“Backing early-stage companies in CEE – is sound and viable.” Interview with Presto Ventures

In 2023, the Prague-based Presto Ventures has closed 15 investments, including Outfindo, CityPay.io, and Blindspot Technologies with some deals are still waiting to be announced, making Presto Ventures one of the most active funds in Central and Eastern Europe this year.

AIN.Capital talked with Roman Novacek, CFA and one of the Partners, about Presto Ventures’ activities and results, as well as the state of the CEE market in 2023.

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It’s almost the end of 2023, could you please summarize Presto Ventures’ activity this year: How many investments were closed? How many of them were announced? Any exits this year?

In 2023, we’ve closed 15 investments so far, including Outfindo, CityPay.io, or Blindspot Technologies. Some deals are still waiting to be announced. That brings us to a total of almost 60 portfolio companies in Presto Ventures across two funds. 

Several companies in the portfolio are in exit discussions at the moment. That said, we prefer to be realistic and count on them only when the pen hits the paper. Fingers crossed two exits will close by the end of Q1 2024.

Last year Presto launched its €30 million Fund II. How much has been accomplished since the launch?

A lot has happened, I must say 🙂 We’ve proven we can effectively scale the company, analyzing more than 3,000 potential opportunities this year. Since its launch, Fund II has closed 40 deals. 

We’ve been building the firm gradually, starting with a solo GP and later a team of 2 people in the first fund. The second fund has grown from 7 people at the beginning to 15 team members at the moment. Over the last year, we’ve set up robust internal processes that enable us to cover the whole CEE+ region, including physical visits to countries such as Tajikistan or Ukraine.

Presto has also built a presence in new markets and strengthened our brand and reputation across the extended CEE region. We’ve successfully proven that our investment strategy – backing early-stage companies in Central and Eastern Europe, with the view of leading them towards raising the next round in the West – is sound and viable. 

Case in point: Keboola. This Czech data supercharger has just announced the largest Series A round in CE in 2023 (and 2nd largest in the entire CEE, at $32 million), with our participation. Presto led the previous Seed round in 2022 with the thesis of getting the company on to the VC path of raising a significant Series A. This was fully accomplished even faster than we had expected.

Last but not least, we’ve been able to select real winners – a number of our portfolio companies have successfully raised further rounds, including the ‘dreaded’ Series B of over €20 million, even in the currently tough economic conditions.

Are there any plans on launching Fund III in the near future?

Yes, we’re in the process of finishing materials for our Fund III, with a target size of €100 million. We aim to capitalize on the opportunities coming from the latest CEE market developments – one of the fastest growing regions for VC funding, yet claiming less than 10% of the total European startup funding.

We have a great track record, and a clear and proven investment focus. We’ll ramp up our activities to get to 30-50 new investments per year, as we continue to build a leading VC firm in the CEE+ region.

In November alone you had two deals announced, one with Ukrainian startup Getpin, another with British startup Magic ID. Tell us more about these deals.

At Presto, we’re always excited to back startups that create solutions we would love to use ourselves. Besides that, Magic ID is our first investment into a Greek founder, and fits with our increased focus on the Balkan region – following our investment in the Serbian-Estonian company OTASync, which closed their round at the end of October.

Ukraine and its resilient founders are among our favorites. It was quite the experience following Volodymyr through the ups and downs related to covid and the war. Getpin’s successful expansion against all odds convinced us to add fuel to their scaling machine.

All in all, we focus on finding startups with a solid value proposition and strong fundamentals, and diversify by geography.

Given your activity, are there any plans for further investments this year? 🙂 What about H1 of 2024?

Hopefully we’ll be able to conclude one more startup investment before Christmas. There’s also a number of Q4 investments that are yet to be announced.

We have several million EUR still left in the fund and plan to do few investments in 2024 before fully focusing on Fund III.

Presto usually invests in CEE, so you must understand the ups and downs of the VC and startup market this year. Tell us about it.

In many CEE countries, there has been an investment slowdown, mainly due to startups not raising late stage investment rounds. With their superior spending efficiency and ability to move to breakeven faster – compared to their western counterparts – they can afford to wait until the valuations on the market correct.

Has anything changed regarding Presto’s investment strategy? Did you need to adapt?

Fundamentally, our investment strategy hasn’t changed. Our strategy has always been to invest into startups with sustainable and recurring revenue, which provides a lot of downside protection. 

On a more operational level, we’ve realized the need to work with portfolio startups more closely to effectively manage their runway and prepare them for the situation of not receiving good investment conditions in the following round. We help them prepare to be in a position to reject such offers and continue building the company.

You’re also one of the most active investors in the Ukrainian ecosystem. What pieces of advice would you give to Ukrainian startups?

Don’t be afraid to expand quicker and test new markets – including Poland, Baltics, Nordics, or even the US.

Focus more on sales than the product (this is a ‘CEE problem’ in general).

Lean into your resilience.