VC firms from central and eastern Europe (CEE) usually focus on their own region — but Poland’s Market One Capital (MOC) has a history of going far beyond.
And it’s just raised its second fund, of €80m, to invest in more early-stage European marketplace and network effect startups.
Competing in the West
Asked why a startup from France or Germany should consider inviting a Polish VC to their cap table, Marcin Zabielski, managing partner at MOC, quips: “And why not?”
But MOC has a longer answer, too. “Winning deals in western Europe is much harder than in the CEE, but it’s still possible when you have your specialization,” says Marcin Kurek, also a managing partner. “Being a generalist VC from Poland which invests in the West is more difficult.”
MOC, which launched its first fund in 2018, specializes in investing in network effects companies — where the value of a product, service or platform goes up simply because the number of users increases. Almost 70% of MOC’s first fund’s portfolio operate in this model — they’re mostly marketplaces but there are also some fintech and software startups.
That makes it far easier to “sell” MOC to western European entrepreneurs, says Kurek. “If you focus on marketplaces, if you have five, 10, 15 marketplaces in your portfolio, it’s easier to win a deal with another one because you’ve gathered the knowledge. If you’re in talks with an entrepreneur early enough, if you know their market and understand their business then you can find yourself in very competitive deals.”
Around half of the first fund’s investments have been in western European startups, including Tier and JOKR, French deeptech Pathway, British fintech Silverbird and Dutch marketing platform Convious. MOC has also backed Poland’s most successful startups, such as medtech DocPlanner and edtech Brainly.
As a Polish VC, MOC also has leverage against its western peers: a unique understanding of the regional market. This knowledge can be crucial for startups that want to expand to eastern Europe.
“For entrepreneurs who build marketplaces, CEE is often a tier-one expansion market. It’s a big market that they want to reach but they don’t have enough expertise. That’s why they’re looking for partners from this region who’ll provide them not only with the capital but also the network and to help them expand,” Zabielski says.
With the new fund, MOC wants to support around 30 new startups, mostly at the pre-seed and seed stage. The fund’s initial tickets range from €200k to €2m, with the possibility to invest up to €8m in one company.
A third of the new €80m fund comes from the European Investment Fund. Numerous individual and family investors, mostly entrepreneurs from CEE, have also contributed. The fund’s hard cap is at €100m, and the partners are currently in talks with additional investors.
Zabielski adds that by investing in western European startups, which usually get higher valuations than eastern European startups, MOC’s positioning itself well in the eyes of its investors.
“Most of our LPs are from CEE and for them it’s a good sign that we invest in western Europe,” he says. “Valuations are potentially higher, and one could achieve higher returns.”
Zosia Wanat is Sifted’s central and eastern Europe reporter. She tweets from @zosiawanat