In 2023, ff Venture capital capped off with a series of milestones, including the successful closure of 9 new investments. Having launched two new funds, ff Tech & Gaming and ff Red & White, 2023 was a year of strategic expansions for ffVC, cementing its place as one of CEE’s most prominent investors.
AIN.Capital’s chief editor had the opportunity to talk with Mariusz Adamski, a Partner at ff Venture Capital, about the fund’s activities in 2023 and plans for 2024, as well as discuss what makes the CEE market so appealing to investors.
Tell us the story behind ff Venture Capital.
ff Venture Capital is an early-stage venture capital firm with a unique footprint spanning the United States and Poland. Eschewing the traditional model of a centralized headquarters, ffVC embraces a modern, decentralized approach to venture capital. This is evident in its operation through dedicated teams that cater to the European and US markets, operating out of strategic offices in New York and Warsaw. Such a structure highlights ffVC’s dedication to combining local insights with a global perspective, ensuring a broad impact across the startup ecosystem.
ffVC’s journey began in 2008 with the establishment of its first office in New York City, marking the start of its mission to support early-stage ventures. Expanding its geographical footprint, the firm extended its operations to Warsaw in 2020, assembling a dedicated team of investment professionals to oversee its European ventures. This expansion reflects ffVC’s strategic intent to tap into the rich vein of innovation and entrepreneurial talent in Central Europe and to act as a bridge between these startups and global markets, especially leveraging its unique position to connect with Japanese corporate interests.
In Europe, ffVC actively manages two funds. The firm’s inaugural fund, established in 2020 with anchor investors including Totalizator Sportowy and PFR Ventures from Poland, is already fully deployed. Building on this momentum, ff Venture Capital launched a new investment initiative in June 2023, aiming for a final close of €60 million. This new fund is particularly focused on empowering Central European startups, with a significant portion of funding sourced from Japanese investors. Specialising in sectors such as enterprise software, industrial technology, and sustainability transformation, ffVC distinguishes itself by facilitating unique connections between Central and Eastern European startups and Japanese corporations, a capability few European VCs possess.
In 2023, ffVC made a number of resounding deals. Can you share the general numbers and results of the year?
I’m thrilled to report that ffVC capped off 2023 with a series of remarkable milestones, including the successful closure of 9 new investments. This achievement not only shatters our expectations but also highlights our prominence among regional investment funds.
A significant development this year was the complete deployment of our first fund ff Tech and Gaming, demonstrating our commitment and strategic acumen in identifying and nurturing startup potential. Building on this success, we launched our second fund ff Red & White in Europe, reinforcing our dedication to driving innovation and supporting entrepreneurial ventures across the continent.
Among our notable investments is Molecule.one, a tech-bio innovator revolutionizing early-stage drug discovery with AI-enabled chemical synthesis planning, led by Piotr Byrski and Paweł Włodarczyk-Pruszyński. Additionally, ForActive, co-founded by experienced entrepreneurs Maciej Bieganski and Konrad Howard, is redefining connectivity within the health and fitness community.
2023 also marked a strategic expansion of our team with the addition of two new partners to our European operations, who relocated from Japan to Poland. This move not only strengthens our global perspective but also enhances our operational capabilities in Europe, further solidifying our position as a key player in the venture capital landscape.
ffVC was one of the leading international investors in the CEE region in 2023. In particular, the firm invested in Polish startup ReadyCode and Ukrainian AI startup Respeecher. Tell us more about those deals.
I am glad you asked about some of the most noteworthy investments circling around the entertainment sector. We think that both ReadyCode and Respeecher are both extremely interesting stories from the region which are both still somewhat overlooked.
ReadyCode was founded by a serial entrepreneur, Julek Kopczewski and it addresses the most important problem in game development — how to effectively market games and prolong their sales. The solution can be applied to different genres and the company is seeing strong interest from established game developers.
Respeecher is yet another fascinating story of a team that has thrived despite the war in Ukraine. They have a highly unique speech-to-speech technology and have the potential to become the dominant model in this space. The company has won multiple Emmy awards for voice cloning in TV series The Mandalorian or Richard Nixon in a short documentary. Now, it will be working together with CD Projekt for the Polish language release of the Cyberpunk 2077 expansion Phantom Liberty. [ed. Respeecher has already worked on character voices for Cyberpunk 2077]
From your experience, can you tell us what differentiates the CEE startups from others around the world? What drives you to invest in these startups?
The CEE startup scene distinguishes itself in several ways, making it an intriguing space for investment. One notable factor is the presence of a robust talent pool in the CEE region. Skilled founders, equipped with a diverse range of expertise, contribute to the development of innovative and competitive startups. This depth of talent often translates into a dynamic entrepreneurial environment, fostering the creation of ventures with unique value propositions.
Technological know-how is another key differentiator for CEE startups. The region has demonstrated a remarkable capacity for technological innovation, with startups often leveraging cutting-edge technologies to address market needs. This technological proficiency not only enhances the competitiveness of CEE startups in the global market but also positions them as leaders in specific niches.
Moreover, the presence of good technical schools in the CEE region plays a crucial role in shaping the startup landscape. Institutions such as the Warsaw University of Technology, which is now actively connecting with the venture world through the creation of a new fund, exemplify the growing synergy between academia and entrepreneurship. The integration of educational institutions into the venture ecosystem serves as a catalyst for innovation, providing startups with access to knowledge, resources, and mentorship.
The emergence of funds within technical schools, like the one at Warsaw University of Technology, is a testament to the evolving support structure for startups in CEE. This trend signals a proactive approach to fostering entrepreneurship, facilitating the transition of innovative ideas from academia to the marketplace. The collaboration between these educational institutions and the venture world enriches the startup landscape, creating a more interconnected and supportive ecosystem.
As an investor, these characteristics in CEE startups become compelling reasons for investment. The combination of a strong talent pool, technological prowess, and the increasing integration of technical schools with the venture world presents a promising landscape for identifying and nurturing innovative ventures. The potential for groundbreaking solutions, driven by skilled founders and supported by a conducive ecosystem, makes CEE an exciting and opportunistic region for venture capital investments.
With almost 16 years behind ffVC’s back, what are your thoughts on the current startup and VC climate in the world?
In my view, the current startup and venture capital climate appears dynamic and resilient. Despite the ongoing global challenges, there’s a palpable sense of innovation and adaptability within the startup landscape. Ventures seem to be navigating uncertainties with a blend of creativity and strategic thinking, showcasing the entrepreneurial spirit at its best.
On the venture capital front, it’s interesting to observe a continued appetite for diverse investment opportunities. The landscape appears to be evolving, with an increased emphasis on sectors that address the changing needs of our world, such as health tech, sustainable solutions, and digital transformation.
However, the scene isn’t without its challenges. Economic uncertainties and geopolitical factors could introduce elements of caution. Yet, this very environment often sparks ingenuity, with startups finding innovative solutions to not just survive but thrive in unpredictable circumstances.
Are there any notable changes between the global and Central and Eastern European ecosystems?
When we talk about the global scene versus what’s happening in Central and Eastern Europe, some commentators like to say the CEE market isn’t as active. Sure, the venture market had its ups and downs in 2023, deal-making in Europe took a bit of a hit compared to the years before. But if you check out the latest info from PitchBook, it shows that we managed to keep things above the average for the past 10 years.
Despite what people might think, we’re not seeing the CEE market as some kind of no man’s land. We’ve been facing the challenges head-on and actually found some great opportunities. Actually, we’ve been experiencing a totally different reality, only lately adding amazing companies to our European portfolio.
As we keep navigating the twists and turns of the venture landscape, we’re sticking to our guns – the CEE market is a space full of potential, just waiting for the right moves and investments to bring out the best in it.
What are your general predictions on the market in 2024. And can you share anything on your future plans in 2024?
The ongoing development of AI technologies will likely make them more common in existing startups. I believe venture capitalists will be interested in finding startups that use AI to make things work better, make smarter decisions, and come up with creative solutions. This wider use of AI won’t just stay in tech – it will likely spread to regular fields like healthcare, manufacturing, and finance. The question that everyone is asking themselves today is how to capture value in this space and make investments that will realize returns over longer period of time. There is no obvious answer but we will for sure be actively reviewing any AI-related opportunities that have an asymmetric option value.
As the venture capital world matures, I think we’ll see more focus on teaming up and combining efforts. Bigger firms might try to expand by bringing in experts from different areas or teaming up with smaller local players. This could create a more connected network of venture capital on a global scale. Coming together could lead to a stronger and more cooperative investment world, where teamwork drives new ideas and smart decision-making.
Talking about IPOs, they’ve had a tough time recently. But I’m hopeful that as the economy gets steadier, companies with solid foundations will find it easier to go public. I think if businesses have successful exits and the market looks positive, it might get more people interested in IPOs again. Businesses that got support from venture capitalists might see going public as a good next step for their growth. So, there’s hope that a friendlier market will encourage more IPOs, giving investors their money back and encouraging more investments in new businesses. Liquidity is what the broader venture capital market desperately needs these days.
