🔥RR#15 VCLeaders, slowdown, Bulgaria

Mining for hidden gems in Central Easter Europe

Dear Friends!

September passed by really quick. For me, September brought some changes but I will dive into that sometime later. For the CEE ecosystem, it was a slow month. For the first month this year, we were closer to €100M in capital raised than a €1B. Mostly because there was only one mega-round. Is it only a speedbump or maybe the start of something? Isn’t everyone tired of the funding craziness? I hear you Gil.

The funding data for September also revealed something else interesting. Out of the 52 funding rounds tracked by Crunchbase, I saw familiar VCs in only a handful of them. I have to pick up my game as I feel a bit in the dark. That is why I asked my Linkedin network to shed some light on CEE news and share their secret sources. What came out of it is what I think the Ultimate Guide To CEE Tech News.

This brings me to another topic. Recently, I participated in VCLeaders a new gathering of the Who’s Who of CEE VC. Rather small but very insightful event covering the local scene. What stuck with me was a panel with Patric Gresko (EIF), Ertan Can (Multiple Capital) and Jan Habermann (Credo Ventures). The discussion was focused on fostering the growth of the ecosystem by the introduction of new LPs/GPs. Patric argued that CEE compared to Western Europe is still in its infancy. Ertan is still looking to fund the first pan-CEE seed-stage micro VC. Jan, as the leading VC in the region, is not complaining but is open to more competition.

I asked a provocative question (at least in a room full of VCs) - do we even need more VCs in CEE? Then it struck me. Central Eastern Europe is such a vast and diverse region that it is silly to treat it as one “country”. There are very few investors with deep networks across CEE. On a fund level, there are only a few funds that can be considered as CEE focused funds. Credo Ventures, Earlybird, 3TS, Flashpoint and Innovation Nest would probably make the list. It is rather a short list considering the nature of CEE and 15 or so countries that make up the region.

Come to think of it, even after 18 months of looking at CEE rounds I still don’t know that much. If we would consider CEE a network and VCs as nodes on that network, I can only relate to super-nodes on this network. Each country has a deep internal network, which is hard to penetrate from the outside. What I found to be effective is going through those super-nodes mentioned before. These are usually 2-3 funds per country which are connected on a regional level.

The point I would like to make is that if anyone would like to “own” CEE as a single market, it would probably be difficult. Each country is becoming a vibrant ecosystem in its own right. Without being present, I guess it will be hard to spot the best companies early. Smilen Hadzhikostov recently wrote about the tech scene in Bulgaria. Launchub Ventures is probably the most know VC fund in Bulgaria, but it is only one of many in the country. As more action is moving towards seed and pre-seed, how can anyone be a better spotter and picker than these local funds? I will leave you with this question as I also try to answer it through my research.

Let’s go!

/Marcin


#news and data about CEE I've picked up recently
  1. Ihar Mahaniok shared a slide-deck on hunting unicorns in the region

  2. Rando Rannus of Siena Secondary Fund commented on how Estonia could grow in the next decade to €6B in venture funding.

  3. The Recursive shared a list of +30 Angels in SEE you should know about

  4. If you are into fintech, here is a list of Polish LendTech companies

  5. Pipedrive Mafia has now a new Honey Badger (Capital)


#companies I found somehow interesting this month

Orqa

Immersive video headsets for drone pilots. The First Person View, or FPV segment of the drone market is growing rapidly. FPV started as a consumer thing, first used for drone racing, but quickly expanded into the mainstream drone market as the preferred way to fly drones for fun.

Tailent

Affordable and approachable RPA platform.

Estateguru

EstateGuru is the leading European marketplace for short-term, property-backed loans.

Mobilyze

As we will transition towards EVs, we will need to build the entire charging stations networks. Mobilyze is applying location intelligence to choose the right spot for a charging station and maximize ROI.

Kernolab

Enrich your product with powerful banking and payment features using our simple banking-as-a-service APIs.


#Sep'21 - here is a snippet of the most important numbers

📣 52 rounds announced
💰 ~ €130M raised (all rounds converted into EUR)
🚀 One mega-rounds -> Jasper Theraputics
🌍 I haven’t picked up any notable international funds in the announced rounds
🇹🇷 Turkey was the most active country (again). 22 rounds raised by companies in Turkey.

Few comments based on the data

  1. On average we see around €300M in monthly funding across the region. September was not even half of that number. If we would exclude the €85M round in Jasper Theraputics, then the average round size was actually higher for this month €1,2M vs €750k in previous months.

  2. The lack of international VCs is a surprise. Usually I am able to pick up at least a few notable VCs from outside CEE. Maybe there is a correlation between international VCs and mega-rounds. In both cases we haven’t seen both in September.

  3. Turkey is definitely becoming a vibrant funding ecosystem. On the other side in September I haven’t tracked any Hungarian rounds. Usually, Hiventures invests in a number of companies each month.


#announcedrounds
Thank You!
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PS sorry for all the typos