Oana Coșman
This number is a substantial drop from the previous quarter of 2022 when over €2B was spent by VCs in 205 disclosed transactions.
‘‘We've seen a significant drop in the YoY deal value in Western Europe regarding VC investments and it seems CEE is starting to catch up with the West. Nevertheless, our region remains relatively strong at the early stage despite facing unprecedented crises, mainly due to the prevalence of public capital, which helps to cushion any rapid decrease in startup funding. The current challenge for the region is growth rounds due to their reliance on private funding from developed ecosystems. This potentially limits the number of companies that can receive support - at least in the short term”, underlines Ewa Chronowska, CEO at Vestbee and General Partner at Next Road Ventures..
With the next few months coming up, a vast amount of data will be crucial in understanding what awaits us in the future of the Central and Eastern European ecosystem. Macroeconomic factors will play a major role in driving the overall sentiment, influencing startup valuations and ultimately deal velocity across different stages.
Furthermore, considering that many local GPs are currently raising their new funds and CEE's significant exposure to venture capital investments backed by public money - many of which are now fully deployed - it is hard to predict how the VC market may take shape in 2023.
”Keeping a close eye on the data to come will help us better map out realistic scenarios for the year ahead and identify areas of opportunity for startups and investors alike. For the time being, weak projects and mega valuations are no longer a case for investors, as they are now looking for solid and reliable deals at reasonable valuations”, says Ewa Chronowska, CEO at Vestbee and General Partner at Next Road Ventures.
As reported by Vestbee, the third quarter of 2022 showed a continuous decrease in investments on a month-to-month basis. With €480M recorded in July, €340M in August, and only €300M in September, VCs have shifted their attention towards smaller and earlier rounds at the expense of larger ones.
The trend is likely to continue as analysts and economists predict an economic crisis going beyond the one experienced in 2007. Nevertheless, 264 VC transactions were noted in 2022 3Q, with Poland, Estonia, and Ukraine being at the top of the list, while the largest injections of financing went to companies such as Cera, who secured €150M in Venture Round funding and another €150M in debt capital. Other notable investments included Unstoppable Domains, Fonoa Technologies, Ready Player Me and Bitlevex.
The sectors most appreciated by investors included healthcare, fintech, AI, blockchain and SaaS, with VC funds such as SATUS Starter, EBRD, EIC, Movens Capital, Presto Ventures, Endeavor, KAYA, LT Capital, Plural VC, Creandum, Eleven Ventures, Inventure, Smok Ventures and Speedup Group leading the activities in the region.
