Romanian Tech Startups Ecosystem - EY

December 2020

Romanian TechStartups Ecosystem

Romanian Startups Ecosystem 2020

Florin Vasilică

EY Romania Strategy and Transactions Leader EY CESA Capital & Debt Advisory Leader

2

Turning crisis into opportunity can result in fundamental, long-term growth

Previous crisis proved to be a catalyst for growth

Covid-19 has emerged as a game-changer for Digital Transformation. Business leaders arenow focused on leveraging technology and digital. Most of the companies experienceddifficulties with online connectivity and communicating with their customers and suppliers, in

addition to infrastructure issues. Some businesses have been forced to temporarilyshutdown or to substantially reduce the activity, along with their workforce.

Surprisingly, the last Global Financial Crisis proved to be a fertile period for successful startups and unicorns. It was a boom time for software infrastructure, development tools and social applications. Nutanix, MongoDB, GitHub, and Cloudera were all founded during this period, while others such as Square, Slack, Dropbox and Glassdoor have tried to revolutionize how work is done. All of the above companies are now valuated at more than $30Bn. Uber and Airbnb were founded between 2007 and 2008, while Yahoo veterans Jan Koum and Brian Acton created encrypted messaging WhatsApp in 2009 as a way for people

around the world to message each other quickly. Aggregate data on funding for US software companies founded after 2003 , receiving more than $100mn in investments, is positioning 2009 as a landmark year in terms of financing (source: Mattermark Data). Mostly because this is the year when Uber was founded, but still 80% of the funding went in other companies that started their business in 2009 and saw the crisis as a catalyst for their growth.

Global Market trend in favor of growth rounds

Will you define the new normal or watch it unfold?

The start of global lockdowns in March, raised sentiments that the downturn is coming, impacting the venture funding and IPO markets. A correction has happened, but not as negatively as expected. The changes in consumer behavior generated by social distancing, transformed the way we work, dine, learn, travel, consume entertainment and exercise. During the first three quarters of 2020, we have witnessed a significant increase in investments vs 2019 in: health-care, gaming, online payments and education. The same trend when comparing to 2019 has also been seen in e-commerce and shopping, manufacturing, agriculture and apparel sectors.

Even if the deals plunged vs. last year, the dealmaking goes on, in favor of well-establishedplayers. Crunchbase data shows seed funding in the third quarter was down 32 percent year over year, while the entire total early-stage funding, in the third quarter, was down 18 percent year over year. Late-stage funding has increased in the third quarter of 2020, up 24 percent year over year.

The IPO market is now on track to surpass last year by deal count and proceeds. Having a strong backlog of unicorns, the market registered a 50% increase of filings for IPO vs. last year, mainly on the US market.

Business leaders cannot ignore investments in technology and digital solutions, while the crisis should be a catalyst for addressing the shifts of cultural and societal behaviors. Now is the right time for the Romanian ecosystem, to accelerate entrepreneurship and innovation and to approach new business models. Waiting is not a solution anymore.

Funding

Despite economic downturn, investments in the local tech startups ecosystem continue to be strong and focused on scaling-up the well-established players

Romanian Startups ecosystem 20204

Business Name Amount Date

Sources: Dealroom, Crunchbase, Press Releases





* Last Round reported late December 2019



In 2020, the local ecosystem attracted more local capital than previous years,determined by an increased count of seed rounds


* Last Round reported late December 2019 Sources: Dealroom, Crunchbase, Press Releases

Investors Round Date Start-up

Alkeon Capital, Accel, Dragoneer, Coatue Management, IVP, Sequoia Capital, Madrona Venture Group, Tencent, Tiger Global Management, Wellington Partners and T. Rowe Price and Associates.

July 2020 UiPath

Gradient Ventures, GapMinder Venture Partners January 2020 TypingDNA

GapMinder Venture Partners, Roca X February 2020 Beez

Early Game Ventures December 2019 Druid*

Early Game Ventures, Roca X, Marius Alexe June 2020 CODA Intelligence

Early Game Ventures, Angel Investors January 2020 Tokinomo

Next Capital March 2020 Docbook

Founders, SeedBlink May 2020 SeedBlink

Neogen Capital April 2020 MissionCritical

SeedBlink, Cleverage Venture Capital, Founders Bridge

March 2020 SanoPass

SeedBlink, Roca X April 2020 Code of Talent

Early Game Ventures, Roca X May 2020 Humans

SeedBlink, GapMinder Venture Partners March 2020 Ialoc

Angel Investors, IAV Digital Labs June 2020 Jobful

GapMinder Venture Partners, V7 Capital June 2020 Flip

Sparking Capital, SeedBlink February 2020 EcoTree

Sparking Capital, SeedBlink June 2020 KFactory

Founders April 2020 Fenix.eco



Transilvania Angels Network, Growceanu, Simple Capital, Angel Investors

May 2020 Telios

SeedBlink, Angel Investors May 2020 Quarks interactive

SeedBlink March 2020 Amsimcel

GapMinder Venture Partners, SeedBlink September 2020 CyScale

Roca X January 2020 yeParking

Angel Investors June 2020 StressLess

Turn/River February 2020 CoCoSys

Early Game Ventures, Roca X January 2020 Miluu

Angel Investors June 2020 StockBinder

Angel Investors Pre-May 2020 Gumzzz

GapMinder Venture Partners August 2020 Innoship

GapMinder Venture Partners, SeedBlink August 2020 SecurifAI

SeedBlink, Others, Angel Investors July 2020 Ringhel

Roca X, SeedBlink, Angel Investors June 2020 Kinderpedia

Early Game Ventures, Sparking Capital July 2020 Instant Spaces

Holde Agri Invest SA August 2020 AgroCity

Early Game Ventures, Sparking Capital July 2020 Questo

SeedBlink, Others October 2020 Brio

GapMinder Venture Partners, SeedBlink October 2020 Apiary Book

SeedBlink, Cleverage VC October 2020 Oncochain




Neogen Capital June 2020 Avocado.red

Lunar Ventures, Techstart Ventures, ID4 Ventures, 7percent Ventures, Charles Songhurst, Andreas Wiese

July 2020 Neurolabs

GapMinder Venture Partners, Angel Investors

September 2020 Cartloop

Simple Capital October 2020 yummdiet

GapMinder Venture Partners, DayOne Capital, SeedBlink

October 2020 Soleadify

Roca X May 2020 xVision

SeedBlink October 2020 Cassa

GapMinder Venture Partners, SeedBlink September 2020 Voxi Kids

SeedBlink November 2020 Comarket

SeedBlink October 2020 Mocapp

SeedBlink September 2020 R-Create

Seedcamp, GapMinder June 2020 Machinations

GapMinder Venture Partners, Connect Venture, Cultivate Capital

December 2020 Deepstash

GapMinder Venture Partners December 2020 MeetGeek

IT Fortech November 2020 Inventory

Radu Gogoasa, Alexandru Boghiu November 2020 The Mavers

GapMinder Venture Partners December 2020 MediNav

GapMinder Venture Partners December 2020 RepsMate

SeedBlink, Founders November 2020 Crickle

GapMinder Venture Partners, TechAngels, Simple Capital, Transilvania Angels Network

December 2020 Cartloop


Ecosystem


Dashboard 2020December 2020 - Based on publicly available information

$1.3bn24%

All time

total investments

in the ecosystem

On its way to the IPO, UiPath closed its Series E investment round, raising $225 million at a post-money valuation of $10.2 billion. With a total of $1.2bn raised in 3 years, UiPath accounts for more than 93% of all time Romanian startups fundraising.

Total funding plunged by 60% in 2020, due the lack of Series A+ rounds, revealing no intermediary growth rounds between UiPath and the rest of the ecosystem.

€225mTotal Funding

2020 60%

Growth generated by increased interest from crowdfunding, business angels and local funds, in seed, follow-on seed rounds and new startups.

€552kAverage

Funding per Round

2020

-% w/o UiPath

Transactions over 75k

Average funding per round is similar with the last year, in a context of increased count of seed rounds.

Data : 4th December 2020

53Rounds 2020 27%


Dashboard 2020


UiPath still accounts in 2020 for 86% of local ecosystem total funding

0

10

20

30

40

50

60

70

0

100

200

300

400

500

600

2013 2014 2015 2016 2017 2018 2019 2020

UiPath

Others

Rounds

Total investments and rounds

Source: Dealroom, Crunchbase, Press Releases

Date: 4th of December 2020


The ecosystem is aligning with global trends in terms of Covid-19 emergingsectors for investments: Health, Security and Education

Driven by the pandemic context, the local market has aligned to the global trends and, for the first time, there have been more rounds in the area of Covid-19 emerging sectors: Health, Education, Security, eCommerce and Games.

Top performing sectors by number of rounds

Without UiPath and TypingDNA, the local ecosystem still provides a foundry for innovative startups in Enterprise Software and Security sectors, representing 38% of the total amount invested in seed rounds.


Enterprise Software

Heath

Education

Security

Fintech

HumanResources

eCommerce


After its Match freeze, the investments are back on a positive trend

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

0

1

2

3

4

5

6

7

8

9

10

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Rounds/Month vs Amount/Month (w/o UiPath)

Rounds per Month Amount Per Month

Sources: Dealroom, Crunchbase, Press ReleasesData: 4th of December 2020

€80-100m(w/o UiPath)

Valuation of startups that raised funds in 2020

Total valuation

Sources: Dealroom, Crunchbase, Press ReleasesData: 4th of December 2020

*Crowdfunding


SeedBlink is the largest equity crowdfunding platform in Southeast Europe with 24 closed and ongoing equity crowdfunding rounds in 2020

€7.8mTotal amount

raised throughcrowdfunding

2020

24Rounds2020


46%

Roundscrowdfunded

from total

rounds

0

2

4

6

8

10

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Ecosystem Seedblink

Crowdfunding vs ecosystem

Number of Rounds


Data: 4th of December 2020

EY exists to build a better working world, helping to create long-term value for clients, people and society and build trust in the capital markets.

Enabled by data and technology, diverse EY teams in over 150 countries provide trust through assurance and help clients grow, transform and operate.

Working across assurance, consulting, law, strategy, tax and transactions, EY teams ask better questions to find new answers for the complex issues facing our world today.

EY refers to the global organization, and mayrefer to one or more, of the member firms of

Ernst & Young Global Limited, each of which is

a separate legal entity. Ernst & Young GlobalLimited, a UK company limited by guarantee,

does not provide services to clients. For more

information about our organization, please visit

ey.com.

EY Romania, Bucharest Tower Center Building,22nd Floor, 15-17 Ion Mihalache Blvd., Sector

1, 011171 Bucharest, Romania

© Ernst & Young SRL. All Rights Reserved.

ey.com

EY | Building a better working world

https://ey.com/en_ro


http://Reserved.ey.com


Documents

Romanian Tech Startups Ecosystem - EY