fast growth : evolution of the romanian tech startups ... romanian tech startup ecosystem is rapidly...

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

4

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.


7

11

16

18

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


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


1 Trends


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


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

1 Funding

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


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 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


1 Investors

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


1 Ecosystemtop transactions

most active players

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


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


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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