PFR Ventures and Inovo VC have prepared a report summarizing the transactions in the Polish venture capital (VC) market in 2023. According to the data, 399 companies raised PLN 2.1 billion from 210 funds during this period.
In 2023, PLN 2.1 billion flowed through the Polish VC market. This is the total value of the capital that Polish and foreign funds invested in 438 transactions involving 399 innovative native businesses. Compared to 2022, the market value decreased by 42%.
Figure 1 Transaction value. In our summary, we deliberately present mega rounds (outliers) separately, which distort the statistical picture.
“In the face of the global crisis, VC funds, especially those investing in the growth phase, limited their activity. This resulted in a lack of large rounds and a reduction in valuations. Hence, the overall decline in investment values ​​in 2023. I expect that the first six months of 2024 may be a difficult period in the Polish market: due to the end of POIR programs there will be less capital for seed projects. The situation will significantly be altered by the inflow of funds from FENG in the second half of the year,” comments Aleksander Mokrzycki, Vice President of PFR Ventures.
The most significant investment round was the one of ElevenLabs company. The company raised about PLN 320 million and acquired unicorn status, meaning its market valuation exceeded 1 billion USD. Among the first investors in ElevenLabs was a large group of business angels associated with Poland. Meanwhile, international funds such as Andreessen Horowitz and Sequoia Capital participated in the most recent transaction.
“The success that the founders of ElevenLabs have achieved in such a short time is an extraordinary inspiration for the entire startup ecosystem. This event can stimulate the entire VC market,” points out Karol Lasota, Principal at Inovo VC.
Seed investments still dominate in the Polish market – in 2023, 380 transactions of this nature were conducted. So we noted a slight decrease, by 7%, compared to the previous year. Meanwhile, the number of series A rounds increased by 27%. The biggest drop was noted among series B rounds, by as much as 70%.
The average transaction value has also fallen, which currently stands at PLN 4.1 million, compared to PLN 6.6 million in 2022. Considering that the number of investments remained at a level similar to previous years, it can be concluded that there has been significant downward adjustment in valuating innovative companies.
Out of 438 transactions, 137 involved investments from PFR Ventures funds. They provided about a quarter of the capital for innovative enterprises. Funds from the National Centre for Research and Development also play an important role in the seed segment, with 148 transactions at 9% participation in value.
“VC funds’ money most often goes to companies that are innovating in the health sector. This trend has been sustained for 4 years. In 2023, they constituted 15.8% of all transactions. The most popular business model remains SaaS (subscription model), which accounts for more than half.”
A slowdown has also occurred in the job market in startups. 9 out of 19 companies that raised the most VC financing between 2019 and 2023 reduced their number of full-time positions. At the same time, the total number of employees in all the companies being examined remained at a similar level.
You can download the full report here:
www.pfrventures.pl/raport2023
