Last week I was on a trip to Sofia. I went there for the Venture Blender event hosted by Launchub and to meet a few founders & friends.

The region is facing challenges in the tech job market. That’s nothing new, in the past 2-3 years the market cooled off in CEE. Companies have been cutting budgets, outsourcing projects became scarcer, startups had hard times raising => engineers have hard times to find jobs. Software engineering is not the same “work from home, juggle three jobs”, sweet spot anymore. Tables have turned and now companies have the leverage.

But this is the exact reason local investors become bullish.

It might sound counterintuitive at first, but tough times are often what create great companies. When people have well-paying jobs with little stress, why would they leave to start a company (which is 100x harder)? But when jobs are difficult to find and opportunities are scarcer, starting a company becomes more appealing - it’s now only 50x harder instead of 100x.

One local seed investor said “in the past 3 years we invested in only 1 local team and 3 other diaspora teams. But now we expect more teams to come up”.

And it’s interesting, because Bulgaria has more capital available from VCs compared to other countries in the region. But these funds have long gone outside of the region to hunt for opportunities and invest. Same did funds from other countries. While this shows signs of maturity of CEE, it also has shown that the pipeline has been dry in some regions.

But things come in cycles - lately we’ve seen more pre-seeds in CEE, which will soon enough lead to multiple new seed & series A companies.

These conditions, though difficult, drive innovation and resilience in the ecosystem.