investment to Central and Eastern Europe
Romania is still one of the first four countries in Central and Eastern Europe which draw investments private equity type, shows a new study made by the team of the project Healthy Investment Central and Eastern Europe (HICEE).
The survey gathered answers from various investors, including venture capital funds and private investors, most coming from Hungary, Slovenia, Czechia, France and Sweden.
Historically speaking, Romania and the CEE region had several structural barriers in the way of innovation, including limited access to funding, limited capacities for research and development and lack of adequate infrastructure, the study shows. In 2021, CEE represented only 3.2% of total investments in risk capital in Europe and start-ups in the domain of health received, on average, 1.2 million euro – only one third of the European average of 3.8 million euro.
Investments continue to be orientated mainly towards some markets. Romania consolidates gradually its position in the investment landscape, drawing 8% of the total of investments in private capital in the region and is the fourth in the ranking.
The Czech Republic, which attracted 27% of total private equity investment, followed by Poland (26%) and Lithuania (14%), topped the list, with these four countries together accounting for 75% of the total value of CEE investment and 41% of companies receiving private equity funding in 2023. In parallel, Hungary attracted 6.7% of total investments and had the highest number of private equity-backed companies (115), accounting for 23% of all deals in the CEE. Slovakia and Slovenia lagged behind, attracting only 2.3% and 0.76% of total investments respectively.
Trust among investors is growing, 20% of them considering Romania a promising destination for risk capital for the next three years, similar situation to Slovenia, the authors of the study mention. However, Poland is considered the most dynamic market in the CEE, four out of five interviewees naming it ‘promising’ for investments in risk capital over the next three years.
Investors identify several barriers to channelling funding to CEE as critical: the quality of investment opportunities (92% of respondents consider it at least a moderate challenge), followed by the difficulty of obtaining follow-on funding (80%), institutional trust, the complexity of the legal framework and political stability (all cited by 64% of investors). On the other hand, geographical distance, currency fluctuations and rising interest rates are perceived as minor obstacles.
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