Vestbee: VC investments in CEE reached €640M in Q1 2024

Business | May 23, 2024, Thursday // 09:22
Bulgaria: Vestbee: VC investments in CEE reached €640M in Q1 2024 @Vestbee

Vestbee, one of the leading European platforms for startups, VC funds, accelerators, and corporates, has just released the quarterly overview of the Central and Eastern European funding landscape — VC Funding In CEE Report for Q1 2024. It reveals that visible economic uncertainties lead to a palpable sense of anticipation in Central and Eastern Europe, with funding amounts reverting to levels seen in 2019-2020. In Q1 2024, CEE startups secured over €640 million across 157 rounds. 

 

The challenges that have plagued the CEE startup landscape in recent quarters persisted. Foreign investors as well as public funds reduced their participation in the region. As a result, VCs are taking a cautious approach, awaiting a catalyst to restore funding to 2021-2022 levels. Notably, enterprise software, AI, fintech, healthcare, energy, SaaS, and cloud were the top sectors attracting attention and capital in Q1 2024.

CEE funding regional highlights

As Vestbee reports, VC financing in Q1 2024 in the CEE closely mirrored the lower levels observed in 2019-2020, stabilizing at €640 million. While the aggregate financing value remained consistent with the previous quarter, the volume of funding rounds plummeted by nearly 40%, dropping from over 250 rounds in Q4 2023 to just 157 rounds. It indicated heightened challenges for CEE companies seeking capital investments.

 

This decline can be attributed to macroeconomic uncertainties, leading to investors' more cautious and risk-averse approach. The region also witnessed decreased participation from foreign investors and a slowdown in the activity of public funds, especially visible in Poland (the biggest market in CEE). This reflected budgetary constraints alongside the expiration of existing funding programs.

 

“The market dynamics in the region were significantly impacted by the larger-rounds, which collectively accounted for nearly 50% of the total capital invested during the quarter. If these large rounds were excluded, the total funding raised in the CEE region would have been significantly lower,”underlines Ewa Chronowska, CEO of Vestbee and General Partner of Next Road Ventures. “It further highlights the challenges companies seeking capital investments face during this period. With stakeholders eagerly awaiting a catalyst to reignite investor interest, this quarter underscores a shift towards risk diversification and strategic capital allocation among investors,” she adds. 

Regional leaders and thriving sectors

Estonia, Poland, and Czechia emerged as the front-runners, collectively accounting for nearly 60% of the total funding raised in the region and hosting the highest number of funding rounds. enterprise software, AI, fintech, SaaS, and cloud sectors garnered significant investor interest, with some notable investments in hospitality and mobility during mega-rounds.

Notable deals

Czech startup Mews secured €101.3 million in a Series D round, marking one of the largest disclosed investments. It was followed closely by another mega round of €100 million raised by Croatian Project 3 Mobility. Other prominent deals included an €84.6 million round for Estonian Starship Technologies and Series B rounds for Estonian Bob W (€40 million), Slovakian CloudTalk (€26.3 million), and Estonian Tuum (€25 million).

Active VC funds

The quarter witnessed a broad range of active investors, including New Vision 3, Credo Ventures, EIT Digital, Tenity, Vitosha Venture Partners, Presto Ventures, FundingBox Deep Tech Fund, Inventures, Launchub Ventures, Movens Capital, PortfoLion Capital Partners, Practica Capital, Tera Ventures, Baltic Sandbox Ventures, CofounderZone, KAYA VC, Sunfish Partners, Techstars, ZAS Ventures, Coinvest Capital, DEPO Ventures, DOMiNO Ventures, Inovo VC, J&T Ventures, N1 Fund, Reflex Capital, Startup Wise Guys, and Taiwania Capital. 

 

Furthermore, several new VC funds were established in the region during Q1 2024, including OTB Ventures' $185 million deeptech fund, GapMinder's €80 million seed fund, Practica Capital's €80 million fund for seed-stage investments in the Baltics and SMOK Ventures' $25 million fund for pre-seed and seed startups. 

Global and European funding trends

In Q1 2024, global venture funding reached $66 billion, marking a 6% increase from the previous quarter but a significant 20% year-over-year decrease. The healthcare and biotech industry claimed the largest share of capital, raising $15.7 billion (24% of total global funding), followed by the AI sector, which secured $11.4 billion, representing approximately 17%. Furthermore, late-stage companies globally experienced a 36% decrease in funding compared to the previous year.

 

In Europe, startups received $11.8 billion in funding, a 10% decrease from Q1 2023, accounting for approximately 18% of global venture capital. The UK, Germany, and France emerged as leaders on the continent, with key sectors including financial services, healthcare, and energy. Notably, AI companies secured $1.4 billion, $1 billion less than the financial services sector.

 

What is more, early-stage funding continued to outpace late-stage investments, with $5.4 billion invested in over 300 startups compared to $4.6 billion in 84 late-stage companies.

Dig deeper with Vestbee's full report

For a comprehensive overview of VC funding, emerging trends, and an in-depth monthly analysis of the first quarter of 2024, access Vestbee's full report.

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Tags: Vestbee, funding, CEE, companies

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