Polish VC market outlook Q3 2023

PFR Ventures and Inovo VC have prepared a report summarising transactions in the Polish venture capital (VC) market in the third quarter of 2023. According to the data, 95 companies raised EUR 94 million from 74 funds during the period concerned.

In the third quarter of 2023, EUR 94 million flowed through the Polish VC market. This is the total value of capital that Polish and foreign funds invested in 95 domestic innovative companies. Comparing the total amount of funding in the first three quarters in 2022 and 2023, there was a 54% decrease (calculated in PLN). By contrast, the decline in the value of VC investments across Europe is 49%, and in the CEE region 76%.

In the third quarter of 2023, a total of seven transactions valued above PLN 10 million (EUR 2 m) were recorded. These are rounds raised by KYP.ai, AI Clearing, Inuru, Hexacore, Oasis Diagnostics and Fresh Inset as well as one more deal, the details of which have not been publicly disclosed. Five of these companies used publicly funded funds in the past. 

In the third quarter, we saw a significant decline in the number of seed rounds. This is due to the overlapping of two phenomena: the global decline in valuations and the number of deals, but also the approaching end of the Smart Growth Operational Programme, which will soon be replaced by the FENG programme. At the same time, the number of Series A and B rounds has increased, which means that more developed companies finally received capital. Despite the overall declines, the Polish market is in a very different place than it was five years ago. Even now, net of outliers, we have surpassed the 2019 and 2020 hurdles

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

Although this is not yet reflected in the data, the number of interesting seed deals has grown significantly. Capital is flowing to Polish entrepreneurs with experience in managing global tech companies. These rounds were led by recognizable angel investors or top VC funds. Over the past few weeks, we've seen at least a few such transactions, with many investors competing for them

- says Karol Lasota, Principal at Inovo VC.

The third quarter marked the first time in more than a year that less than 100 seed rounds were recorded. In the previous three months, only 78 such transactions were registered. The decline in this area also translated into an increase in the average value of rounds, amounting to PLN 4.5 million.

29 of the 95 transactions were investments involving PFR Ventures funds. They provided 37% of the capital for innovative companies. National Centre for Research and Development (NCBR) funds also play an important role in the seed segment, accounting for 31 deals and a 5% share of their value.

Foreign investments by Polish VC funds are gaining in importance. After three quarters, we recorded 44 such rounds, with local teams contributing around PLN 242 million. 

It is worth noting that despite the international nature of these investments, they also benefit the Polish economy. These deals often entail the opening of corporate branches in Poland, which not only contributes to boosting employment in the country, but also provides an opportunity to bring best practices and modern technologies to the local market

- comments Dmytro Golournyi, Investment Analyst, PFR Ventures.