fast growth : evolution of the romanian tech startups ... romanian tech startup ecosystem is rapidly...
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Fast growth : Evolution
of the Romanian Tech
Startups ecosystemVenture Capital and startups in Romania
December 2019
Fast growth: Evolution of the Romanian Tech Startups ecosystem
After years of constant growth, 2019 set a new milestone in the development of the Romanian Tech startups ecosystem. It is growing up and attracting investor’s interest.
Funding of Romanian startups became more sustainable and diversified. The pipeline of the local and international ventures is no longer driven by a few small-sized companies in e-commerce and marketplaces, rather it shows a balanced mix of innovative ideas in FinTech, Biometrics, Blockchain, Robotic Process Automation and HR related solutions. Bucharest is the main hub in Romania, driven by its strong digital workforce and diversity.
Top funding is driven by international investors with only a few local Romanian funds able to participate in Series A+ rounds. Among the local VC funds investing in the ecosystem, we increasingly see more international players scouting the Romanian tech market for investments opportunities. Due to the lack of local growth VC funds, most of the early stages startups are looking to join external incubators and accelerators programs.
In terms of M&A, corporates remain the most relevant exit channel for startups founders and their VC investors. Romanian ventures are sold in rather early stages, whereby the buyers’ headquarters are outside Romania. Besides the missing experience of an international IPO, the local stock exchange market has never been seen as a relevant exit channel for the Romanian tech startups, despite favorable macroeconomic conditions.
Empowered by the success of UiPath, the first Romanian unicorn, the local tech startups ecosystem is experiencing a radical transformation. We see double-digit growth in the ecosystem indicators: number of startups, new accelerators, capital raising rounds, total funding amount.
Our Global survey of over 506 business reveals that, relative to other regions of the world, Western Europe is now considered more attractive than 10 years ago. Moreover, Eastern Europe is considered the second-most attractive region for investments in the world. In this positive investment context, Romania should take advantage of its second largest economy in Central-Eastern Europe and its long tradition in IT education to increase its potential in the region.
Venture Capital and startups in Romania 20192
Florin Vasilică
Partner, Leader of Transaction Advisory Services of EY RomaniaEY CESA Capital & Debt Advisory Leader
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Executive Summary
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Trends
Funding
Investors
The Romanian tech startup ecosystem is rapidly growing with innovative
ideas in the area of FinTech, Biometrics, HR/Recruitment, Marketing
and Analytics related solutions.
Including UiPath, the ecosystem accounts in 2019
for an accumulated funding of $613m+, which is +50% more than
previous year. Excluding UiPath from the total amount the trend is
similar, due to the increased number of seed rounds over $1m.
Still underserved by global funding players, the local tech startup
ecosystem has developed with the involvement of EU funded VC funds and
the local community of investors and entrepreneurs.
Venture Capital and startups in Romania 20193
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16
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Ecosystem
Empowered by the success of UiPath and EU funded VCs, the ecosystem
became more active than previous year. We expect the foundation built
this year to create the ground for the next Series A and more seed
rounds, at the beginning of 2020.
Dashboard 2019
Startups & Scaleups,
Business Angels,
VCs & PEs.
Active investors
network1500+ 100+
$1bnAll time investments
in the ecosystem $680kAverage Investment
per Round
( w/o UiPath )
TrendingBusiness models
Enterprise Software,
Fintech, Security
and Recruitment
Outlookfor future
trends
AI as key disruptive
technology in all industry
sectors
Outlook for growth
We expect
seed funded startups with +$1m
to start closing Series A funding
New funding
We expect existing funds to raise
additional capital and additional
EU funded PEs & VCs to be lunched
on the Romanian market
Venture Capital and startups in Romania 20194
December 2019 - Based on publicly available information
Key Terms
With investments we refer to funding, M&A deals and IPOs, which involve startups, operating a digital business
model. Investments in non-digital startups have not been considered in this report.
Funding M&A IPO
We define funding as equity or
debt financing with a change of
ownership below 50% provided
to a startup that operates a
digital business model.
M&A activity comprises acquisitions of Romanian
startups with a change in
ownership of more than 50%.
We define an initial public
offering (IPO) as a public
offering in which a startup
founded in Romania sells
shares for the first time.
Exit
Investors Startups
We define investors as market participants
acquiring shares in Romanian-based startups in
course of either funding or M&A. A company is
considered corporate when its primary business
is non-finance related, e.g. industry or service
provision.
We define an investor as a financial investor
when its primary activities are investing or
financing related.
Startups are companies generally younger than 5-10
years that are operating digital business models.
Exceptions might apply for older companies that have
digitally transformed their business model during the
last 5-10 years.
The digital sector comprises companies mainly focused on the sectors consumer products and services,
software, IT services, media and entertainment or
retail/ distribution.
Corporate Financial
Investments
Players
Venture Capital and startups in Romania 20196
Venture Capital and startups in Romania 20198
Trending industry sectors are now accelerated by ML/AI technology
Enterprise Software FinTech Recruitment
Security Marketing
Artificial Intelligence
Enterprise Software startups have been traditionally the best funded sector within the local ecosystem.
Software applications for web development and recently RPA solutions succeeds to attract local and international funding or exits via cross-border transactions with key international players. UiPath is the first Romanian unicorn currently valuated for $7.0b active in the
area of Robotic Process Automation solutions.
Lack of workforce and skills have been an increasing problem in Europe, not only in Romania. Startups tackling diverse segments of the recruiting process, acting either as a platform or offering selected services, continued to be in the public spotlight. Recruiting platforms engaging in specific occupational fields such as medical and IT, received significant funding in the last years and the trend continued during 2019.
Fintech startups have been evolving by offering a disruptive set of services and solutions. Most active startups with their solutions can be mapped in the following categories : Payments & wallets, Lending, Personal Finance, Investment & Wealth, InsurTech, Financial Infrastructure. Another category , different from the ones mentioned before, provides different cross-functional enablers, for the existing financial services.
Security is the most mature sector of the Romanian tech market. While Romanian AntiVirus (RAV) sold to Microsoft in 2003, Bitdefender, the second antivirus solutions provider, has now the second biggest valuation of a Romanian Tech business after UiPath. New startups are tackling Biometrics and Cloud security solutions.
Machine Learning (ML)/Artificial Intelligence (AI) remains the driving force behind more and more startups, aiming to
facilitate innovations or optimize processes.
Marketing is the sector with the highest growth rate due the disruption in online sales channels. Adopting a growth mindset has become an essential element of the marketing teams. In this context, startups provide more agile marketing execution models with focus on customer experience, an essential ingredient for online growth.
Startups are providing innovative digital ideas and business models
Enterprise Software FinTech Recruitment
Security Marketing
Selected startups with ongoing investments
• SmartDreamers
• Happy Recruiter
• MEDIJobs
• Undelucram
• Jobful
• UiPath
• DocProcess
• Roboself
• SWAZM
• Questo
• Blugento
• FintechOS
• SymphoPay
• FINQware
• Beez
• Instant Factoring
• Smart Bill
• AlphaBlock
• TypingDNA
• Cyscale
• SecurifAI
• Pentest-Tools.com
• InnerTrends
• MorphL
Venture Capital and startups in Romania 201910
Outlook for future trends
AI will change society –but we must also ask what is changing in society that
makes AI necessary?
Nigel DuffyEY Global Artificial Intelligence Leader
Half of the investment rounds in 2019 are between $100k and $2m
Business Name
Amount DateEstimated market value
of the company
1 UiPath $568m April $ 7Bn
2 FintechOS $15.3m May/December $56m - $84m
3 Elrond $1.9m July $8m - $11m
4 TypingDNA $1.5m January $6m - $9m
5 Postis €1.3m May $6m - $8m
6 AlphaBlock €1.3m February $15m
7 Frisbo €1.3m November $6m
9 Blugento €1.0m July $4m - $6m
10Happy
Recruiter€1.0m April $4m - $6m
11 MEDIJobs $900k August $4m - $5m
12 BunnyShell €750k September $3m - $5m
13 SymphoPay €650k March $3m - $4m
14 SWAZM €500k May $2m - $3m
15 BookVitals €500k July $2m - $3m
16Instant
Factoring€500k November $6m - $9m
17 Digitail €320k April/August €400k - €600k
18 Undelucram €300k July $1m - $2m
19 Beez €250k June $1m - $2m
20 FINQware €200k July €800k - €1m
21 Roboself €200k September €800k - €1m
22Nifty
Learning€110k October €440k - €660m
23 Ialoc €100k January €400k - €600k
24 Medicai €80k January €400k - €600k
25 Jobful €100k June €400k - €600k
25 Questo N/A February €1.5mSource: Crunchbase, Megamarket, Press Releases
Venture Capital and startups in Romania 201912
Transactions over 80k | November 2019
Top 10 fundings in 2019 account for $596m, up to 54% vs all 2018
2019
20182019
2018
$378m $568m
€600k $15.3m
$100k $1.5m
€500k €1.2m
UiPath
FintechOS
TypingDNA
Frisbo
$596m
$403m
$10m
Top 10 funding volumes 2019 vs. 2018
Source: Crunchbase, Press Releases, November 2019 - Based on publicly available information
Report titles goes here14
0
10
20
30
40
50
60
0
100
200
300
400
500
600
700
2013 2014 2015 2016 2017 2018 2019
Others UiPath Rounds
UiPath accounts for 92.5% of total funding
Source: Crunchbase, Press Releases, November 2019 - Based on publicly available information
Funding volumes 2019 vs. 2018
Venture Capital and startups in Romania 201915
Venture Capital to maintain growth drive in 2019 and 2020 but still insufficient to fuel early-stage startups
Source: Dealroom
€0.00 €0.20 €0.40 €0.60 €0.80 €1.00 €1.20
AUS
POR
CRO
ROM
EST
GRE
POL
HUN
UKR
SLO
LAT
LIT
BUL
€ (m)
€0.00 €10.00 €20.00 €30.00 €40.00 €50.00 €60.00
EST
EUR
AUS
SPA
LIT
POR
LAT
CEE
ITA
SLO
GRE
POL
HUN
BUL
ROM
Source: Dealroom
Average median rounds increased in 2019 vs 2018 up by more than 20% (w/o UiPath)
VC Investment per Capita in Romania ( w/o UiPath ) is lowest in CEE
Venture Capital and startups in Romania 201915
Active Investors in Seed/Series A
Investors Round / Date Business
1
Accel Partners, Sequoia Capital, Wellington Management, Institutional Venture Partners,
CapitalG, Dragoneer Investment Group, Coatue Management, Sands Capital Ventures, Madrona Venture Group
Series DApril 2019
UiPath
2Techstars, Gecad Ventures, GapMinder
Venture PartnersSeed
Jan 2019TypingDNA
3 Armand Domuta Seed
May 2019SWAZM
4Binance Labs, Electric Capital, NGC Partners,
Maven 11, Authorito Capital Seed Elrond
5 Real VenturesSeed
Feb 2019AlphaBlock
6
Launchub Ventures, Gecad Ventures, GapMinder Venture Partners
Digital East Fund / Earlybird Venture Capital, OTB Ventures
SeedMay 2019,
Series ADecember 2019
FintechOS
7 TechstarsSeed
Aug 2019MEDIJobs
8 Blackstone Group N/A Superbet
9Gecad Ventures, Early Game Ventures,
Sparking CapitalSeed
March 2019SymphoPay
10 GapMinder Venture Partners Late VC
Jul 2019Undelucram
11GapMinder Venture Partners, ROCA
PartnersSeed
Jan & June 2019Beez
12 GapMinder Venture Partners Seed
Jul 2019FINQware
14 GapMinder Venture Partners, ROCA XSeed
Nov 2019Frisbo
15 Early Game VenturesSeed Jul
2019Bookvitals
16 Early Game VenturesSeed
Sept 2019BunnyShell,
Roboself
Source: Crunchbase, Dealroom, Press Releases
Venture Capital and startups in Romania 201917
Elrond is a complete rethinking of public blockchain architecture, especially designed to bring a 1000x overall improvement by being scalable, efficient and secure while maintaining a sufficiently decentralized settings. Elrond supports multiple smart contract languages and formal verification.
Top Startupswith funding
over $1m
Elrond
TypingDNA provides typing biometrics authentication as a service, enabling companies recognize people by the way they type. Authentication API compares "how" people type on their keyboards against previous recordings. Main applicability is in passive fraud prevention and 2FA/MFA, on both PCs and mobile phones. The company is now established in USA from early 2018, two years after being started in Romania.
TypingDNAPostis platform helps Retailers, Logistic Service Providers and Transport companies to streamline complex delivery process and optimize their efficiency across their common ecosystem so they can gain competitive is improving customer experience and satisfaction by offering full visibility and predictability on full delivery process.
Postis
Frisbo is the first e-fulfillment and warehouse platform that offers storage, order processing, invoicing, packing, delivery and administration solutions for online sellers.
Frisbo
FintechOS mission is to change the way people experience and to transform the digital customer experience quickly and affordably. FintechOS provides a unique self-service framework allows teams to develop and operate end-to-end financial products built on custom data models that constantly evolve through each application’s lifecycle.
FintechOS
AlphaBlock is a Romanian AI company that builds investment management solutions for pension funds, family offices, and hedge funds.
AlphaBlock
Happy Recruiter introduces Dora – the Robot. It is the recruiter's virtual assistant that finds and screens candidates, schedules them for interviews, replaces them if rejected/withdrawn.
Happy Recruiter
Venture Capital and startups in Romania 201919
Blugento’s core business is a Platform as a Service (PaaS) solution for e-commerce. Using the Magento framework, Blugento’s platform enables business owners to effectively create e-shops and automate their online business processes.
Blugento
Most activelocal VC
20
GapMinder Venture Partners is a Venture Capital Fund based in Bucharest, Romania, targeting ITSoftware and Services start-ups in Central Eastern Europe. The focus is on scale potential looking for disruptive projects with regional, European and global ambitions harvesting sustainable differentiators that offer a long-term competitive advantage, incl. unique technologies.
www.gapminder.vc
Funds Raised€36M
Notable Investments
TypingDNA, Frisbo, Elrond
FintechOS, SmartDreamers
Undelucram, MEDIJobs
TalentBrowse, Beez
Medicai | RideSafe | Sypher
FINQware | Deepstash
OfficesBucharest, Romania
Target
SaaS
Artificial Intelligence
Machine/Deep Learning
Advanced Analytics
Security
Healthcare IT & MedTech
Predictive Marketing
Most activeAccelerator
Techcelerator vision is to reposition Romania on the world map of leading innovative startups that will reshape the world of tomorrow and offer us a higher life quality.
• Support local founders and startups to rapidly accelerate their businesses by a rich package of resources.
• Strengthen the startup ecosystem in Romania by accelerating growth of most extraordinary founders and their startups with highest potential to conquer the global market.
• Pump them with high quality fuels: investment, top educational content and new marketing attack tools, link to attractive angels, investors and industry advisors, scale up services and promotion to world top startup events and movements.
Mission:
www.techcelerator.ro
Seeders
TalentBrowse | Wireframe
ApiaryBook | AppSeed | CMD
FormulaDB | EngageApp
Ialoc | Vetted | Omnicare
Hyper Pragma | Miio Smile
Uhura | Medicai | Engage
RideSafe | Beez | Confidas
OfficesBucharest, Romania
Industries
Fintech
Health | Food | Media | IoT
Enterprise Software
Predictive Marketing
Recruitment
Healthcare IT & MedTech
Robotics
Venture Capital and startups in Romania 201921
EY | Assurance | Tax | Transactions | Advisory
About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
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© Ernst & Young SRL. All Rights Reserved.
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Venture Capital and startups in Romania 201922