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Polish VC market outlook 2023

PFR Ventures
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Polish VC market outlook 2023

PFR Ventures and Inovo VC have prepared a report summarising transactions on the Polish venture capital (VC) market in 2023. The data shows that during this period, 399 companies raised EUR 466 million from 210 funds.

In 2023, EUR 466 million flowed through the Polish VC market. This is the total value of capital invested by Polish and foreign funds in 438 deals in 399 domestic innovative companies. Comparing 2023 to 2022, the value of the market decreased by 42%.

In the face of the global crisis, VC funds, especially those investing in growth-stage companies, have reduced activity. This has resulted in fewer large investments and lower company valuations. Hence the overall decrease in the value of investments in 2023. I expect the first half of 2024 to be a difficult period for the Polish market: due to the end of projects under the Smart Growth Operational Programme, there will be less capital available for seed projects. The picture will change significantly in the second half of the year with the inflow of FENG (European Funds for a Modern Economy) funds

- comments Aleksander Mokrzycki, Vice-President of the Board at PFR Ventures.

Of all the investments, the ElevenLabs round was the most significant. The company raised around EUR 74 million (USD 80 million) and achieved unicorn status, meaning that its market valuation exceeded USD 1 billion. Among the first investors in ElevenLabs was a large group of business angels with links to Poland. However, the most recent transaction involved international funds such as Andreessen Horowitz and Sequoia Capital.

Karol Lasota, Principal at Inovo VC, notes:

The success the founders have achieved in such a short time is a remarkable inspiration for the entire startup ecosystem. This milestone has the potential to become a catalyst for the entire VC market.

The Polish market continues to be dominated by seed investments, with 380 transactions of this type in 2023. This represents a slight decrease of 7% compared to the previous year. In contrast, the number of Series A rounds increased by 27%. The biggest decrease was in Series B rounds, which fell by 70%.

The average value of a transaction also decreased, from EUR 1.4 million in 2022 to EUR 1 million now. Given that the number of investments themselves remained at a similar level to previous years, it can be concluded that there has been a significant decrease in the valuations of innovative companies. 

137 of the 438 deals were investments involving PFR Ventures funds. They provided about a quarter of the capital to innovative companies. The funds of the National Centre for Research and Development (NCBR) also play an important role in the seed segment, with 148 deals accounting for 9% of the value.

Money from VC funds most often goes to companies involved in healthcare innovation. This is a trend that has continued over the last four years. In 2023, they accounted for 15.8% of all deals. With a share of more than 50%, SaaS (subscription-based model) remains the most popular business model.

The startup job market has also slowed down. 9 of the 19 companies that raised the most VC funding between 2019 and 2023 reduced the number of full-time employees. At the same time, the total number of employees across all companies surveyed remained at a similar level.

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