VC firms from Central and Eastern Europe (CEE) usually focus on their region – but Poland’s MOC market has a history of going beyond.
Western European unicorns like Germany are supported Tier Scooter Company And JOKR food delivery startupwas founded in Berlin and now operates out of New York.
And it has recently raised its second capital of 80 million euros to invest in the early stages of the European market and network effect startups.
MOC is another example of CEE-based VC, along with check credit And Polish Inovoraising a new fund despite difficult conditions in the European investment market.
Competition in the West
“And why not?” quipped MOC managing partner Marcin Zabylski when asked why a startup from France or Germany would consider inviting a Polish VC to its head table.
But MOC also has a longer answer. “It’s much harder to win deals in Western Europe than in CEE, but it’s still possible when you have the expertise,” says managing partner Marcin Kork. He continued: “It is more difficult to get a public VC company from Poland that invests in the West.”
MOC, which launched its first fund in 2018, specializes in investing in network effect companies – where the value of a product, service or platform only increases as the number of users increases. Almost 70% of the portfolio of the first MOC fund operates in this model – they are mainly markets, but there are also some fintech and software startups.
Cork says that it becomes much easier to “sell” MOC to Western European entrepreneurs. “If you focus on markets, if you have five, 10, 15 markets in your portfolio, it’s easier to get a deal with another one because you’ve accumulated knowledge. “If you’re negotiating with an entrepreneur enough, if you know their market and understand their business, you can find yourself in very competitive deals.”
About half of the first fund’s investments have been in Western European startups, including Tier and JOKR, France’s Deeptech Pathway, UK fintech Silverbird and Dutch marketing platform Convious. MOC has also supported the most successful startups in Poland, such as medtech DocPlanner and edtech Brainly.
As a Polish VC, MOC also has leverage against its Western counterparts: a unique understanding of the regional market. This knowledge can be vital for startups looking to expand into Eastern Europe.
For market-building entrepreneurs, CEE is often a tier-one emerging market. This is a big market they want to reach but they don’t have enough expertise. That is why they are looking for partners from this region to provide them with not only capital but also the network and help them expand.
With the new fund, MOC wants to support around 30 new start-ups, mostly in the early stages of the project. The fund’s initial tickets are between 200,000 euros and 2 million euros, and it is possible to invest up to 8 million euros in one company.
A third of the new 80 million euro fund will come from the European Investment Fund. Many individual and family investors, mainly entrepreneurs from CEE, have also contributed. The fund’s capital cap is 100 million euros, and the partners are currently negotiating with additional investors.
Zabylski adds that by investing in Western European startups, which typically receive higher valuations than Eastern European startups, MOC positions itself well in the eyes of its investors.
“Most of our LPs are from CEE and for them it is a good sign that we are investing in Western Europe,” he says. “Values are potentially higher and higher returns can be achieved.”
Zosia Wanat is Sifted’s correspondent in Central and Eastern Europe. He tweets from @zosiawanat