Cyprus' Brain Drain: Are We Exporting Our Future, One Fintech Startup at a Time?

Cyprus' Brain Drain: Are We Exporting Our Future, One Fintech Startup at a Time? | Cyprus Insider

Cyprus' Brain Drain: Are We Exporting Our Future, One Fintech Startup at a Time?

Cyprus, with its sun-kissed beaches and burgeoning tech scene, is becoming an increasingly attractive hub for innovation. Fintech, gaming, AI and other sectors are seeing real growth. We're seeing startups, like inDrive and Sumsub, make waves on the international stage, raising significant funding. But beneath the surface of this promising landscape lies a troubling paradox: are we inadvertently fuelling a brain drain by failing to adequately support our homegrown talent?

The numbers paint a picture of both progress and potential peril. In 2025 alone, Cypriot startups raised a commendable $76.2 million across 13 equity funding rounds, a significant jump from the $33.9 million raised in 2024. The Cyprus startup ecosystem grew by over 28% in 2025, ranking 40th globally with over 300 startups. With this growth, Cyprus projected a €1.13 billion fiscal surplus in 2025, theoretically meaning more resources to support new companies. Angel investors are increasingly focusing on sectors like fintech, AI, blockchain, health tech, and sustainability, providing crucial early-stage funding and mentorship.

So, what's the problem? Despite the increased investment and ecosystem growth, many of our brightest young entrepreneurs and engineers still find themselves drawn to opportunities abroad. London, in particular, remains a popular destination. Why?

Regulatory Hurdles and Bureaucracy

One major obstacle is the persistent challenge of navigating Cyprus' regulatory landscape. While improvements have been made, including updated visa policies to attract foreign talent – companies investing €150,000 or more can now hire additional foreign staff – the process for setting up and scaling a business can still be painfully slow and complex. The bureaucratic red tape can be especially frustrating for agile startups used to moving quickly.

The Funding Gap: Beyond Seed Stage

While seed funding and pre-seed rounds are plentiful, thanks in part to government initiatives and EU funding, a significant funding gap emerges after Series A. The reality is, securing substantial Series B or C funding often requires looking beyond Cyprus' borders. This forces many successful startups to relocate their headquarters and teams to countries with more readily available capital and established venture capital ecosystems.

A Lack of Specialised Expertise

Another factor is the availability of specialised expertise. While Cyprus boasts a growing pool of talented graduates, certain niche skills, particularly in areas like deep tech and AI, can be difficult to find locally. This can hinder the growth of startups that require highly specialised knowledge and talent. This doesn't mean the talent isn't here, but that access to it is limited and the competition is fierce.

What Can Be Done?

Reversing this brain drain requires a multi-faceted approach. We need to:

• Streamline Regulations: Continue to simplify and modernise our regulatory framework to make it easier for startups to operate and scale.
• Increase Later-Stage Funding: Attract larger venture capital funds to invest in Cypriot startups beyond the seed stage. Initiatives like 33East's venture capital fund are a step in the right direction.
• Foster a Culture of Innovation: Support initiatives that promote entrepreneurship and innovation, such as Startup Cyprus, and encourage collaboration between academia, industry, and government.
• Invest in Skills Development: Prioritise education and training programs that equip our workforce with the skills needed to thrive in the digital economy. Coding bootcamps and specialised tech training are crucial.
• Highlight Success Stories: Showcase the successes of Cypriot startups and entrepreneurs to inspire the next generation and demonstrate that it is possible to build a thriving business in Cyprus.

Cyprus is projected to have a booming fintech sector, strengthened by crowdfunding rules issued by CySEC. Public funding is turning Cyprus into a startup engine. The pieces are there, but we need to ensure that the talent that starts here, stays here. The Cyprus Mail reported that fintech and gaming are growing quickly, with strengths across biotech, AI, engineering, shipping, and energy. Let's build on that!

The future of Cyprus depends on our ability to retain and attract talent. By addressing these challenges and creating a more supportive ecosystem, we can ensure that our burgeoning tech sector contributes to, rather than detracts from, the island's long-term prosperity.