2022 has been marked by many changes, challenges, and uncertainties in the tech financing landscape, but it has also brought the first exits by venture capital funds to strategic investors and private equity funds as well as new startup funding through the European Innovation Council (EIC) Accelerator.
By Claudiu Vrinceanu
FIRST VC EXITS TO STRATEGIC INVESTORS
The tech startup ecosystem has developed significantly in the last five years, having recorded somewhere between 500 and 1,000 new startups being born. Of these, 200-300 got financing from business angels and venture capital funds. As a result, we’re starting to see the first exits by venture capital funds following their investments in Romanian tech companies. A prime example this year was the transaction in which MedLife purchased the bulk share package in SanoPass, one of the most active Romanian ventures in the health tech space. MedLife has also started investing in tech after its multiple takeovers of clinics and fitness networks. We also saw the first exit carried out by Cleverage VC, an investment fund launched by several Romanian investors specialising in health tech.
Meanwhile, SeedBlink also made its first exit from a tech startup, two and a half years after the initial listing. MedLife also bought part of the shares that had been sold to individual investors through the crowdfunding platform.
In general, Romanian founders fall into one of four main scenarios. The first one is the “acquihire” or masked hiring, whereby a corporation buys the startup for its team. A second option is a startup being acquired by a corporation for its advanced technology. There is also a scenario where the startup gets purchased by a corporation for its customer (user) base it has built up over time. And finally, an exit scenario involves the purchase of a startup by a corporation that is existentially threatened by the new technology or business model being developed by the firm’s founders.
FIRST VC EXIT TO PE FUNDS
Another first recorded in 2022 in the Romanian IT field was the involvement of private equity funds in tech startups. Previously, only venture capital funds had invested in Romania’s tech industry, but this area is also becoming relevant for private equity funds, which generally invest in large companies with a proven track record and mature firms with an established business model.
By comparison, venture capital invests in enterprises that have not yet been proven successful but that show significant potential and provide an opportunity to make back higher-than-typical returns if they deliver on that expected potential. The significant distinction between private equity and venture capital has to do with size and risk levels.
More specifically, Abris Capital Partners, a private equity investor, supported Alsendo in acquiring a majority stake in Innoship, to support the growth of the delivery management company in Central and Eastern Europe, together with its four founders. Gapminder, the leading venture capital fund that invests in technology companies, sold its entire stake in this transaction. Innoship will help accelerate the transition of Alsendo, which already has a presence in Poland, the Czech Republic, and Slovakia, to a specialist supplier of advanced delivery management technology throughout Europe.
STARTUPS FUNDED THROUGH THE EUROPEAN INNOVATION COUNCIL (EIC) ACCELERATOR
According to data published by the European Innovation Council, until this year, .lumen had been the only Romanian company selected in the Horizon Europe programme, following a rigorous process, having obtained funding of EUR 9.4 million. Recently however, Romanian startup AMSIMCEL, the first GPU-Powered Physical Verification Framework with High-Performance Computing capabilities, raised EUR 4.8 million in blended financing through the European Innovation Council (EIC) Accelerator. The company ranks among the 75 innovative European firms that will receive financial support worth EUR 400 million, all in the form of grants and equity investments from the European Innovation Council (EIC) Accelerator.