Polish VC firm bValue has announced its third fund, targeted at later-stage tech startups from central and eastern Europe (CEE). It’s raised €72m at first close, and hopes to raise €100m in total.

The firm is hoping to fill a gap in the market for later-stage capital and invest in more mature companies, of the kind which might later be bought out by a private equity fund or a strategic investor. Its first two funds were focused on early-stage investments — but, as bigger international VCs have increasingly begun snapping up startups with unicorn potential in the region, it’s changing tack. 

“We see a growing number of companies that don’t follow the path leading to a billion-dollar valuation but attract strategic investors who acquire them at a price that generates appealing returns for the shareholders,” says Maciej Balsewicz, partner at bValue. “It’s a clear mark that our tech ecosystem is maturing and there are multiple ways to develop and grow a new business.”

BValue’s new fund is yet another sign that the venture market in CEE is maturing. Polish VC firms Inovo and Market One Capital and Czech firm Credo have all also raised  significant funds despite unfavourable economic conditions in recent months.

Where will the money go? 

BValue aims to invest in eight to twelve startups from the CEE with the new fund. It’s focused on growing, profitable companies with scalable business models. A target company is Ebitda-positive and has a turnover of no more than €25m.

With this strategy, it hopes to fill the gap between traditional VC funding for early-stage startups with high growth potential and private equity offerings which focus on mature companies that are often past the growth stage.

Michał Bartosz, partner at bValue, says the team is more interested in companies that have the potential to become regional, but not necessarily global, leaders. “The latter are often discovered at an early stage by more and more of the global VC funds that have become exceptionally interested in the CEE region. They are difficult to compete with for local teams,” he says.

What’s bValue’s track record like? 

In the last six years, bValue has managed two early-stage funds with a combined value of €20m. The firm has made 36 investments — in companies such as a live chat creator Tidio, venture builder More Growth and cybersecurity startup Spin.ai — and had 12 exits. 

Who’s backing bValue? 

The new fund is backed by around 20 Polish and international investors. This group includes private investors, family offices and international institutions, including the European Investment Fund. 

Sifted’s take 

In recent years, an increasing number of firms have been keen to invest in CEE startups at the pre-seed and seed stage. But there still aren’t too many investors to back later-stage companies and participate in later-stage rounds in CEE. 

This is exactly the gap bValue wants to fill. “This is a huge market niche, where we see a lot of investment opportunities that can generate considerable returns,” says Balsewicz.

Zosia Wanat is Sifted’s central and eastern Europe reporter, based in Warsaw. She tweets from @zosiawanat