Purple Ventures plans EUR 30m-EUR 40m fund to invest across CEE

Purple Ventures II will be its first fund open to external investment, with EUR 15m already committed by founding LP Purple Holding, Stanek said. 

Purple Ventures considered Luxembourg, the Netherlands, Malta and Cyprus for the fund but Estonia is the preferred location, Stanek said. The fund is likely to be established in Estonia due to the country’s transparent conditions for VC funds, Stanek said.

The fund is targeting institutional investors as well as high net-worth individuals as investors, he said.

The vehicle plans to hold a first close of at least EUR 20m by the end of 1Q 2024 and a final close by the end of 2025, Stanek said.

Purple Ventures invests into early-stage technology companies that already generate revenues and have global ambitions, he said. While its focus is broad, healthtech, B2B SaaS and fintech are among the “themes” for its investments, he said, adding that this could also include deeptech related to healthtech and AI-related startups, he added.

The second fund will focus on founders from the CEE region, from the Baltics to Romania and Bulgaria and including Ukraine and Georgia, Stanek said. It expects that more than 60% of its investments will be outside of the Czech Republic, he said. While its target companies might be headquartered in other countries such as the UK, their founders and usually their development teams will be within CEE, he added.

The fund is likely to be established in Estonia due to the country’s transparent conditions for VC funds, Stanek said.

The second fund will continue the investment strategy of the first fund but with a more focused geography, Stanek said.

It plans to have 50 companies in the portfolio, investing over the next four years, he said. It will begin building deal flow in 2H 2023, he added.

Purple Ventures invests ticket sizes of EUR 200,000-EUR 500,000, Stanek said. It typically acquires stakes of 10% or less, and almost always co-invests with other VC firms from the CEE region, he said.

Portfolio development
Launched in 2019, the firm’s predecessor fund, Purple Ventures I, has 21 portfolio companies in the US, South America, Europe and Asia. The first fund, which has operated as a family office, plans to make three to four more investments in the CEE region by year-end before closing the fund at around EUR 16m, Stanek said.

Purple Ventures currently makes six investments per year and has capacity to double this, Stanek noted. It is currently working on several potential exits, he said.

The fund is targeting startups doing “something meaningful” and making the world a better place, Stanek said. Ideally, founders have lived abroad, have perseverance and the competence to scale a business internationally, he said. Purple Ventures plays a hands-on, active role, he said.

The current macroeconomic climate is the ideal time to invest into startups, Stanek said. Valuations for early-stage investments may have seen a slight correction, but more importantly, owners are less confident and more open to negotiations as a result, he said.

The firm’s strategy is to invest at the early stages and rarely to participate in follow-on rounds, Stanek said.

Purple Ventures sources deals through word of mouth, from other funds and events, he said.

Purple Ventures I’s portfolio includes psychotherapy platform Hedepy, camper van marketplace Campiri, blockchain startup Tatum and foodtech startup Choice.

Purple Ventures has five full-time equivalents in its team.

[Editor's note: The article has been amended post-publication to clarify Purple Ventures does not have soft commitments from investors from Luxembourg, the Netherlands, Malta and Cyprus but considered these regions for establishing its fund.]

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