Budapest Letters #56
๐๐ป Hi All! Great to have you back. This is Budapest Letters, my newsletter covering startup and small business stories from the CEE region, or interesting developments that might have something to do with this part of Europe. Hope you will enjoy it!
Before we jump into edition #56, big shout out to our new subscribers, good to have you here. And one more thing before we roll, if you like what you read, subscribe + share ๐๐ป
Cheers, Aron
๐ข TL;DR
Top stories this week: โ๐ป Q3 2022 data from PFR Ventures and Inovo Venture Partners show that the Polish startup ecosystem is doing great, despite turbulent economic and political times โ๐ป ZoidPay, LatticeFlow, Nevomo and Yummy raised ๐ถ โ๐ป Lithuaniaโs Deepfin aims to help small entrepreneurs manage their finances easier โ๐ป The CEE annual startup report is out and itโs a proud read
๐ฅ Story of the Week
PFR Ventures and Inovo Venture Partners, two investment firms from ๐ต๐ฑ, have published their quarterly analysis of local VC activity and the numbers look ๐๐ป
In Q3 2022, โฌ110M (both from local and foreign VCs) flowed through the Polish VC market, meaning that is โฌ250M short of surpassing the 2021 record. But this, fortunately, is still reachable as the last quarter is usually the strongest of all.
According to PFR Vice-President Aleksander Mokrzycki:
โThis allows us to believe that despite the turbulent economic and geopolitical climate, the Polish ecosystem will maintain its upward trend. Most importantly, this will distinguish us from other regions that are experiencing large declines. We see this as a positive signal for foreign investors wishing to do business in CEEโ.
So high inflation, soaring energy prices and a war close by seems not have a major affect on the Polish startup ecosystem and investment activity which is ๐ฅ
Show Me Da ๐ถ
๐๐ป ZoidPay, a crypto startup from ๐ท๐ด, bagged โฌ75M from GEM Digital Limited (๐ง๐ธ). The company, that operates a crypto liquidity platform enabling instant card issuance for purchases from any merchant at the lowest fees, will use the fresh funding to fine-tune and boost its product offering, plus acquire a bank.
๐๐ป LatticeFlow, a deeptech startup from ๐ง๐ฌ, nabbed ca. โฌ12M co-led by Atlantic Bridge (๐ฎ๐ช) and Open Ocean (๐ซ๐ฎ), with participation from existing investors. The company, that help developer teams deliver better AI models, will use the fresh raise to expand its team / presence, and also to accelerate product development.
๐๐ป Nevomo, a deeptech startup from ๐ต๐ฑ, received โฌ5M from a sleuth of investors, including EIT InnoEnergy and local Hรผtter Private Equity. The startup, that is developing a hybrid solution that allows the functionality of both the MagRail system and conventional trains on the same tracks, will use the new investment to accelerate product development and the upgrade of existing railroad tracks.
๐๐ป Yummy, a foodtech startup from ๐ช๐ช, snatched โฌ3.4M from DEPO Ventures (๐จ๐ฟ), Startup Wise Guys (๐ช๐ช) and various angel investors. The startup, that offers its clients a food order service of freshly cooked dishes, will use its funding to expand in CEE and to build a full-blown platform for home food management.
๐๐ป Additional investment news and fun stuff that you should know about:
Yarooms, a SaaS startup from ๐ท๐ด, raised โฌ2M co-led by GapMinder Ventures and SeedBlink, both local investors: more on this via AIN.Capital
Alter, an AI avatar startup from ๐จ๐ฟ, was acquired by US tech behemoth Google for about $100M: more on this via TechCrunch
Market One Capital, a VC firm from ๐ต๐ฑ, announced its new, โฌ80M fund that will be used to invest in marketplace startups: more on this via Sifted
Nation 1 VC, a VC firm from ๐จ๐ฟ, announced the launch of its acceleration program for Czech and Slovak pre-seed startups: more on this via Linkedin
๐จ Startup Alert
This weekโs alert is on Deepfin, a fintech startup from ๐ฑ๐น, that provides simplified finance and tax management solutions for freelancers and small business owners.
Pretty trendy stuff. Loads of startups targeting the segment. But why this Lithuanian startup is exciting is that - according to their USP - they really aim to solve all crucial financial obligations of small entrepreneurs, from issuing invoices to tracking expenses until understanding how much tax they owe. And this is a huge burden. Based on a UK market survey, 67% of small entrepreneurs say that administrative burden prevents them to focus fully on their business.
So it is clear that Deepfin, founded by Algirdas Sakmanas in 2021, is onto something and investors has already taken note. The startup recently raised โฌ685k led by Superhero Capital (๐ซ๐ฎ), with participation from local VC firm Iron Wolf Capital.
๐ง Food
Google for Startups, dealroom.co and two European VC funds, Atomico and Credo Ventures, published their annual report on the state of CEE startups and the wider sector and the numbers, like in the the case of the Polish ecosystem, are ๐ฅ
Just look at this graphโฆ
Holy Moly ๐ According to the data, the โCEE region is one of the fastest growing regions for VC funding in Europe, growing 7.6x since 2017. Combined enterprise value of CEE startups has quadrupled in the last five years. And while average funding per startup is decreasing globally, itโs increasing in CEE.โ Wins. Wins. Wins.
But thankfully, this is just the tip of the iceberg, go and check the report.