The Romanian startup scene is booming, with a 12-fold increase in venture capital deal volume in 2022 over a 5-year period. Domestic startups have attracted a significant amount of capital over the past year, furthering the success and growth of the ecosystem. The volume of transactions involving Romanian startups increased from a modest 8.2 million euros in 2017 to an impressive 101.7 million euros in 2022, a “How to Make the Web” Romanian Business Report watch.
“Venture capital deals involving Romanian startups have withstood the strong headwinds of 2022 coming from the global tech scene and the economy in general. Looking ahead to 2022, we see strong signals that such transactions may actually turn into a highly sought-after bet in the portfolio, to say the least.” Alexandru Agatinei, CEO of How to Web, emphasizes this.
The figures from the Romanian business report come as no surprise given the credit enjoyed by the entire CEE region in terms of growth in venture capital funding. CEE is currently one of the fastest growing regions in venture capital funding in Europe, growing 7.6 times since 2017.
73 transactions completed in 2022 secure Romania’s fifth place in the CEEC venture capital financing ranking
The total volume of transactions (73) in 2022 approached the volume level of the previous year – €101.7 million compared to €116.9 million in 2021.
However, according to the Romanian Business Report, it is worth mentioning that 2021 performance represents 51 million euros for FintechOS Series B – meaning that excluding these outliers, 2022 still outperformed 2021 – 101 .7 million euros compared to 65.9 million euros in 2021.
The data confirms Romania’s fifth position among leading CEE countries thanks to venture capital funding raised in 2022, according to Dealroom’s CEE Startups 2022 report. Romania comes just after Croatia, Poland, Estonia and the Czech Republic, which account for 70% of the total volume.
In terms of the total number of transactions, there is also a slight increase on average of 5% compared to the 71 transactions recorded in 2021 and the 73 transactions recorded in 2022.
Series A Volume Skyrockets Over 300% YoY
2022 has been the best year so far in terms of Series A deals for the period dating back to 2017 – both in terms of volume and number of deals.
The volume of Series A deals tripled compared to the previous year, from €15.3 million in 2021 to €63 million in 2022. The number of Series A deals also more than tripled, from 3 in 2021 to 10 in 2022. The first 3 transactions of 2022 – DRUIDDigitail and OutThink – account for more than 30% of total 2022 transaction volume, according to the report.
Indeed, the average amount of Series A transactions increased by 23.4%, from €5,103.3 thousand in 2021 to €6,296 thousand in 2022 – which is not surprising if we consider the regional trends in which CEEs have shown resilience through 2022 so far, particularly in early-stage investments, as the average seed and Series A round size continues to increase.
The report also shows that pre-seed volume decreased by 13.2%, reaching €2.8 million from €3.3 million the previous year. The number of pre-seed transactions remained stable, going from 20 in 2021 to 19 in 2022. Indeed, the average size of pre-seed transactions only decreased by 8.6%, from €163,000. in 2021 to €149 thousand in 2022.
At the same time, the volume of seed transactions also decreased by 4.3%, reaching €45.3 million compared to €47.4 million in 2021.
However, the 2021 seed deal volume represents FlowX’s €7 million funding round, one of the largest funding rounds in Europe at the time. So, if this is taken into account, there is no gap at all between the seed volume of 2022 and that of 2021, but in reality, a significant increase of 13.1% appears, from 40.1 million euros in 2021 (excluding FlowX of 7 million euros). ) to €45.3 million in 2022, specifies the report.
Although 2022 did not see outliers as in the case of FintechOS’s €51 million Series B and FlowX’s €7 million in 2021, it did see larger and more diverse funding rounds in terms of type of investment.
Additionally, the trading volume of the first round doubled, while the volume of subsequent trading increased by 36% compared to the previous year.
With €49.3 million raised in the first rounds of 2022, this represents a 109% increase in volume compared to the €23.6 million in the first rounds of 2021, according to the report.
With a considerable 25.7% increase in the number of first-round deals – from 35 in 2021 to 44 in 2022, this was accompanied by an impressive increase in the average first-round deal size of 66.3%. , from €673.9 thousand in 2021 to €66.3 thousand. 1,120.4K in 2022.
Concerning the monitoring cycles, the report notes significant deviations compared to the previous year. With a volume of €60M raised in follow-on rounds in 2022, this represents a 35.7% decrease in volume compared to the €93.4M in follow-on round volume in 2021.
Indeed, the average transaction size for follow-up rounds showed either:
- a decrease of 14.3% taking into account FintechOS series B in 2021, from €2,593.2 thousand in 2021 to €2,222.4 thousand in 2022
- an increase of 83.7% by updating FintechOS series B in 2021, from €1,210.1 thousand in 2021 to €2,222.4 thousand in 2022
This is regardless of the fact that the number of recorded follow-up cycles also decreased by an average of 24%, from 36 in 2021 to 27 in 2022, the report adds.
Best deals and stars in 2022
The best deals of 2022 were Druid, DigitalOutThink, Bware LaboratoriesSessions, Rabbit shellMachinations, NeuroLabs, for €54M, almost half (48.6%) of the total 2022 deal volume. Other notable deals included Cyscale, AdServio, evoMAG, Ogre AI, YAROOMS, adding another €11M in volume.
The report also notes that 3 other companies could not be disclosed, raising more than 11.5 million euros in total, with a breakdown for all: 12 transactions between 2 and 5 million euros, 2 transactions between 5 and 10 million euros and 2 transactions between 2 and 5 million euros. transactions between 10 and 15 million euros.
RPA, cybersecurity and healthcare are leading the way
The report also shows that the sectors represented by these top deals are very diverse and have great potential for the years to come: RPA (robotic process automation), cybersecurity, healthcare, development tools, productivity tools, gaming, human resources , e-commerce, energy. , Education.
These verticals are promising in which to invest and grow, as they align with the common themes we have observed in CEE. The region is now home to promising startups in many other segments, including disruptive technologies such as security, enterprise software, e-commerce and Fintech.
Additionally, Web3 and Gaming startups deserve special attention in 2023, as they reinforce each other in CEE, leveraging the region’s recognized expertise.
Here, Romania also finds itself in the top 5 hubs in terms of enterprise value with around 253 million euros in Web3. Finally, Gaming and Web3 startups are aiming for efficiency to face the difficult times of 2023.
Acquisitions and conclusion
The report also highlights Victoria’s Secret’s $400 million acquisition of Adore Me and Emona Capital’s €20.5 million investment in Amber Labs, both finalized in the second half of 2022. (November and October respectively).
Additionally, as the report does not take into account investments in service providers, exits, buyouts, IPOs, etc., these transactions were not considered in the analysis.
Developments in 2022 highlight the potential and maturity of the ecosystem, attracting more investors and entrepreneurs to the country, and as the startup scene continues to flourish, it is expected to bring more economic growth and innovation in Romania.
So, it is no longer a secret that Romania is the place where rough diamonds appear more often than ever, concludes “How to Web” in its report.