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Polish VC market outlook Q1 2023

PFR Ventures
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Polish VC market outlook Q1 2023

PFR Ventures and Inovo VC have prepared a report synthesizing transactions in the Polish venture capital (VC) market in the first quarter of 2023. The data shows that during the period 127 companies raised PLN 446 million from 68 funds.

In the first quarter of 2023, PLN 446 million flowed through the Polish VC market, which is the total value of capital that Polish and foreign funds invested in 127 transactions in Polish innovative companies. This represents a decrease compared to the same period in 2022 and an increase of 84% compared to the first quarter of 2021. At the same time, the market saw a significant increase in the number of transactions.

The year 2023 in the Polish start-up ecosystem began with no megaround transactions (in all of 2022 only 1 such transaction was reported). The largest transaction in the quarter was Vue Storefront’s Series A round. The company raised PLN 94.2 million from investors. VC funds closed 4 more transactions exceeding the PLN 20 million threshold (Contect – PLN 47.1 million, HiProMine – PLN 34.5 million, SatRevolution – PLN 21.9 million, Occubee – PLN 20 million). 

Global and European declines in investment value in the first quarter of 2023 are also reflected in our ecosystem. We recorded a remarkably high number of investment rounds, though most of them are based on domestic seed capital. We have seen less interest from foreign funds, which used to provide capital in Series A+ rounds.  Consequently, the average investment value is also falling. Polish VC funds still have seed capital for innovative projects. Founders will have to face the challenge of convincing foreign investors. This is not impossible, though – as evidenced by the Vue Storefront round

- comments Aleksander Mokrzycki, Vice-President at PFR Ventures. 

There is less activity in the market, as reflected primarily in the shrinking supply of projects despite continued investor demand. It is also likely that the process of matching investor sentiment and the expectations of founders is still ongoing. Some, following the NASDAQ multiples, are more conservative about company valuations, while others remember how things were 1-2 years ago and often want to wait for a better time to sell shares

- notes Karol Lasota, Principal at Inovo VC.

The number of seed transactions increased in the first quarter of 2023. This type of financing occurred in 112 transactions compared to 86 the year before and 88 two years before. In contrast, the number of later rounds dropped significantly.

Despite the overall increase in the number of transactions, their average value fell from PLN 6 million in Q1 2022 to PLN 3.5 million in Q1 2023. These statistics can suggest indirectly a decline in the valuations of the companies, as confirmed also by comments from representatives of VC funds.

20 of the 127 transactions were investments involving PFR Ventures funds. They provided nearly 9% of the capital for innovative companies. National Centre for Research and Development funds also play an important role in the seed segment, accounting for well over half of the transactions (68), but representing just a 9% share of their value.

Prominent among the exits were the sale of Renters. pl by bValue Fund (the transaction generated an 8-fold increase for the team) and the buyout of a stake in PsiBufet by one of the investors, Butternut Box. As a result, the Kogito Ventures team generated ROI at ca. 3.5x.

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