A week ago, SpeedUp Group made it to our 20 most active Polish VC funds in the 2023 ranking. Through its funds, SpeedUp invested in 4 news companies, which counts for a total of €1.6 million capital, with more deals underway.
In an interview with the editor of AIN.Capital, Robert Grygorowicz, Investment Manager at SpeedUp Venture Capital Group, shares his thoughts about the state of the Polish VC market and the results of SpeedUp’s operations in 2023.
Can you share the results of SpeedUp’s activity in 2023: What is the number of investments made so far? Which startups/scaleups have you invested in?
This far we have invested in 4 new companies (including one unannounced yet) and we’re in the closing of the fifth initial investment this year. In total, these will count for €1.6 million in capital.
Our investments include Swobbee (Germany) manufacturer and operator of battery-swap machines for LEV operators, Bringly (The Netherlands) developing logistic platform for emission-free last-mile delivery companies and Anymove (Germany) targeting rental companies (especially electric fleet owners) with its software platform, integrating all needed stuff for such companies.
We have also participated in €10 million Series A round of our portfolio company Cycle (Germany), following-on our initial seed ticket from Q1 2022.
Were there any successful exits yet?
Two in total, so far this year, one still in the making. One really successful, not announced yet. Closed just a month ago. The investment took almost 8 years and resulted in really good cash on cash (>10x) and IRR. In Q1 2023 we have also liquidated shares in one of the investments from 2021. Just 1,5 years later. Unfortunately, this one was just a liq-pref situation, resulting in 1x return. Fortunately, better than nothing. I wish all the fire sales would bring us a money-back result.
Are there any tangible changes in the Polish VC and startup market in recent
years? What are the most recent trends?
On the capital side, it’s hard to compare recent years as 2023 is a significant change compared to the previous ones. We experience similar trends in round sizes and their number as other European countries. Hence, thanks to the public funding (mostly public-supported funds) the last quarters in Poland resulted in lower decreases than in other developed countries. On the other hand, this is connected to the European budget periods with one finishing its execution by the end of this year. Most of these funds, helping in lowering the downturn in the first half of 2023, could become inactive investors in the next months or even the whole of 2024. Only a few Polish management teams have already announced their new funds, private or invested by the European Investment Fund. I wish it would be better.
Fortunately, there are other positive, more long-term trends in Polish ecosystems. More and more foreign venture capital investors are investing in companies with Polish roots. I use the term “roots” on purpose because there are usually Series A and later stages, which means that these companies are quite often international or global ones.
Although, early-stage companies still struggle to attract foreign investors. There are multiple reasons limiting their possibilities to fundraise abroad. Local customers, local network and communication (English) or pitching skills. For multiple companies it’s reasonable to launch on the local market first but there are industries where it’s not, like: marketing, education, and many others. Usually, if the solution is software only — you should try to launch abroad from day one. Even small successes can increase your fundraising chances exponentially.
We also experience a broader quality deal flow from Ukraine, with a lot of talented teams working from Poland. Unfortunately, this is of course due to the war and Russian aggression in their country. Nevertheless, Polish VC funds benefit from a higher number of attractive opportunities.
Does SpeedUp Group experience any effects (temporary or long-lasting) on the market due to the Russian war in Ukraine? And how did you adapt to it?
I can’t say that we experience any major negative effects. Some of our portfolio companies had, e.g. because of energy prices volatility after the beginning of the war. I would say that most of the Polish VC investors rather benefit from the quality deal flow of Ukrainian startups, working in Poland and attracting Polish investors. Also, a lot of IT specialists come from Ukraine or work remotely which also helps portfolio companies in hiring new people.
In the first year since the war started, we participated in the initiative of Google for Startups, aiming to support Ukrainian startups — the $5 millions Google for Startups Ukrainian Support Fund — with its equity-free grants up to $100,000. We were part of the assessment team, thanks to the cooperation of Huge Thing, which is part of SpeedUp Group, and GFS in previous years.
Furthermore, heard a lot of fears from our LPs in the funds that they would like to move their assets to Western Europe, perceiving it more safe than Poland. I also think this effect, after the first shock, has already stabilized.
Has anything changed in SpeedUp’s approach to investments? Did the average ticket size, focus, or geography change in any way?
Yes, we also need to adapt to market situations. After years of investing from public-supported funds, we’re launching a fully private one. It will be a small fund, just slightly bigger than the last one but without any public LPs. The reason is simple, we want to increase our chances to invest in the best pre-seed and seed companies, and the general quality of our capital. In past years, we couldn’t invest in a bunch of opportunities because of the limitations the public-supported fund has.
We’re now focusing on helping founders in pre-seed and seed rounds. Investing from €100,000 to €500,000 in the CEE teams. We’ve been targeting energytech and cleantech fields. That hasn’t changed. However, right now we invest in people and planet tech which means we are also investing in digital health, edtech, and HRtech.
As we know, the recent investments made by SpeedUp Energy Innovation include Swoobee and Bringly. How did the deals come to pass?
For the past few years, energytech and cleantech solutions have been core areas for our fund. Unfortunately, these fields are significantly more mature in Western Europe than in Poland. That pushed us to actively search for startups in Germany or the Netherlands, extending our geographical focus on the CEE region.
These particular deals came from our active search through LinkedIn, ranking lists, and other lists of startups. Nevertheless, we have established multiple connections to other investors in the energytech field or startup founders who quite often send us projects to invest in.
In your opinion, what is the best advice you can give to startups or their founders who want to secure financing from SpeedUp Group in the future?
The team is key so take care of building it properly in the first days of your project.
- Find talents that cover different areas of the company’s operations.
- Keep most of the knowledge and expertise inside.
- Share stocks but also engagement fair, keeping all co-founders focused on the startup as their professional number one priority.
- Avoid any advisors or dead equity in the cap table.
With such a clean and comprehensive structure of the team, you will have a higher chance to secure funding not only from us.
