Preqin’s Venture Deals Analyst online service shows there have been 863 venture capital financings announced in Central and Eastern Europe since 2007, with an aggregate value of €1.9bn. During this period, the most active countries for venture capital deals in the CEE region were Russia, Poland and Turkey, with 384, 139 and 55 deals taking place in these areas respectively.
In the period 2007 to 2012, the total number of venture capital investments in CEE companies increased by 258%, accompanied by an increase in aggregate deal value of 245%. However, from 2012 onwards this trend slowed, with the market even experiencing a slight decrease in the number of deals in 2014.
This slowdown seems to be reinforced by the unease surrounding the current political events taking place in the CEE region. In H2 2014 there were only 54 recorded venture capital deals, the lowest number for a half-year period since 2010. Q1 2015 TD accounts for 11 deals with an aggregate value of €10mn, which is subdued compared to Q1 2012 and Q1 2013, which recorded 41 and 37 deals with an aggregate value of €79mn and €128mn respectively.
Despite a reduction in the number of deals, 2014 was the highest year on record in terms of aggregate deal value, accounting for €431mn. This comparably high deal value is largely due to the €109mn financing of Ozon.ru, a Russian e-commerce company. The funding came from MTS and Sistema, each acquiring a 10.8% stake, and so far is the largest venture capital deal to take place in the CEE region. Another large investment in the Russian e-commerce industry was the funding of Lamoda in June 2013, when Access Industries, Summit Partners and Tengelmann Group invested a combined €98mn in the company.
The internet sector is the predominant industry for venture capital investment in the CEE region, accounting for 331 deals worth an aggregate €1.2bn between 2007 and 2015 YTD. This is followed by software and telecoms, which accounted for 132 deals and 110 deals in the time period, for an aggregate value of €209mn and €149mn respectively. The three sectors combined constitute 66% of all venture capital deals in the CEE region between 2007 and 2015 YTD, and 81% of the aggregate value.