CEE Founders on the Rise: SMOK’s 10 Investments in 2023
In 2023 SMOK Ventures made a splash in the Central and Eastern European pre-seed investment scene. We backed 10 startups from Poland, Ukraine, Czechia, Latvia, Croatia, and Bulgaria, and our momentum continues with plans for more investments in the region throughout 2024.
SMOK I Summary
We concluded the investment period of our first fund. I believe that together with Diana Koziarska and Paul Bragiel, we managed to create a new fund in CEE that is entrepreneur-friendly and geared towards global ambitions.
- SMOK I invested a total of €9 million EUR in 24 startups between 2020 and 2022.
- The startups from the first fund’s portfolio are already generating over €31 million EUR annually and employing more than 650 people.
- Collectively, these startups have raised over €99 million EUR from external investors, with 83% of this amount coming from investors outside of the CEE region.
- The total valuation of all startups in the portfolio has exceeded €230 million EUR.
- The average valuation of a SMOK startup has tripled since our initial investment (considering only equity rounds) or even sextupled (considering cap in SAFE rounds).
- Every third SMOK startup is led by a woman, and 12.5% of the startups had a founding team consisting entirely of women during SMOK’s investments.
The fund’s performance is defined by sevens:
- Seven startups are thriving and are worth 8 times or more compared to SMOK’s initial investment — these are potential “dragons” that will deliver outsized returns to the fund’s investors.
- Another seven are doing well, with valuations ranging between 2 times and 8 times the initial one.
- The next seven are putting up a fight and not giving up, although it cannot be said that they are in a favorable situation.
- Unfortunately, the last three startups have ceased to exist; may they rest in peace.
Overall we are on track to provide a 5x or better net return for our private investors. Not bad for the first fund launched in a niche market in 2020, I believe.
First 10 Investments from SMOK II
The closure of our first fund did not signal a halt in our investment activities. On the contrary, we have established a new, this time fully private fund, and have already invested in 10 companies from seven countries in Central and Eastern Europe. In addition to Poland, SMOK’s portfolio now includes startups from Ukraine, the Czech Republic, Latvia, Bosnia, Croatia, and Bulgaria.
Six of these investments are already public:
- Finmap — a Ukrainian 🇺🇦 startup based in the UK, specializing in liquidity and cashflow management for small and medium-sized enterprises.
- Hyperjob — a Latvian 🇱🇻 HR project enabling personalized recruitment, starting from outreach through LinkedIn, featuring candidate-friendly job ads with integrated analytics, up to CRM for process management.
- Workee — a San Francisco-based Ukrainian 🇺🇦 startup providing freelancers with tools for online business management, from scheduling and conducting video meetings to invoicing.
- 57hours — a Croatian 🇭🇷 marketplace for active tourists seeking non-standard trips with guides to the most interesting places worldwide.
- Masthead Data — another Ukrainian 🇺🇦 project, currently located in Toronto and Kyiv, offering a system that analyzes database logs on Google Cloud to immediately detect irregularities in data flows potentially saving millions of dollars.
- Gemelo.ai — located in Los Angeles and Warsaw 🇵🇱, this startup enables the creation of a digital clone for social media, customer service on websites, or in game development.
What surprised us in the past year?
Despite numerous signals indicating a decrease in investor appetite, the sudden and significant drop in VC investments in 2023 surprised founders like a winter storm surprises drivers. Those who quickly adapted to the new conditions, including lower valuations, smaller funding rounds, and a greater emphasis on reaching break-even points quickly, survived and are doing well under the prevailing circumstances. Others either dropped out of the game or were brutally brought down to earth, forced to accept the new reality. The past year was marked by layoffs, lower growth rates, down rounds, bridge loans, and all those buzzwords that neither founders nor investors want to hear or acknowledge.
At the same time, 2023 was still better than 2022. It was a period of great scrutiny in the venture capital market in Poland and the region. Only the best survived, those who demonstrated through the results of their previous funds that there is a place for them in the market and managed to raise private funds for investments despite the unfavorable economic situation. Unfortunately, there are not many of us, indicating that the regional VC market is still dependent on public and European funds. Whether startups in Poland and the region will experience development or stagnation now largely depends on how quickly new European programs for seed funds from institutions like EIF or PFR Ventures can be activated.
What are our plans for 2024?
Despite expanding our operations to new countries, Poland remains our primary market. The rest of our investment policy remains unchanged. We continue to seek startups at the pre-seed and seed stages. Our goal is to invest in at least 10 new projects from Central & Eastern Europe in 2024.
We are open to investing in teams with products before the first revenues, as well as projects with initial traction. We are interested in all software-related startups, but we most commonly invest in tools for developers, game development, and broadly defined AI.
In the new year, we plan to strengthen our outreach to the Polish and Eastern European diaspora in the United States. This diaspora has already proven to be a source of excellent projects for our portfolio, and we aim to enhance the integration of the diaspora with the local startup scene. We plan to achieve this by inviting experienced founders to Warsaw and co-investing with diaspora leaders.
Additionally, we want to take more active steps towards integrating the Ukrainian and Belarusian diaspora in Poland. We plan to collaborate with leaders of these communities to organize joint events aimed at connecting founders, engineers, and investors from each of these environments. The goal is to build a single, strong startup community in Poland by fostering collaboration and unity among these diverse groups.
Are you looking for (pre-)seed funding in 2024?
Our new fund is active and we’re planning to invest in 20–30 more companies during the next three years, so if you are
- a cockroach superhero
- raising your pre-seed or seed round
- for a software startup
- from the CEE region (see the flags below) or diaspora,
read our FAQ and shoot me an email with a pitch deck at borys@smok.vc!
🇵🇱🇨🇿 🇸🇰🇪🇪🇱🇹🇱🇻🇺🇦🇧🇾🇷🇴 🇧🇬 🇭🇺🇸🇮🇭🇷🇲🇰🇷🇸🇲🇪🇧🇦🇲🇩🇦🇱🇽🇰🇦🇲🇬🇪🇦🇿🇰🇿
