Source: cyprus-mail
Cyprus must avoid becoming a back-office hub, says VC analyst
Cyprus’ startup ecosystem is entering a period of growing maturity, but challenges surrounding founder quality, access to capital and international scaling remain, according to Dionysis Partsinevelos, associate at venture capital firm 33East and analyst at G4 Ventures.
In an exclusive interview with the Cyprus Mail, Partsinevelos discussed the evolution of the island’s innovation landscape, lessons from elsewhere in Europe, as well as the sectors currently showing the strongest momentum in 2026.
Drawing on experience, he explained why early-stage investing is ultimately centred on people rather than numbers, while warning that Cyprus faces a critical decade in its efforts to build a self-sustaining startup ecosystem.
He also highlighted the growing role of applied artificial intelligence, DeepTech, PropTech and hospitality technology, and argued that the country needs more founders willing to take risks and pursue their ventures full time.
CM: You have a diverse background as an economist and Certified Valuation Analyst working between Cyprus and Germany; what initially drew you to the venture capital space, and how does your expertise in valuation influence your approach to early-stage startups?
I have always been fascinated by startups. I was the kind of person who enjoyed sitting with friends, hearing their “million-dollar ideas”, and trying to figure out how we could actually build them. When you spend enough time around founders, you realise they all share something in common. They are constantly looking for problems to solve.
And that’s my own story as well. I left Cyprus and moved to Germany without anything secure lined up. That is where I met my co-founder, and we started building an AI startup from scratch in 2021. That experience changed how I see everything. It teaches you very quickly that ideas are cheap, and execution is everything,
The irony is that, in parallel, I spent years studying valuation. Degrees, certifications, financial models. You learn how to value companies based on revenue, cash flows, and comparables. Then you try to raise money as a founder and realise none of that really applies.
At the early stage, valuation is not about numbers. It is about people. What a startup is worth has very little to do with revenue or traction, and sometimes not even with the idea itself. It comes down to the team, their ability to execute, and the story they can convincingly tell.
That is also what drew me into venture capital. It felt natural to me. The analytical side from valuation, and the human side from being a founder. The best investors I have worked with, including the team at 33East, are not just good with numbers. They are exceptionally good at reading people. In many ways, they are building mental models not just to evaluate companies, but to evaluate founders.
CM: You recently mapped out 85 investors and stakeholders in a comprehensive resource for founders; what did this mapping exercise reveal to you about the biggest “funding gaps” currently existing within the Cypriot ecosystem?
First of all, there are too many accelerator programmes in Cyprus. Second, there are more investors and stakeholders than most people realise.
The main issue is that the ecosystem is fragmented. Founders often do not know who to approach, when to approach them, or how to position themselves properly.
If we are being honest, as long as the quality is there, capital will find its way into the company. I believe it is time to raise the standard of what makes a founder “backable”. If you are the right person, the idea is strong, and you can communicate it well, you can raise capital.
Of course, late-stage capital, such as Series A and beyond, is harder to access. But that is expected. It is more of a European issue than just a Cypriot one. If a startup reaches pre-seed and seed, it is already building something global and can raise from international investors.
CM: With 33East being sector-agnostic but having a Cyprus focus, how do you define that connection for a modern, decentralised startup, and how vital is it for the island’s long-term economic growth?
We are sector-agnostic, but there is clearly a tech bias in our portfolio. In theory, being sector-agnostic means being open to any idea, in any industry, in any market. In practice, if we expect a large outcome to come out of Cyprus, it will most likely be technology-driven.
We emphasise the “Cyprus connection” but we are not referring to something rigid. It does not have to be about where the company is incorporated or where the office is based. It can be the founders, part of the team, or a meaningful operational presence on the island. Technology allows companies to be decentralised, which makes this connection more flexible than ever.
What matters is that this connection contributes back to the ecosystem over time. That is where the real impact is. If done correctly, startups can create high-quality jobs, attract international talent, and bring capital into the country.
There is also a sense of urgency. If Cyprus does not build a strong, self-sustaining startup ecosystem in the next decade, it risks becoming a back-office hub for companies headquartered elsewhere. The opportunity is there, but it needs to be taken seriously.
CM: You are currently collaborating with CEE-based VCs on a report regarding ecosystem success; what specific lessons from the Central and Eastern European tech scenes do you believe are most applicable to Cyprus right now?
The first lesson is that capital is probably the most important factor. And not just any capital. We are talking about private capital rather than grants. This becomes clear when you look at the impact the EIF has had on ecosystems like Bulgaria, Romania, Estonia, and Poland.
The second lesson is how culture changes once success stories are visible. Founders in these countries have seen what is possible and are more willing to take risks. To go full-time on their projects. To build publicly. To raise the bar. To aim to become the next Skype, UiPath, or ElevenLabs.
Cyprus is moving in a similar direction. There have not been many outliers yet, but there have been real successes. You can already sense the cultural shift. It is gradual, but it is happening. The standard is rising year after year, and stronger founders are emerging. It is only a matter of time before we see a major success story.
CM: 33East has a dedicated acceleration compartment alongside its main venture fund; in your experience, what is the single most common hurdle Cypriot founders face when moving from the pre-seed stage to a Seed or Series A round?
33East’s acceleration compartment exists as a way to back Cypriot talent early and show that we want to be part of their journey from day one. But capital alone does not solve everything.
The biggest hurdle comes when founders try to transition from early validation to building a real, scalable company. At pre-seed, a strong idea and some early traction can be enough. At Seed and especially Series A, expectations change completely. Investors want to see clear product-market fit, consistent growth, and a structured approach to execution.
Many founders underestimate how demanding that transition is. It requires different skills, stronger teams, and much clearer metrics. What worked at the early stage is often not enough anymore.
There is also the challenge of exposure. At that level, founders are competing on an international stage. They need to position themselves in front of the right investors, often outside Cyprus, and communicate their story in a way that resonates globally.
CM: You mentioned the possibility of publishing quarterly updates on funding rounds and notable startups; based on the data you’ve seen so far in 2026, which particular sectors in Cyprus are showing the most resilience or unexpected growth?
The story of 2026, in terms of funding and momentum, is all about tech of course. Applied AI is the hottest area right now, but I want to emphasise 3 things.
First of all, DeepTech. Funding, dealflow and general interest are increasing. We are seeing a lot of healthtech and medtech startups popping up, and more recently, robotics and hardware! It genuinely gets me excited.
PropTech has been another hot vertical in recent months. PropTech startups in Cyprus have recently attracted funding from local and foreign investors. Cyprus now houses more than 25 promising PropTech startups.
Finally, the hospitality sector is pretty hot. And when I say hospitality, I am referring to software startups building horizontal solutions: HR solutions, workforce management, property management, CRM and customer service agents. I am genuinely surprised by the amount of innovation coming out of hospitality in recent years. A very promising vertical!
CM: Beyond just providing capital, how do you and the team at 33East support founders in bridging the gap between being a local success story and becoming a global industry leader?
All of the team here at 33East bring something valuable to the table. We are a team of former founders, engineers, finance professionals, entrepreneurs, and investors.
We’ve seen what works and what doesn’t and we know what it takes to build not just a good startup, but an extraordinary one. We know what it takes to build a unicorn. Because that is what venture capital is about. It’s about finding the outlier and becoming part of its journey.
Beyond capital, we provide support across multiple areas, including sales, partnerships, market access, and strategic guidance. We also help founders connect internationally and expand into global markets.
As we like to say, we are active investors, not activist investors. We do not interfere with decisions, but we are always available to support where needed.
Venture capital today is not just about funding. It is about adding value. Our goal is to become a platform that founders can rely on when building from Cyprus for the global stage.
CM: What is the one “unpopular opinion” or counter-intuitive truth about the Cypriot startup scene that you feel needs more public discourse?
That the talent is there, but it’s not polished. I’ve genuinely met incredibly talented founders who simply lack the right mindset and characteristics that would make them VC-backable founders.
We also need more risk-takers. Indeed, it’s difficult to go full-time on a project without secured funding, but investors are unlikely to back something that is treated as a side project. The uncomfortable truth is that many startups in Cyprus are still side projects rather than fully committed ventures.
At some point, you have to take the risk. Go all in. Work on it until you’ve exhausted all options. And if it doesn’t work, you can always start over.