“We plan to invest €15M a year in new companies.” Interview with Inovo.vc

23 October, 2023, 13:56

Recently, Inovo.vc made headlines by closing several large deals, including investments in Embla and AI Clearing. The news led us to feature Inovo.vc in our 20 most active Polish VC funds ranking, where it placed first with 6 new investments made in H1 2023. Furthermore, the fund plans to further invest in 2-3 companies this year.

AIN.Capital spoke with Krzysztof Przybylak, a HealthTech investor at Inovo.vc, about the fund’s activities, investments, exits, and the details about future investments.

Tell us about Inovo.vc.

Inovo.vc is one of the oldest and largest VC funds in Poland. It has had three funds under management:

Inovo I — vintage 2014 — size €8 million.
Inovo II — vintage 2018 — size €54 million.
Inovo III — vintage 2022 — size €100 million.

The fund’s main focus is:

Central and Eastern Europe + diaspora.
Preferably Seed stage (occasionally Pre-Seed / Series A).
Ticket range: €500k to €4 million.
Industry agnostic fund with special focus on healthcare (7 portfolio companies) and AI/ML/developer tools (8 portfolio companies).

The fund’s partners are:

Tomasz Swieboda, an ex Investment Banking at Rothschild and ex Private Equity investor at Penta. Today he runs our Founders Club.
Michał Rokosz, an ex McKinsey and Rocket Internet. Focused on B2C startups
Maciej Małysz, Kauffman Fellow focused on ML/AI and developer tools.

How is Inovo.vc’s performance in 2023?

January 2023 — June 2023:
• new investments: 6 (Inovo III fund).
• follow-ons: 4 (Inovo II fund).

July 2023 — today:

1 new deal signed (Inovo III fund)
2 new Term Sheets currently in the process of signing (Inovo III fund)
1 follow-on (Inovo II fund) — AI clearing.

So to sum up, we did 9 new investments year-to-date.

Some of them are not publicly disclosed yet. The ones announced are: Embla, FiatRepublic, Pupilmed

Were there any successful exits yet?

We have successfully exited most of our portfolio companies from Inovo I.
Fund II and Fund III are too early for exits.

Given Inovo.vc’s activity, how many investments are still planned for 2023? What is the focus of your further deals?

We plan to invest around €15 million a year in new companies. We are still able to invest in 2-3 new companies this year.

About the CEE market: Are there any notable differences in the CEE VC and startup market this year?

We can see in Poland that pre-seed/seed rounds are about 20% below the number of previous year (in terms of number of transactions) and there is a significant decline in later stage rounds (Series A and later).

Has anything changed in Inovo.vc’s approach to investments recently?

Our Inovo I fund was focused on Poland only, with the recent funds we do more effort to cover other Central and Eastern European countries too.

Does Inovo.vc experience any effects due to the harsh geopolitical climate (War in Ukraine in particular)?

We can definitely see more Ukrainian diaspora founders in Poland and other countries since the war started.

Two of the most recent rounds joined by Inovo.vc were AI Clearing and Embla. How did the deals come to be? And are you planning to invest in other diaspora startups?

AI clearing — we invested in this company back in 2020, the founders made significant progress since then so the Series A was fully deserved. They were very international from the very beginning.

Embla — we had a thesis on the weight loss market, especially startups combining GLP1 drugs with behavioral therapy. We were actively searching for startups in this space and we got introduced to Embla’s founders from our friendly VC later-stage fund from London. After the initial meeting it was clear that this is the best startup we have seen in this space.

Regarding diaspora — yes, we are actively looking to invest in more diaspora startups.

On a personal note, can you tell us about the specificity of the healthtech investments made by Inovo.vc? Did the industry experience any changes in terms of volume and the number of deals?

We believe that Poland has one of the strongest healthcare startup ecosystems in the CEE region with over 100 startups founded here.
We did 2 pre-seed stage healthcare investments in Poland this year and 1 Series A outside of Poland (Embla).
Similarly to other sectors in Poland, we can see that the number of pre-seed /seed startups is high, but there aren’t that many at Series A or later.

In your opinion, what can you advise to startups or their founders who want to secure financing from Inovo.vc in the future?

It’s difficult to give general advice, every startup is unique in some sense. What helps getting funding from Inovo.vc is knowing your customers inside out and having huge ambitions (market size $1 billion or more).