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Polish VC market outlook 2022

PFR Ventures
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Polish VC market outlook 2022

PFR Ventures together with Inovo VC have prepared a report to summarise transactions in the Polish venture capital (VC) market in 2022. The data shows that 435 companies raised EUR 775 million from 244 funds during this period. Hence, the value of the market compared to 2021 remained only slightly lower, which, considering the global downward trends, is a positive sign.

In 2022, EUR 775 million flowed through the Polish VC market. This is the total value of capital that Polish and foreign funds invested in 460 deals in 435 domestic innovative companies. Comparing 2022 to 2021, the value of the market remained at the same level. At the same time, the number of financed companies increased by 15%.

In 4Q22, funds invested more than EUR 223 billion. Hence, following the trend of previous years, the last three months brought the highest number of transactions and the most capital to start-ups. Throughout 2022, there was only 1 megaround transaction, secured by the Polish-Finnish company ICEYE, for the development of which investors allocated EUR 120 million. VC funds made 4 other deals with a value exceeding the EUR 25 million threshold (Ramp – EUR 69.8 million, Vodeno – EUR 58 million, Silent Eight – EUR 35.6 million and SunRoof – EUR 28.5 million).

In 2022, the Polish VC market slowed down and maintained a transaction value roughly at the same level as in the previous year. This is still a good sign considering the global and regional downward trends. Worth noting is the large scale of available funds that VC funds still plan to invest. In addition, we recorded a new high in the number of investments, with capital flowing to 435 innovative companies compared to 379 a year earlier and 300 two years ago

 comments Aleksander Mokrzycki, Vice-President at PFR Ventures. 

On the one hand, we have a global deceleration of economies, war, and declines in stock market valuations, while on the other, the largest number of investments, record-high rounds, and new large funds from top Polish VC teams. Forecasts for 2023 are challenging with so many variables, but one thing is certain: Poland and all of Central and Eastern Europe have permanently put themselves on the map of the global tech ecosystem, allowing us to be positive about the future of the entire market

notes Karol Lasota, Principal at Inovo VC.

The number of seed-stage transactions has increased over the past year. This type of funding was present in 405 transactions compared to 371 the year before. The number of later-stage rounds increased slightly, from 51 to 55. 

Despite the overall increase in the number of transactions, their average value fell from EUR 1.6 million in 2021 to EUR 1.4 million in 2022. These statistics implicitly suggest a decline in the valuations of the companies, a fact also confirmed by comments from VC fund representatives.

120 of the 460 transactions were investments involving PFR Ventures funds. They provided nearly one-third of the capital for innovative companies. The National Centre for Research and Development funds also played an important role in the seed-stage segment, with 216 transactions made (9% share of the total value).

The money from VC funds most often goes to companies that deal with innovations in the health sector. This trend has been continuing for the past 3 years, and although the number of transactions is declining, this category still ranks first. In 2022, these deals accounted for 13.7% of the total transactions conducted. SaaS (subscription model) remains the most popular start-up business model, with a share of more than 50%. 

The start-up job market has also slowed down. Every third of the 18 companies that raised the most VC funding in 2019-2021 have cut the number of full-time positions. At the same time, however, these companies’ overall number of employees increased. 

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