Polish VC market: Q1'20 summary — strong opening of the new year!
Our quarterly report on the state of the Polish VC scene.
After a very successful, record-breaking year of 2019 (make sure to check our analysis jointly with PFR Ventures), the Polish venture capital ecosystem is not slowing down.
Moreover, the run-rate at the moment is roughly at 1.5B PLN - if it can be maintained (though it might be challenging due to COVID outbreak), it would beat the previous year’s results!
We’ve been able to recognize 35 transactions that sum up to 353M PLN (78M EUR) happening in the first quarter of 2020. That is a strong result, especially given that:
- the beginning of the year is usually a little bit slower - last year, Q1 has accumulated roughly 3x less capital (111M PLN),
- March had been impacted by the COVID outbreak - we know of a few deals either postponed to Q2 or didn’t happen at all, and there is probably more.
Using Dealroom* investment by country breakdown to benchmark us vs other European countries, Poland would be placed at 13th position, almost on-par with Spain, ahead of players like: Italy, Norway, Denmark, or Turkey.
UK, France, and Germany are well ahead of the game, pouring 2.2x more money into startups than the rest of Europe combined! (€5.8B vs €2.6B)
* note: Dealroom might slightly underestimate the value of investments in some of the less developed countries (as in the case of Poland).
While benchmarking these top players vs Poland it’s visible that we still have plenty of room to catch-up in terms of total market size or size per capita - although when compared to GDP, we are only 2x smaller than Germany!
Here’s how the situation plays out each quarter since 2018:
It looks like Q2'19 started a bull market on the local VC ecosystem — also thanks to the increasing interest of international funds entering the stage.
It’s reflected well in the pie chart below — deals with foreign investors (either alone or together with local funds) account for 75% of all the deals value!
Although we do not expect many mega-rounds to happen in 2020 (top3 Polish companies, namely DocPlanner, Booksy, and Brainly had their’s in 2019) it still doesn’t mean the total market size value won’t be high — we foresee even more small- and medium-sized investments to happen compared to the last year, as well as some solid double-digit rounds that will boost the total market size, starting with Codility and NoMagic in Q1.
Two of the top deals stand out:
- Codility, a platform enhancing tech recruitment via skills-based online code tests basically jumped straight into their Series A funding round (ok, maybe excluding a super small seed of $50k in 2009). And it’s not your typical size of Series A round, especially here in Poland!
- NoMagic, smart pick&place robotic solutions, founded by ex-Googler with an outstanding track-record, attracted top global investors almost from day one — in the recent round they’ve added UK’s Hoxton Ventures and Khosla Ventures from the US — we perceive both of these as world-class. Congrats!
The rest of the list are also very strong early-stage deals which should raise much bigger rounds in the coming years. We are happy to see more of the 5–10M USD rounds with good international funds happening which is another proof of the blossoming ecosystem.
Our view on COVID-19:
We’re strongly engaging in supporting not only our portfolio companies but also entire local and regional scene by a series of webinars and video calls for top founders - make sure to check the latest blogpost and presentation. We’re advising both negatively affected startups on what steps to take and how to optimize current actions, as well as companies enjoying a positive trend at the moment on how to fully take hiring and M&A advantage.
Moreover, last week we followed the initiatives of some other European communities and decided to create the list of Polish VC funds that are active during the COVID outbreak.
Through our second fund, Inovo Venture Partners, we’ve done 3 investments in 2019, and we aim for 6 more in 2020 (Allset being the first one this year and there are probably 2 more to come shortly — stay tuned!)
Please make sure to get in touch via warm intro or reach us at pitch@inovo.vc if you’re looking to raise your Seed round!
Methodology: how did we collect data
Publicly available data sources on the Polish venture capital market often do not reflect its actual appearance, omitting significant financing rounds or improperly presenting those that took place. Because of that, we aggregated and we analyzed all the information available in many independent public databases as well as industry news portals such as Crunchbase, MamStartup, Pitchbook, and Dealroom. The goal is to present the actual state of the local VC ecosystem more truthfully and accurately.
Some differences between this report and PFR Ventures one may arise as they use slightly different sources (having access to PFR and NCBiR resources) and as they collect the data earlier, while many transactions aren’t announced yet.
