Polish VC market: how we ended ’20 and entered ‘21
I’m coming back with a quarterly recap of the Polish VC market. How can we summarize 2020 and was Q1’21 a strong opening? Let’s dive in!
To say that the Polish market is booming is an understatement. Despite COVID, 2020 was a record year for Polish startups. With PLN 2.1 billion (EUR 477m) of invested capital, the market grew by 70% y/o/y (based on the joint research we’ve done with PFR Ventures). That growth rate is what’s particularly impressive and it’s yet another thing that shows Poland is where the magic happens.
Global VCs are on board
This aptitude is seen by international investors. The stream with which foreign capital flows into Poland is getting wider each year. In 2020 almost half of the transactions in terms of value (48%) were carried out with the participation of international funds (in Q1’21 it was 35%). We’ve seen top global and European VCs like Khosla Ventures, General Catalyst, Hoxton Ventures, Blossom Capital, Global Founders Capital, Seedcamp and White Star Capital investing in our country, and I’m sure that it’s only a matter of time when we’ll also make Polish co-investments with a16z (we already have one in Ukraine), Bessemer, Sequoia or Insight.
Rounds went through the roof
Q1’21 brought the largest share of pre-Seed and Seed rounds in almost two years (93% of all transactions). There were approx. 60% more early rounds than in Q1'20. Without a doubt there are more and more young, promising tech companies that catch the investors’ attention. Some of them will soon raise larger subsequent rounds, which will translate into the strengthening of our ecosystem and increasing its value.
This understandably affects ticket size as well. What used to be a Series A, now becomes a Seed round. However, what surprised me the most was to see some local pre-Seed rounds reaching EUR 20m+ valuations. I believe this is a sight we should start getting used to.
I also noticed some rounds are reported in a way that might misrepresent the market overall. For instance, they may be reported as Series-A or Series-B even though judging by the ticket size they should be viewed as Seed at most. Therefore I decided to make a slight adjustment. Here are rounds as reported by companies and with a minor change from my side grouping rounds by their size rather than by name.
Top 10 largest rounds in 2020
Seven out of the top ten rounds in 2020 happened in the second half of the year. As I’ve written before, this is when many investors switched their mode from ‘hold’ to ‘invest’ after shaking off the initial COVID shock.
These are the 10 largest rounds in 2020:
Top 5 largest rounds in Q1 2021
What’s coming next for the Polish VC market?
Over the past few months the discussion in Poland has been dominated by “which company will be the first unicorn from Poland”, with the main contenders being Booksy, DocPlanner and Brainly. If you haven’t already, it’s high time you place your bets. This “unicorn thing” is going to happen soon… possibly even in 2021.
Right after you place your bets, start thinking about decacorns, because those unicorns will grow faster than you expect — I wrote more about it here.
Despite the unicorn and decacorn race, keep a close look at the Polish ecosystem in general. We already know about some exciting investments that Q2’21 brings — our investment in SunRoof being one of those of course, but more are coming… shhh for now.
And as I said earlier, I believe it’s only a matter of time until we see the first investments of Tier 1 US investors in Poland — ones like Sequoia, Bessemer, or Insight Partners. Maybe even in the next quarter or two…
Inovo Venture Partners is a first-choice VC for ambitious founders from Poland and the CEE region. We back early-stage, post-traction startups with up to €3M of initial investment, and help them build global brands while driving growth of the local startup ecosystem. We take great pride in being close to top founders who think big. We’re investors in: Booksy, Restaumatic, Sotrender, Infermedica, Spacelift, Tidio, AI Clearing, Zowie, Jutro Medical, Intiaro, Packhelp, Preply, Eyerim, Allset, SunRoof. Our second fund reached a total of €54M.
For more information visit: inovo.vc
Methodology: how did we collect data
We conducted this research in collaboration with PFR Ventures. We sourced our information from aggregators such as Crunchbase, MamStartup, Pitchbook, and Dealroom.
What qualifies the transaction as “Polish”?
1. At least 1 of the co-founders is from Poland.
2. There is a Polish office with full-time employees on the ground.
3. The company is funded by a Polish VC.
4. The company recognizes Poland in its materials (website, press releases).
