As reported by PFR Ventures, in the first quarter of 2023, Polish and foreign VC and CVC funds invested in 127 transactions, totaling PLN 446 million in Polish startups. This represents a decrease in the investment amount compared to the first quarter of 2022 and an 84% increase compared to the first quarter of 2021. At the same time, the number of transactions increased significantly.

The year 2023 in the Polish startup ecosystem began without megaround transactions (in the entire 2022, only one such transaction was recorded). The largest transaction in the quarter was the A Round for Vue Storefront, which raised PLN 94.2 million. VC funds also completed four transactions with values exceeding PLN 20 million (Contect – PLN 47.1 million, HiProMine – PLN 34.5 million, SatRevolution – PLN 21.9 million, Occubee – PLN 20 million).

The crisis touched the Polish ecosystem - foreign VCs invest less.

- Global and European declines in investment value in Q1 2023 have also manifested in our ecosystem. We recorded a very high number of rounds, but most of them are based on domestic seed capital. We observe less interest from foreign funds, which traditionally provided capital in A+ rounds. Consequently, the average investment value is also decreasing. Polish VC funds still have seed capital for innovative projects. The challenge for company founders will be convincing foreign investors. However, this is not impossible, as evidenced by the Vue Storefront round – comments Aleksander Mokrzycki, Vice President of PFR Ventures.

- Market activity is lower, especially seen in the shrinking supply of projects despite sustained demand from investors. The process of aligning investor sentiment and company founder expectations probably continues. Some, following the multiples on NASDAQ, are more conservative regarding company valuations, while others remember how the situation looked 1-2 years ago and often want to wait for a better time to sell shares says Karol Lasota, Principal at Inovo VC.

During the first quarter of 2023, there was an increase in transactions at early stages of company development. Seed and pre-seed financing accounted for 112 transactions. Last year there were 86, and in 2021, there were 88.

Despite the overall increase in the number of transactions, their average value decreased from PLN 6 million in Q1 2022 to PLN 3.5 million in Q1 2023. From these statistics, one can indirectly infer a decrease in company valuations, as confirmed by comments from VC fund representatives. However, it is encouraging that despite the decrease in the number of later-stage rounds, they still constitute a visible part of the market.

- The most important thing for our market is maintaining the level of a dozen or so A rounds and later stages. This happens despite a decrease in investment sentiment among later-stage VC funds worldwide. This is indisputable evidence of the maturation of the Polish startup ecosystem - says Maciej Małysz, a partner at Inovo VC.

The full report can be found on the PFR Ventures website.