‘There’s a big opportunity for Cyprus to redefine its brand and attract startups here as well.’
Ioannis Kasinopoulos and his friend Yiannis Zambas set up Electryone AI in 2023 with a “strong belief and no outside financing.” The belief was in their software, which uses artificial intelligence to make batteries that store renewable energy more efficient and profitable. They also believed in the importance of the transition to a clean, green economy. Without external funding, however, belief could only get them so far.
The two young Cypriots, who had previously been at Meta, McKinsey and Palantir, worked hard to find pre-seed financing and some angel investors from their bases in London and Spain, including Genesis Ventures, a Greek venture capital firm backed by the European Investment Fund. Then they got an unexpected surprise—venture capital financing from their home island, where support for startups has been limited. 33East Venture Capital, a Nicosia-based venture capital fund supported by the Cyprus Equity Fund, started making investments from its €26 million fund this year, and it backed Electryone AI with €400 000 in January.
“We were very happy to have people from Cyprus being part of this,” says Kasinopoulos, who was born in Nicosia. “We had tried to raise money in Cyprus, but we didn’t really get anywhere. There are companies in the energy space, but they didn’t understand software or venture capital. They wouldn’t take that much risk.”
For technology and innovation startups in Cyprus, 33East’s new fund could be a gamechanger, reversing a brain drain that has seen talented Cypriots leave, largely for London. Though the Global Entrepreneurship Monitor ranks Cyprus seventh in the European Union for early stage entrepreneurial activity, venture capital investment in Cyprus is scarce, according to a report by the University of Cyprus’s Centre for Entrepreneurship.
“There has been no formal path for startups to follow, so either companies died or left Cyprus to seek financing,” says Yiannis Eftychiou, one of two 33East cofounders. “There has been a drain of quality talent from Cyprus. But we see a lot of opportunity in Cyprus.”
Targeting Cyprus tech startups
The Cyprus Equity Fund is overseen by the European Investment Fund, using financing from the Recovery and Resilience Facility, part of the European Commission’s programme to help EU economies recover from the COVID-19 pandemic. (It also includes money from the Cyprus portion of an earlier programme called JEREMIE, which stands for Joint European Resources for Micro to Medium Enterprises.) It’s the first investment in a venture capital fund in Cyprus by the European Investment Fund, the largest provider of venture capital in the European Union. (The subsidiary of the European Investment Bank Group has backed 671 venture capital funds across Europe since 2015.)
“It’s already a success that 33East, our selected fund manager, has reached the first closing, at a time when fundraising was increasingly difficult because of geopolitical and economic challenges,” says Areti Roditi, a European Investment Fund mandate manager who oversees the 33East investment. “From now on, they may be able to attract even more private investment.”
Roditi notes that the Cyprus Equity Fund faces a demanding schedule. It has to make at least 12 investments in its first 18 months to meet targets set under the Cyprus Recovery and Resilience Plan. With investments from €100 000 to €1 million, 33East is targeting pre-seed and seed-stage startups that have a Cyprus connection.
At 33East, which takes its name from the geographic longitude of the Mediterranean island, Eftychiou is confident. “We’re going to make it work,” he says. “There’s a lot of expectation on us. But there’s a big opportunity for Cyprus to redefine its brand and attract startups here as well.”
The emphasis on technology is central to this redefinition of Cyprus. Eftychiou argues that a small country like Cyprus cannot hope to compete with bigger nations on an industrial level, so innovation must be the basis of its success. To illustrate that, the Cyprus Equity Fund’s first two investments have both been in startups that use artificial intelligence. As well as allowing clients to manage all their renewable assets on a single software platform, Electryone AI also uses artificial intelligence to forecast the behaviour of energy users and to automate the charging and discharging of batteries.
“Tech is the only way for Cyprus to be competitive,” Eftychiou says.
33East
Cyprus tech ‘people really want to come home’
The impact on Cyprus’s economy could be significant.
For one thing, a better environment for entrepreneurs might lure back Cypriots like Kasinopoulos who moved to London for opportunity. That applies to venture capital investors, too. “Finding Cypriot fund managers is very easy,” says Alexandros Dimitrakopoulos, another European Investment Fund mandate manger working with Cyprus. “But to get them to invest in Cyprus, that’s the challenge. The impact of this could be huge in the VC ecosystem of Cyprus.”
Kasinopoulous remains in London for the time being, because he still has to focus much of his time on fundraising and expanding his company’s activities. But his technical team is in Cyprus, where top talent costs significantly less than it would in London or the US. “This is going to be fundamental and foundational for the future of the country and the ecosystem,” he says. “People really want to come home. A lot of my Cypriot friends in London are looking for a way to come back and would like to work for companies like us.”
33East’s role in that potential boost for Cyprus will be more than just financial. The firm’s managers are eager to meet startups even before they need investment and certainly at an early stage. Kasinopoulos met 33East cofounder Demetrios Zoppos frequently over a period of two years, because of his reputation as one of the most successful entrepreneurs from Cyprus. They got his advice and ideas, long before his fund finally made its investment. “He is a role model for Cyprus entrepreneurs,” Kasinopoulos says.
Experienced investors who have been involved with multiple successful startups in Cyprus and beyond, Zoppos and Eftychiou worked with Electryone AI over Christmas and New Year before finalising the deal in late January. “The most important thing is not just to get the money,” says Kasinopoulos. “Getting a real partner is the real challenge, and a huge bonus.”
Electryone AI
