Polish VC market outlook Q2 2023

PFR Ventures and Inovo VC have prepared a report summarizing transactions in the Polish venture capital (VC) market in the second quarter of 2023. The data shows that in this period 116 companies raised EUR 94 million from 69 funds.

In the second quarter of 2023, EUR 94 million flowed through the Polish VC market, which is the total amount of capital invested in 116 domestic innovative companies. This is the total value of capital that Polish and foreign funds invested in 116 Polish innovative companies. Looking at half-year data, we have seen a 70% decrease compared to the first six months of 2022 and 2021. At the same time, the number of transactions continues to rise.

The highlight of the second quarter of 2023 was Eleven Labs’ Series A round, which raised nearly EUR 17.5 million from a group of international funds and angel investors. Investors included Andreessen Horowitz, among others.

After 6 months of 2023, we have reached the level at which the market was at the end of December 2019. This is not a pace to beat the 2021 and 2022 transaction value records, but there is also no threat of reverting to the ‘low-transaction’ past of pre-2020. I believe that long-term we remain on an upward trend, with the main driver of the ecosystem being the rising number of people working in start-ups

- comments Maciej Ćwikiewicz, President of the Board at PFR Ventures.

We’re seeing the lower investment activity of later-stage funds in Poland and CEE, which naturally accounted for a large portion of the market in the region. On the other hand, we are aware that the best funds from all over the world can compete for the most interesting deals with fast traction, a great team and a good product, a perfect example being Eleven Labs

- says Karol Lasota, Principal at Inovo VC.

The market is still dominated by seed-stage investments, which for 12 months now have not gone below the level of 100 per quarter. The same is true for Series A and higher rounds, which average around 10. The average transaction value has increased slightly from the previous quarter but is still well below the 2022 and 2021 values.

32 of the 116 transactions were investments involving PFR Ventures funds. They provided 18% of the capital for innovative companies. Also playing an important role in the seed segment are the funds of the National Centre for Research and Development, which account for 44 transactions and an 11% share in their value.

An important development for the entire Polish innovation ecosystem is also the official launch of the NATO Innovation Fund. With EUR 1 billion to invest in dual-use projects, one of the Fund's offices will be located in Warsaw.

The NATO Innovation Fund (NIF) investments in Poland can foster technological advancements that cater to both the civilian and defence sectors. The NIF sees the region as a crucial and under-served market and is therefore planning to open one of its first two regional offices in Warsaw

- comments Patrick Schneider-Sikorsky, Founding Partner at the NATO Innovation Fund.