How we cee it. – February 2025 Digest

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Week 6

First Polish Unicorn ElevenLabs Raises $180M, Triples Valuation

AI voice replication startup ElevenLabs has raised $180 million in a new funding round, tripling its valuation to $3.3 billion compared to a year ago. The round was co-led by Andreessen Horowitz and Iconiq Growth, with participation from NEA and Sequoia Capital. This brings the company’s total funding to $280 million to date.

Since the launch of ChatGPT two years ago, investor interest in generative AI has surged, fueling startups that leverage AI to create realistic audio and video. Founded in 2022, ElevenLabs enables users to generate voices in dozens of languages and provides tools for building virtual customer support agents, AI-hosted podcasts, and more.

ElevenLabs became Poland’s first unicorn last year after securing an $80 million investment, pushing its valuation past the $1 billion mark. The company now serves over one million active users per month.

While ElevenLabs is far from the only text-to-speech generator—competitors include Resemble AI, Canva Voice Generator, and AWS Polly, among others—it remains the industry leader.

Alongside the funding announcement, ElevenLabs revealed plans to open a research and development center in Warsaw, Poland, marking the beginning of what could become a major AI ecosystem in the country. Over the next five years, the company plans to invest $11 million into Poland’s AI sector. The Warsaw office will also serve as ElevenLabs’ EU headquarters.

ElevenLabs’ ability to clone any voice using just a few minutes of audio has sparked controversy, particularly in the U.S., where concerns have been raised about its potential use in crimes or deepfake voice forgeries. The company has acknowledged cases of malicious misuse and has since expanded its moderation and policy teams to counter these risks.

To strengthen AI safety, ElevenLabs introduced an AI Speech Classifier last year, a tool designed to detect whether an audio sample was generated using its technology. The company says the new funding will help further these safety efforts while also expanding its product offerings and making its voice AI more expressive and controllable.

The EU’s Competitiveness Compass: Pointing Forward or Being Pulled Off Course?

Last week, the European Commission introduced the Competitiveness Compass, a strategic plan to bolster the EU’s economic standing against the U.S. and China. It promises to fuel start-up growth, boost clean tech, and cut red tape—at least in theory.

But a compass only works if nothing pulls it off course. And if history is any guide, the EU itself might be the biggest magnet disrupting its own path.

The bloc has a habit of launching bold initiatives that falter in execution. For example, the Green Deal Industrial Plan, meant to supercharge clean tech, has instead buried businesses under bureaucracy and slow funding approvals.

The European Chips Act, designed to make Europe a semiconductor leader, faces similar hurdles. Despite €43 billion in subsidies, industry leaders are already calling for a “Chips Act 2.0”, citing sluggish aid and excessive regulation.

Czechia and AMD to Lead EU AI Model Development

The EU is launching OpenEuroLLM, a €34 million project to develop open-source large language models (LLMs) as an alternative to OpenAI and Meta.

Czechia plays a key role: The project is led by Charles University (Prof. Jan Hajič) and Peter Sarlin, co-founder of Silo AI, acquired by AMD for $665 million.

20 European institutions are involved, including Aleph Alpha (DE), LightOn (FR), Prompsit (ES), and supercomputing centers in Spain, Italy, Finland, and the Netherlands.

The goal is to create multilingual AI models that reflect Europe’s linguistic and cultural diversity, countering the dominance of Anglo-American AI.

Week 7

Europe’s €200 Billion Ticket to Catch the AI Train

European tech firms and the European Commission plan to inject €200 billion into AI development over the next five years in a last-minute effort to catch up in the global AI race.

Despite years of groundbreaking AI research, European scientists have struggled to commercialize their innovations as effectively as their American counterparts.

Now, even China has entered the race at full throttle with the release of its DeepSeek model. But last year’s Draghi report—alongside the long-running joke that the EU’s only innovation is an attached plastic cap on a Coke bottle—seems to have sparked a shift.

“I am glad to announce InvestAI, a public-private partnership that aims to mobilize €200 billion in AI investments in Europe,” European Commission President Ursula von der Leyen told the AI Action Summit in Paris on Tuesday.

She said the EU would contribute €50 billion, with the rest coming from the industry.

“We will build European GigaAI factories. These massive computing hubs will be accessible to everyone—researchers and entrepreneurs alike—to push the innovation frontiers of AI.”

Von der Leyen added that EU funds would supplement pledges made on Monday by more than 60 European companies, including Airbus, Volkswagen, and Mistral AI. The firms, part of the “EU AI Champions Initiative,” have committed €150 billion over the next five years to stimulate new AI ventures.

With a combined market capitalization exceeding €2.9 trillion and a workforce of 3.7 million, the initiative’s backers represent a formidable force in European industry.

However, for Europe to truly lead in AI, industry leaders and startups argue that three major barriers must be addressed:

Less regulation and a more pro-business approach that doesn’t hinder innovation.
Greater investment in cloud infrastructure, semiconductor manufacturing, and energy-efficient AI data centers.
A large-scale public engagement campaign to showcase AI’s benefits while addressing ethical concerns.

CEE Investors’ Cautious but Optimistic View on 2025

Year 2024 was tough for startups and investors. With inflation, geopolitical tensions, and a venture capital winter, the Central and Eastern European startup ecosystem has had to navigate some serious. turbulence. However, according to a new survey by The Recursive, 62% of CEE investors believe 2025 will bring a more favorable investment climate.

The optimism is driven by strong investor interest in AI, cybersecurity, and deep tech, as well as the rapid growth of health tech, which is projected to hit a market value of €640 billion by 2025. While venture capital is still selective, investors are betting on a belief that the best startups will continue to attract funding.

Of course, there are reasons to stay cautious. Despite the investors seeing 2025 as a turning point, economic slowdowns and regulatory uncertainty could affect the speed at which it happens. Some VCs are worried that the AI valuations are forming a bubble, while many entrepreneurs feel that the EU policies aren’t as startup-friendly as they claim to be—something we’ve pointed out before in How we cee it. The big question is whether Europe, and especially CEE, can translate investor optimism into real, tangible growth.

CEE startups have already proven their potential. Their combined value has more than doubled from €89bn in 2019 to €213bn in 2023.

Poland’s Year of Breakthroughs and a Big Tech Fund

Poland’s government, led by Prime Minister Tusk, is launching the “Poland: Year of Breakthrough” program to stimulate economic growth through deregulation and investment. Key initiatives include easing investment in public and private markets, and establishing a PLN 300 million (€71.9 million) big tech fund. The reforms aim to reduce business burdens and enhance competitiveness.

Some entrepreneurs remain skeptical—particularly regarding the program’s reliance on foreign tech. The stock market reacted positively to the announcements, with notable gains in the railway, energy, and copper sectors, signaling investor confidence in the proposed changes.

Week 8

Slovakia Now More Expensive for Business Than Austria

Slovakia has become a more expensive place for manufacturing and hiring than Austria. High taxes, levies, and rising fixed costs make it increasingly difficult to maintain existing investments—let alone attract new ones.

According to the Slovak Association of Industrial Associations and Transport (APZD), neighboring countries such as the Czech Republic, Poland, Hungary, and Austria offer a more stable and business-friendly environment.

Slovakia is now the least competitive economy in the region, burdened by a 24% corporate tax rate—the highest in Central Europe—and is the only eurozone country to impose a financial transaction tax. Rising social levies and higher fixed costs for businesses further erode its attractiveness.

For instance, hiring a highly qualified professional in Slovakia now costs companies nearly 17% more than in Czechia.

“If this does not change, we will face stagnation in the labor market and a decline in investment activity,” warns the APZD.

How did Slovakia end up here? The populist government of Robert Fico has refused to roll back generous social programs for its voter base, including bonus pensions for seniors and energy subsidies. While these measures might be politically popular, they come at a time when Slovakia’s public finances are in the worst condition in the entire EU.

Structural spending—mandatory expenditures that the state must cover regardless of economic conditions—has surged from 1.3% of GDP in 2022 to 3.3% in 2023 and is projected to reach 5.2% in 2024.

To sustain this level of spending, the government has turned to tax hikes, further squeezing the middle class and the business sector. One of the most controversial is the financial transaction tax, which forces businesses to pay 0.4% of every transaction to the state.

European Defense Markets Rise in Response to Geopolitical Risks

European defense stocks are on the rise as policymakers discuss increased military spending, responding to shifting US policies and potential Ukraine peace talks. The market reacted swiftly, with key European defense firms posting notable gains across major indices.

STOXX Europe Total Market Aerospace & Defense – The European defense index rose by more than 6% in the past 5 days and hit its all-time high.
Lubawa, a Polish defense equipment maker rose more than 8.5% over the past 5 days.
Rheinmetall, the largest defense company in Germany, jumped more than 27 %.
BAE Systems, from the UK, rose more than 12%.
Renk Group, a German manufacturer of military gear, gained about 20%.

The rally coincides with emergency defense talks in Paris, where European leaders are reassessing the continent’s security strategy amid fears that the US may sideline Europe in negotiations with Russia. The shift underscores Europe’s growing urgency to strengthen its own defense capabilities, particularly as political uncertainty in Washington raises doubts about long-term US support.

However, while investors are bullish on the sector, analysts warn that higher military spending could strain national budgets, increasing debt and borrowing costs. This adds another layer of uncertainty to an already volatile market, which is still digesting new US tariff policies that could impact broader European industries.

Despite these concerns, the surge in defense stocks signals a fundamental shift in European strategic priorities. As geopolitical tensions mount, markets are betting that defense will remain a key investment theme for the foreseeable future.

Poland’s Big Tech Investments

Microsoft office in Warsaw, Poland. Photo: Tomas Hrivnak

Polish Prime Minister Donald Tusk met with Microsoft’s vice president on Monday as the tech giant announced an investment of PLN 2.8 billion (€0.67 million) by June 2026 to expand cloud infrastructure, cybersecurity, and AI in Poland.

The move follows Google’s deepening presence in the country. Last Thursday, Alphabet CEO Sundar Pichai signed an agreement with Tusk to accelerate AI adoption, with Google investing hundreds of millions of euros to expand its operations, including building the EU’s largest Google engineering center.

Google also intends to train one million people in Poland in AI.

Week 9

Europe v. the World: How Can the EU Defend Itself Without the U.S.?

Europe closely watched as Germany’s election results trickled in on Sunday, shaping not only its economic direction but also the continent’s security.

Friedrich Merz and his CDU/CSU secured victory, but as Germany’s next chancellor, Merz must navigate both economic stagnation and rising security threats.

Speaking on Monday, he questioned, “whether we will still be talking about NATO in its current form then (in June) or whether we will have to establish an independent European defense capability much more quickly”.

The risk of a Russian attack on an EU country is growing. NATO and European assessments suggest Russia could be ready to strike within three to ten years—or sooner, with the Zapad military exercises set for Belarus in 2025.

For Central and Eastern Europe, NATO is critical to sovereignty. But with Trump’s second term threatening the integrity of the alliance, countries closest to Russia are exploring ways to deter Russian aggression.

A report by Bruegel and the Kiel Institute for the World Economy outlines what Europe would need to defend itself without U.S. support:

Expand troop numbers and coordination: An increase of a staggering 300,000+ troops or improved military coordination between individual national armies is essential.
Sustain Ukraine’s defense: Kyiv, with its experienced army, is Europe’s strongest deterrent against Russia. The EU should be capable to continue supporting Ukraine, even if the U.S. stops its contribution. To replace the US, the EU would have to spend only 0.12% of EU GDP. However, securing supply chains without the U.S. industry remains a challenge.
Accelerate military build-up: Right now, Russia is perhaps at its weakest point in a long time. However, if a peace deal between Ukraine and Russia is struck, Putin’s regime is likely to rearm, requiring the EU, the UK, and Norway to do the same.
Boost defense spending: A sharp rise from 2% to 3.5% of GDP—about €250 billion annually—is needed, as current forces can’t prevent a rapid Russian advance in the Baltics.
Streamline European defense procurement: Coordinated purchases could cut costs and enhance production.

Ukraine, U.S. Reach Resource Deal in Ceasefire Push

Critical raw materials in Ukraine. Source: Ukrainian Geological Survey

Ukraine agreed on Tuesday to jointly develop its natural resources with the U.S., a move the White House views as a step toward a potential ceasefire with Russia. The deal, which is set for Cabinet approval, does not include security guarantees but aims to deepen economic ties.

The original proposal, presented by U.S. President Donald Trump, initially sparked outrage, as it demanded the right to $500 billion in potential revenue from resource exploitation in Ukraine—without offering any security guarantees in return.

While these conditions initially angered Ukrainians, officials later approved the deal after the U.S. dropped this demand.

The final version of the agreement, dated February 24, as seen by the Financial Times, would establish a fund into which Ukraine would contribute 50% of proceeds from the “future monetization” of state-owned mineral resources—including oil, gas, and related logistics. The fund would then invest in projects within Ukraine.

CEE’s Morphosis Capital Invests in EnduroSat, aiming to boost “New Space”

Romania’s Morphosis Capital, fund focusing on high-growth SMEs, has made its first investment outside the country, backing EnduroSat, a Bulgarian nanosatellite company. The move reflects growing investor interest in space tech, where startups are making access to orbit faster and cheaper.

Founded in 2015, EnduroSat builds software-defined satellites, already used by 350+ clients for Earth observation, communications, and research. With fresh backing from Morphosis Capital and CEECAT Capital, the company is looking to expand its operations.

For Morphosis, this is both a geographic and sector expansion, marking its entry into the space industry. It also shows how CEE is stepping up in high-tech innovation, moving beyond its reputation as an IT outsourcing hub.