#11 CEE Venture Rounds Review Apr’21

Dear Friends,

It is hard to believe but it is already a year since the pandemic broke out. I remember the sudden shock in the stock market, the Zoom hype, the re-organisation of the “office”. Everything else is a blur. We survived. Markets rebounded with a K-shaped recovery. The VC landscape in Europe got even crazier, with blurred lines between stages and geos. We quickly got accustomed to more competition and a “new” way of doing things. On a more personal note - I think I've matured as an investor. We got to see some amazing companies in the last 12 months. We’ve won some deals and lost plenty of others. I guess that in order to be a “good” VC you have to go through booms and busts to really experience all there is to VC.

Since many of us have been discussing what will the “post-pandemic” world look like, I’ve been spending time to understand what the new “norm” might be. I’m trying to form my own thesis. One thing that is really helpful in the process is a book by Carlota Perez titled Technological Revolutions and Financial Capital. Perez describes an interesting framework for how to think about innovation, bubbles, capital and technological progress. To supplement the book I recommend a post by David Phelps titled Where Are We? Part 1: Bubbles, Bubbles, Toils and Troubles. David looks at Perez’s framework in the context of the last 20 years in tech. If you are not familiar with the framework the key thing to know is that there are two main periods in any technological revolution. First the installation period, then the deployment period. In terms of tech, it is fair to say that we are somewhere around Turning Point. Why does it matter? Well, it might explain the recent frenzy in all things tech. Also, it might hint at “Crypto” being a real bubble. What is most interesting though, is what changes during the “Deployment Period” of Tech. This is exactly what I am trying to figure out right now. I strongly believe that VC returns in the Deployment Period of Tech might look different from the ones realized in the Installation Period.

I will leave this thought hanging for now, as I haven’t structured my thinking yet.

Now, let’s look at Announced VC Rounds in CEE for April 2021. As you might have noticed I haven’t published a full update for February and March. The truth is that I have been busy with my portfolio and new investments. I know that consistency trumps all good efforts so I will try not to let that happen again.

Here are some of my high level thoughts:

  • April was a decent month with 33 rounds. Most countries have seen at least 1 round being announced.

  • Fil Rouge Capital is definitely a fund worth mentioning. They were part of 3 rounds in April. The fund is based in Croatia. To my knowledge, together with South Central Ventures, those are the two most active funds in the Balkans.

  • April was also dominated by Pre-seed and Seed rounds. To give you a bit of context. Since June 2020, I tracked 467 rounds. 55 of them were Series A and Series B rounds. This represents ~11% of the total. I think the region still has a quality challenge.

  • Veriff scored a solid Series B led by Accel. The company has raised more than €80M so far. Lemonade Stand was the original investor, almost 5 years ago - it already must be a great multiple on that initial investment. With so many online services requiring Identity Checks it might be just the beginning for Veriff. Imho Veriff is another Estonian unicorn in the making.

#Apr’21 - here is a snippet of the most important numbers:

📣 33 rounds announced
💰 ~ €376M raised (all rounds converted into EUR)
🚀 We have seen two mega-rounds. Veriff raised ~€60M, Trendyol raised ~€300M.
🌍 Creandum, InReach, Speedinvest, Accel, Alibaba Group were among some of the international investors active this month.
🇹🇷 Turkey was the most active country. Also, Turkey was home to the ~€300M mega round from Alibaba Group.

As you might have noticed you are now receiving this email from my Substack Newsletter. I have decided to finally switch and start a proper publication. Any feedback will be highly appreciated. I want to keep these updates short at I know that most of us are flooded with information.

Cheers!
Marcin