Global VC Investments
The first quarter of this year saw a substantial decrease in global funding, with a total of $76 billion invested, reflecting a significant 53% decline compared to the same period in 2022, which recorded $162 billion in funding according to Crunchbase data. Excluding notable deals like the $10 billion investment in OpenAI and the $6.5 billion funding round for Stripe, Q1 venture funding would have declined even further, nearing $60 billion.
Strikingly, there was a decline of 44% to 54% in every funding stage year over year, indicating a broader slowdown beyond late-stage funding. Investors across all phases took a cautious approach, balancing fresh investment opportunities with managing existing portfolios.
In 2022, the visible impact of the venture capital market slowdown was partially masked by ongoing investments already in progress. However, the start of Q1 2023 undeniably marked the end of the VC market's exuberance, as it retraced its path back to pre-pandemic benchmarks. The CEE VC ecosystem mostly demonstrated its resilience throughout 2022 by exceeding €5.9 billion in transactional value with a slow-down in the second half of the year, while Q1 2023, witnessed a significant downturn in this trajectory.
On the other hand, according to James Ephrati from Lightspeed Venture Partners, there is still a lot of dry powder on the market (estimated over $580B globally for VC), and that may generate pressure to invest (dependent on fund structure, it’s investment period, relationship with LPs, and market volatility).
CEE Investments on the slide
In the first quarter of 2023, venture capital investments in the Central and Eastern European region amounted to slightly over €600 million. This figure marked a significant decrease compared to the previous quarter, which recorded €1.1 billion in investments.
It is worth noting that this decline mirrors the situation observed in both the broader European and global markets. In these markets as well, a reduction in present capital was witnessed, with overall funding amount dropping from $15.7 billion in the fourth quarter of 2022 to $9.8 billion in the first quarter of 2023, as highlighted in a recent KPMG report.
The decline in VC investments in the CEE region can be attributed to the prevailing macroeconomic situation, characterized by heightened uncertainty. This uncertain environment has led to a significant reduction in the participation of foreign investors within the CEE region, who became more skeptical and cautious about investment choices.
Startup investment rounds in CEE in 1Q 2023
> Number of funding rounds: 285 (205 fully disclosed in terms of amount, month, investors, and company details)
> The biggest disclosed investment round: TOKHIT - venture round - €93.6M, Lokalise - venture round - €57.2M, Dronamics - Series A - €37.2M, Centurion Invest - Venture round - €23.5M, CAST AI - Series A - €18.8M, Rangeforce - Series B - €18.8M, Vue Storefront - Series A - €18.8M.
>Total value of funding closed in CEE: over €600M*
> Countries with the highest number of funding rounds: Poland - 127 rounds, Estonia - 37, Bulgaria - 24 rounds,
> The most active VC funds: Vitosha Venture Partners, Eleven Ventures, Invento VC, LAUNCHub Ventures, Startup Wise Guys, Carlson ASI EVIG Alfa, Coinvest Capital, Credo Ventures, Czech Founders VC, Merito Partners, Practica Capital, Taiwania Capital, Techstars, JR Holding, Warsaw Equity Group.
> The most popular industries: Ecommerce, Gaming, Fintech, AI, Analytics, SaaS.
*80 rounds undisclosed in terms of transaction value
When comparing the first quarter of 2022 with the corresponding period in 2023, despite observing a rise in the number of funding rounds, there has been a substantial decrease of over 60% in the total value of financing. Specifically, the total financing value dropped from €1.6 billion in Q1 2022 to €600 million in Q1 2023. This decline reflects the difficulties faced by companies seeking significant capital investments during this period. It is primarily due to the current macroeconomic situation, which brings high uncertainty and a reduction in the participation of foreign investors in the CEE region.
Another interesting trend is the absence of mega-rounds (rounds over 100M EUR) in the CEE region in Q1 2023. This apart from the reduced involvement of foreign investors might be seen as a sign of shifting investor attitudes and preferences.
Investors are now actively seeking greater risk diversification by engaging in more frequent, albeit smaller, funding rounds. This change in strategy reflects a desire to spread investment risks across multiple ventures rather than concentrating on a few large-scale funding opportunities.
Let’s have a closer look at what shaped the CEE ecosystem in Q1 2023.
In Q1 2023, 285 VC transactions were recorded. The distribution of deals was rather stable throughout the quarter (66 in January, 68 in February, and 70 in March), while the value remained at relatively low levels (over €130M in January, over €280M in February, and over €200M in March), according to the fully disclosed data.
Among the biggest rounds disclosed in Q1 were secured by Romanian TOKHIT (Venture Round - €93.6M), Latvian Lokalise (Venture Round - €57.2M), Bulgarian Dronamics (Series A - €37.2M), Estonian Centurion Invest (Venture Round - €23.5M), Lithuanian CAST AI (Series A - €18.8M), Estonian Rangeforce (Series B - €18.8M), and Polish Vue Storefront (Series A - €18.8M).
In the first quarter, Poland, Estonia, and Bulgaria accounted for 127, 37, and 24 funding rounds, respectively. These countries have also been leading in terms of the investment volume - Poland (over €90M), Estonia (over €100M), and Bulgaria (over €65M), however, it was Romania that secured the most funding in 1Q (over €125M).
Among the most popular sectors were: E-commerce, Gaming, Fintech, AI, Analytics, and SaaS, while among the most active investors were Vitosha Venture Partners, Eleven Ventures, Invento VC, LAUNCHub Ventures, Startup Wise Guys, Carlson ASI EVIG Alfa, Coinvest Capital, Credo Ventures, Czech Founders VC, Merito Partners, Practica Capital, Taiwania Capital, Techstars, JR Holding, Warsaw Equity Group.
Now let's review the Q1 results on a month-by-month basis. The review was based on publicly declared venture investments (name of startup, closing date, round’s size, participating investors).
Investment rounds in March
> Number of funding rounds: 70
> The biggest investment rounds: Centurion Invest - Venture round - €23.5M, CAST AI - Series A - €18.8M, Rangeforce - Series B - €18.8M, Vue Storefront - Series A - €18.8M.
> Total value of funding secured in CEE: over €200M
> Countries with most funding rounds: Estonia - 15, Poland - 12 rounds.
> The most active VC funds: Eleven Ventures, Creandum, Merito Partners, Practica Capital.
> The most appreciated industries: Fintech, AI, E-commerce, Analytics.
In March, the amount of funding obtained by CEE startups exceeded €200M and was raised during 70 funding rounds. Estonia led with its 15 investment rounds, followed closely by Poland and Lithuania, where 12 and 11 startups secured funding, respectively.
Those three countries were also leading when it comes to the total value of funding by securing over €150M all together (which was over 75% of all VC money raised in the region that month).
Among the most active investors were: Eleven Ventures, Creandum, Merito Partners, Practica Capital, while investors attention was shifted towards Fintech, AI, E-commerce and Analytics space.
Find out more: TOP CEE funding rounds closed in March.
Investment rounds in February
> Number of funding rounds: 68
> The biggest investment round: TOKHIT - venture round - €93.6M, Lokalise - venture round - €57.2M, Dronamics - Series A - €37.2M.
> Total value of funding secured this in CEE: over €280M
> Countries with most funding rounds: Poland - 15, Bulgaria - 14 rounds
> The most active VC funds: Vitosha Venture Partners, LAUNCHub Ventures, Carlson ASI EVIG Alfa, Credo Ventures.
> The most appreciated industries: Cloud, IT, SaaS, Analytics, Gaming.
In February, the value of secured funding reached over €280M raised in 68 rounds, which made it the most active month when it comes to the total funding secured. The biggest investments were landed by Romanian TOKHIT (Venture Round - €93.6M), Latvian Lokalise (Venture Round - €57.2M), and Bulgarian Dronamics (Series A - €37.2M). Most rounds took place in Poland, Bulgaria and Estonia (15, 14 and 10 rounds, respectively). However, it was Romania and Latvia who led in terms of total value of funding secured on the market (over €100M, and over €55M, respectively). Among most active investors were Vitosha Venture Partners, LAUNCHub Ventures, Carlson ASI EVIG Alfa, Credo Ventures, while investors showed the most interest in: Cloud, IT, SaaS, Analytics, Gaming.
Find out more: TOP CEE funding rounds closed in February.
Investment rounds in January
> Number of funding rounds: 66
> The biggest investment round: Photoneo - Series B - €17.6M, Fuergy - Venture round - €16M, Sunroof - Series A - €13.4M.
> Total value of funding secured in CEE: over €130M
> Countries with the most funding rounds: Poland - 19, Estonia - 12 rounds.
> The most active VC fund: Startup Wise Guys, Coinvest Capital, Czech Founders, ff Venture Capital, Invento VC, Scanderia Ventures, Taiwania Capital, Techstars, Pointer.Capital, Warsaw Equity Group.
> The most appreciated industries: Energy, Robotics, IT, AI, Automotive.
In January, the startup funding landscape exhibited a somewhat subdued activity with a total of €130 million secured during 66 funding rounds and this relatively lower level of activity positioned January as the least active month within the first quarter of 2023. Ecosystems with the most funding rounds were: Poland, and Estonia, with 19, and 12 rounds respectively. When it comes to the total amount of funding secured it was Poland and Slovakia on the lead (attracting over €33M each). The biggest rounds in January were raised by Slovakian Photoneo (Series B - €17.6M), Slovakian Fuergy (venture round - €16M), and Polish-Swedish Sunroof (Series A - €13.4M). VCs displayed a keen focus on specific sectors like Energy, Robotics, IT, AI, Automotive.
Among investors that are worth distinguishing were Startup Wise Guys, Coinvest Capital, Czech Founders, ff Venture Capital, Invento VC, Scanderia Ventures, Taiwania Capital, Techstars, Pointer.Capital, Warsaw Equity Group.
Find out more: TOP CEE funding rounds closed in January.
Now, let's discover the note-worthy and recently raised VC funds from CEE.
Notable VC funds raised from CEE in 4Q 2022:
- Startup Wise Guys - announced the initial €25M closing of their €45M fund to back early-stage companies in B2B SaaS, Fintech, cybersecurity, XR, and sustainability spaces.
- Merito Partners - announced €17M closing of its upcoming fund, intending to invest between €500K to €5M into startups from Scandinavia and the Baltics.
- Contrarian Ventures - Lands €25 Million From The EU For next fund (€100M cap).
Interested in other new VC Funds investing in CEE and Europe? Check out our article - recently raised VC funds from CEE and Europe.
Now let’s have a closer look at the Top 50 funding rounds closed in CEE between January and March 2023!
Top 50 CEE startup funding rounds closed in 1Q 2023:
- TOKHIT is the Romanian app where creators, influencers and crypto enthusiasts can share experiences, connect with their followers and where content is rewarded using the Blockchain Technology.
- Lokalise is a Latvian startup, developing translation management system built for agile teams and developers who want to automate their localization process, while eliminating the problem of localization via APIs, CLI tools, mobile SDKs, and comprehensive documentation.
- DRONAMICS Bulgarian startup that developed cargo drone technology, remotely-piloted and fuel-efficient, suitable for a longer range and higher load factor.
- Centurion_Invest is an Estonian solution that provides high liquid, secured, decentralized investments and trading platforms mixed with investment plans to increase customers profit by educating investors on the most advanced investment tools and dynamic techniques.
- CAST AI is an all-in-one, Lithuanian platform for Kubernetes automation, optimization, security, and cost management.
- Rangeforce is an Estonian startup, developing a platform that enables companies to minimize cyber risk by improving cybersecurity skills and validating cyber readiness in-action with realistic threat exercises.
- Vue Storefront is a Polish company that delivers custom storefronts at the fraction of cost and time, and with lightning-fast page loads to improve customer experience, achieve better conversion rates and higher revenue.
- Photoneo is a Slovakian company that patented high-accuracy 3D cameras that after implementation, enable companies to improve their performance in automotive, logistics, e-commerce, food, and medical industries, while reducing the training and deployment time.
- Ibanera is a Lithuanian digital banking and payments platform, developing tailored solutions for banks, corporations, and entrepreneurs worldwide.
- FUERGY is a Slovakian company that developed a smart battery storage system based on the hardware device with AI-powered software, as well as a fully automated management system of energy sources and dispatch system for electricity suppliers.
- Capitual is an Estonian multi-currency digital bank that makes the use of cryptocurrencies, enabling customers to send and receive bank transfers, pay bills directly from crypto-currencies and manage personal finances.
- Larrosa Music Group is an Estonian consulting company, enabling to understand new technologies that created Petal - a highly specialized in the music industry AI with specific training in key areas such as copyright management, artist promotion and investment in music assets.
- DressX is an Ukrainian startup that developed a digital fashion store carrying 3D clothing collections from most well-known contemporary brands born in the physical world and transporting them into the digital space.
- Sunroof - Polish technological company that created 2-in-1 solar roofs and innovative façades which generate electricity without having to install traditional photovoltaic modules.
- Genialis is a Slovenian medtech startup that created an innovative platform with a mission to leverage biomedical data and advanced analytics to help pharma companies develop more effective drugs with higher probability of clinical success.
- AMPECO is a Bulgarian software company that offers a white-label and hardware-agnostic EV charging management platform bundled with white-label EV driver apps.
- Digital is a Romanian startup that delivers a solution dedicated to vet practitioners, allowing having an online booking system, pet portal, automated communication, fast record-keeping, e-sign for consent forms, and many more in one place.
- Contect is a Polish startup with a goal to provide products with a low carbon footprint, including soot, oil, or steel from used tires, enabling partners to decarbonize their supply chains and contributing to a vision of the future in which recycled rubber waste can be used as a feedstock instead of fossil fuels.
- Carmoola is a UK based startup developing an app dedicated to enable customers to take control of their car finance and spread the car costs with a suitable plan.
- Roofit.solar is an Estonian company set up to implement the technology based on a combination of sleek black roof panels and high-tech photovoltaic cells in order to obtain the integrated solar roofs, combining the traditional Nordic metal roof design with progressive solar technology.
- Veridion is a Romanian startup, creating AI that provides business data enrichment with coverage of private companies, accurate classification and in-depth insights based on real-time updates, for procurement, insurance, market intelligence and more.
- Plenti is a Polish startup that developed a service allowing you to rent the latest technology without leaving home.
- Colossyan Creator is a Hungarian video creation software, empowering everyone to create studio-quality videos with AI.
- SmartyMeet is a Polish technology startup, leveraging AI to enhance team video meetings, improving team meetings by using meeting assistants that leverage AI.
- Oxipit is a Lithuanian startup that creates AI tools for global medical imaging, to harness the latest AI and Machine Learning developments and address the global radiologist shortage, as well as improve diagnostic quality.
- Atrandi Biosciences is a startup based in Lithuania that created a microfluidics technology, enabling compartmentalizing molecular biology reactions into millions of pico-liter droplets, empowering to study biological samples at the resolution of single cells and single molecules.
- Occubee is a Polish solution allowing to forecast sales and demand based on advanced data analysis.
- Salv is an Estonian company that developed a solution to fight financial crimes with their innovative platform dedicated to banks and fintechs who are in constant need to combat financial frauds.
- Coding giants is a Polish EdTech company with a mission to educate young people in new technologies, coding, computer games creation, mobile applications, websites and 3D graphics.
- Videowise is a Romanian video platform for brands & retailers, offering a commerce-centric video infrastructure that protects page speed, saves merchant time with automation, and offers more insights with advanced video analytics.
- GoodVision is a company based in the Czech Republic that provides automation tools for transport surveyors and planners, helping to achieve better productivity in traffic data analytics in all stages of traffic projects, from AI traffic data collection to real-time traffic control.
- Kubeark is a Romanian solution that helps organizations scale through its all-in-one software operations management platform that enables application management across multiple clouds and infrastructures, streamlined software operations, and enhanced technology ROI.
- VOS.health (AI Mental Health) is a company based in the Czech Republic with a wellbeing companion app that helps to manage and take care of individual mental health, as well as the mental health and condition of team members in their B2B model.
- Epinote is a Polish based company that provides data annotation and collection services, specializing in Computer Vision, NLP and search relevance projects including image, video, text and audio annotations.
- Trace.Space is a Latvian AI productivity platform for engineers building complex hardware products in automotive, industrial, aerospace, and defense, creating a 10X improvement in requirements management.
- Inbalance grid is a Lithuanian mobility startup, developing charging infrastructure that is built on a cluster system with a master and slave design concept, where the majority of the components are off the shelf and managed by the company's software.
- FINMAP is a Ukrainian cash flow management tool that allows business owners to see the state of their company without special knowledge of finance and studying complex systems.
- Milluu is a Romanian solution providing a platform based on AI and Ml that directly connects listers and tenants based on their preferences.
- Bloomcoding is a company registered in Estonia but actively working on the Romanian market, digitally teaching coding to children by building Virtual and Augmented Reality experiences.
- ELLIO Technology is a startup coming from the Czech Republic with its technology dedicated to help security teams focus on threats that matter by filtering irrelevant and random Internet noise from targeted attacks.
- Awesonomic is a Ukrainian startup developing a platform that matches design task with the best fit designer, automating marketing design routines for agencies, startups, and e-commerce of all sizes.
- Co-one is an Estonian data platform, providing fast & accurate data annotations for AI teams.
- Repsense is a Lithuanian data company that mimics user journeys and predicts reactions to content found in search results pages.
- FlatAway is a Bulgarian booking platform dedicated to the hospitality sector, enabling customers to manage their holiday properties reservations with ease.
- Buffmaker is a tool developed by Polish company KoolThings, dedicated to developing and monetizing technology to automate, process and analyze marketing data for the gaming industry
- Checly is a Polish platform set up to create, manage and check control processes across multiple industries.
- Moniti is a Polish technology company that developed an innovative application that offers modular solutions for automating and digitizing processes involving employees of companies in many key sectors of the economy.
- Vool is an Estonian, EV charging solution that provides business and private customers with dependable, smart, and cost-effective charging.
- Atomontage is the Slovakian-American company that develops a volumetric graphics and simulation platform that can scale to record-breaking data sets.
- Cryptiony is a digital assets tax automation software created in Poland, which simplifies digital assets tax calculation and allows monitoring of tax liabilities in real-time.
If you have some insights about the report, feel free to drop me a line!
Want to get a more detailed view of the CEE Startup & VC Ecosystem in 1Q 2023?
Discover our monthly, quarterly and yearly reports:
- VC Transactions in CEE in 2022
- VC Transactions in CEE in 1Q 2022
- VC Transactions in CEE in 2Q 2022
- VC Transactions in CEE in 3Q 2022
- VC Transactions in CEE in 4Q 2022
- TOP CEE funding rounds closed in January
- TOP CEE funding rounds closed in February
- TOP CEE funding rounds closed in March
- New VC Funds Investing in Europe - 1Q 2023
Disclaimer: This report features VC rounds that have been publicly disclosed before the publication date, or were shared by our VC and startup community. Grants and transactions below €50k were not considered. Furthermore, while we value all startups operating in CEE, our focus is on companies that originate from the region, self-identify as CEE companies, or have a significant presence of CEE founders.
Sources: Vestbee VC & startup community, startup press releases, web & social media monitoring, Crunchbase, PFR (Polish Development Fund).
