Polish VC market outlook Q1 2024

PFR Ventures and Inovo VC have jointly released a comprehensive report outlining the venture capital (VC) investment landscape in Poland for the first quarter of 2024. According to the report, a total of 30 companies successfully secured PLN 173 million in funding from 35 different funds during this period.

In the first quarter of 2024, PLN 173 million flowed through the Polish VC market, representing the total capital invested by Polish and foreign funds in 30 deals involving domestic innovative companies. Comparing the best and worst first quarters of 2019-2023, the value of investments increased by 56% or decreased by 72%, respectively. Relative to the same period in 2023, this marks a decrease of 61%

The beginning of the year witnessed a notable decline in the number of companies securing financing. This trend correlates with the conclusion of the investment horizon of funds derived from the EU funds under the Smart Growth Operational Programme. These funds have been primarily responsible for the majority of transactions in our market in recent years.

Despite the declines, the availability of VC funds surpasses pre-2019 levels. We anticipate a rebound in the second half of the year, coinciding with the release of new funds from the FENG programme. Consequently, the second quarter is expected to pose challenges for companies seeking funding. Under FENG, we plan to invest in approximately 40 VC teams, receiving a total injection of over PLN 3.1 billion. This funding includes contributions from PFR Ventures and private investors

comments Aleksander Mokrzycki, Vice President of PFR Ventures.

It’s noteworthy that, compared to previous years, the market is in good standing. The number of new Polish entrepreneurs initiating technology projects is increasing, and we’re witnessing a technology revolution driven by AI. Therefore, I’m confident that this year we’ll achieve levels comparable to those of 2020 and 2023. I anticipate the total value of VC funding for 2024 to exceed PLN 2 billion

highlights Karol Lasota, principal at Inovo VC.

The low number of deals has not notably altered the nature of transactions conducted by the funds. Over 80% of transactions remained seed rounds, with 5 investments recorded at the A and B rounds. Notably, there has been a substantial shift in the median transaction size, rising from PLN 1 million to PLN 3 million in the last two quarters. This change is attributed to the winding down of activities by funds within the portfolio of the National Centre for Research and Development, which previously capped investments at PLN 1 million.

Out of the 30 transactions, 4 involved investments from the PFR Ventures funds, accounting for nearly 30% of capital for innovative companies. The majority of transactions were executed with significant contributions from private Polish funds and business angels. Additionally, 36% of the capital was provided by international funds.

Two of the most significant transactions included the Saleor Commerce (PLN 32 million) and Vasa Therapeutics (PLN 24 million) rounds, both of which were seed rounds and attracted considerable foreign investment. Furthermore, an additional five companies successfully secured funding ranging from PLN 10 million to PLN 20 million.
 

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