Russia’s Tech Brain Drain Provides Eastern European Startups Opportunity For Brain Gain

While Western European countries have long dominated the region’s venture capital (VC) landscape, Central and Eastern Europe (CEE) is fast emerging as a hotbed of investment opportunity, with several new funds closed this year.

These include recently closed Trind VC, a seed-stage venture fund based in the Estonian capital of Tallinn, and Poland’s Inovo, which closed its third fund in August with a target capitalization of 100 million euros ($99.6 million) to invest in CEE startups.

Read more: Estonia’s Small but Thriving Startup Ecosystem Offers Big Tech No Special Treatment

And as VC firms hit the ground in countries like Poland and Bulgaria looking for the next Big Tech startup, access to tech talent is bound to further stimulate innovation in the region.

Russia is currently boosting this supply, as the war with Ukraine has prompted a large-scale brain drain of educated and highly skilled citizens to the east of Europe escaping from mandatory military service.

As New Scientist recently reported, between February 2021 and June 2022, almost a quarter of Russian developers using the popular coding platform GitHub changed their location or deleted their profiles altogether.

And even prior to the government’s military mobilization last month, the country had already experienced a mass exodus of tech talent since the onset of the crisis, leading to the departure of hundreds of thousands of male citizens.

Opportunities for Cross-Border Hiring

At a time when global sanctions are increasingly restricting the ability of Russian companies to operate internationally, technology and evolving employment norms are having the opposite effect elsewhere.

For example, the use of private agencies to manage a global workforce is gradually gaining traction as employers in developed markets who are struggling to fill vacant positions with local talent cast a wider net to broaden their search.

This aligns with findings published in PYMNTS report “Meeting The Demand For Cross Border Hiring: The Role Of Private Agencies,” which found that 64% of all U.S. and U.K. firms surveyed said they used private agencies to recruit international workers in 2021, while 38% said these agencies were their most important channel.

This means that developed countries do not necessarily have to be in close geographical proximity to Russia to tap into the growing pool of highly skilled Russian workers, such as engineers and programmers, available on the job market.

See more: Cross-Border Payroll Complexities Demand a Partnership Approach

And while European governments’ stance on the refugee status of these workers have been mixed, many will likely end up with remote employment opportunities regardless of where they end up settling.

To help accommodate this population of traveling digital workers, some countries have implemented visa schemes to encourage and lure mobile workers. These include initiatives such as Estonia’s digital nomad visa and the Czech Republic’s trade license specifically designed to meet the needs of non-traditional migrants.

Related: Home Sharing Uses Pricing, Payments Choice to Lure Digital Nomads

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