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Polish VC Market Sees Investment Decline in Q1 2024, But Future Looks Brighter

BUSINESSPolish VC Market Sees Investment Decline in Q1 2024, But Future Looks Brighter

PFR Ventures and Inovo VC have prepared a report summarizing transactions in the Polish venture capital (VC) market for the first quarter of 2024. The data shows that during this period, 30 companies raised 173 million PLN from 35 funds.

In the first quarter of 2024, the Polish VC market saw a flow of 173 million PLN. This is the total value of capital that Polish and foreign funds invested in 30 transactions with native innovative enterprises. Comparing the worst and best first quarters from 2019-2023, the investment value increased by 56% or decreased by 72%. Compared to the same period in 2023, this represents a decline of 61%.

The opening of the year primarily saw a significant decrease in the number of companies that obtained financing. This is related to the end of the investment horizon for funds based on EU funds from the Operational Programme Intelligent Development. These funds have accounted for the vast majority of transactions in our market in recent years.

“Despite the declines, the availability of VC funds is drastically better than before 2019. We assume that the situation will improve in the second half of the year, after the launch of new funds from the FENG program. This means that the second quarter will also be a difficult period for companies seeking financing. As part of FENG, we plan to invest in about 40 VC teams, which will be fueled by over 3.1 billion PLN. This amount includes funds from PFR Ventures and private investors,” comments Aleksander Mokrzycki, Vice President of PFR Ventures.

“It is worth noting that compared to previous years, the market is in good condition. The number of new Polish entrepreneurs starting new technology projects is growing, and we are in the middle of a technological revolution led by AI. Therefore, I am confident that this year we will reach the levels of 2020 and 2023, and the total value of VC financing for the entire year of 2024 will exceed 2 billion PLN,” indicates Karol Lasota, principal at Inovo VC.

The low number of transactions has not significantly impacted the type of transactions made by the funds. Over 80% of them are still seed rounds. We also recorded 5 investments at the Series A and B levels. A significant change occurred in the median transaction size, which in the last two quarters increased from 1 to 3 million PLN. This is related to the expiration of activity by funds from the portfolio of the National Centre for Research and Development, which could invest up to 1 million PLN.

4 out of the 30 transactions involved investments by PFR Ventures funds. They provided nearly 30% of the capital for innovative enterprises. Most transactions were conducted with significant participation from private Polish funds and business angels. International funds provided 36% of the capital.

Among the largest transactions were rounds for Saleor Commerce (32 million PLN) and Vasa Therapeutics (24 million PLN). Both investments were seed-stage and were financed with significant foreign capital involvement. Five other companies managed to secure funds in the range of 10 to 20 million PLN.

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