Cyprus Technology Sector Thrives but Lacks Startup Creation Infrastructure, Proposes Five-Year Growth Plan
Cyprus's technology industry now contributes €5.9 billion directly to the economy, representing 16.2% of GDP and supporting around 79,000 jobs. From 2016 to 2025, the ICT sector's contribution increased by 435%, the fastest growth in the EU, driven primarily by relocated companies rather than local startups. Despite talent and ambition, Cyprus has not yet developed a robust startup ecosystem that helps create new local technology companies.
The major challenges include inadequate early-stage funding, legal structures unfriendly to founders, and a lack of experienced entrepreneurs. Although public funding initiatives like the Research and Innovation Foundation have mobilized €207 million, private investment remains limited, undermining efforts to scale startups. To address this, a proposed five-year plan focuses on co-investment between private and public funds, improving legal frameworks, expanding venture capital availability, and encouraging government contracts for young companies.
Key actions include creating a €50 million co-investment fund, establishing a €150 million fund-of-funds, reforming stock-option tax policies, and dedicating a share of government procurement to startups. Success will be measured by increased private investment per public euro, international funding rounds, and growth in local founders. Cyprus aims to move from attracting companies to cultivating its own thriving technology startup ecosystem by 2031.
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