Credo Ventures sees activity uptick, plans further deals in 2023 with EUR 75m fourth fund

Katka Krosnar
23 August 2023

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With activity picking up following a slower start to the year, Czech VC firm Credo Ventures is in serious talks with three to four targets and will aim to close three to seven new deals by the end of 2023 via its EUR 75m fourth fund, general partner Guillaume Fournier told this news service.

While fundraising at later stages is more challenging in the current environment, early-stage fundraising is less impacted by the macroeconomic landscape and there are plenty of people founding new startups, Fournier said.

Early-stage valuations have come back to more rational levels, while not falling as much as at the Series A stage and above, he said. Therefore, now is a great time for early-stage funds such as Credo Ventures to be active, he said.

Investment strategy
CS4, which held a first close in April 2022 and a final close in October 2022, backs startups founded by central and eastern European (CEE) founders, both in the region and abroad. The fund has invested in 14 startups since its first close and expects to back 25-30 in total, Fournier said.

The fund will be fully invested over the next three years, Fournier said.

While generalist, the fund's targets are often software-based companies, including product-led software as a service (SaaS), generative artificial intelligence (AI), and cloud infrastructure developer tool (DevTool) companies, Fournier said.

Targets are usually anchored on some form of technological breakthrough, having built a unique IP or a unique product vision, he said.

Credo Ventures invests at the pre-seed, seed and early Series A stages, usually co-investing and often participating in follow-on rounds.

Ticket sizes range from EUR 100,000-EUR 5m, with a sweet spot of EUR 500,000-EUR 3m, Fournier said. A maximum of 10% of the fund would be invested into one company over several rounds, he added.

While most of the fund's portfolio companies are based in central Europe countries, namely the Czech Republic, Poland, Hungary and Slovakia, as well as Romania, Credo Ventures is not focusing on any particular countries within the CEE region, Fournier said, noting that is has recently been active in Bulgaria, for example.

The war in Ukraine led to an influx of talented and resilient Ukrainian founders to the region, he said. Credo Ventures has been talking to a number of founders and aims to invest into Ukraine-founded startups in future, he said.

Credo Ventures sources targets through a combination of inbound approaches, leads from other funds, networking, organising its own events and scraping the Internet, Fournier said.

It usually retains legal counsel to close investments, he said.

Portfolio and team
Credo Ventures has invested into more than 80 companies since launching its first fund in 2010. It currently has 55 companies in its portfolio and EUR 250m in assets under management (AUM), according to its website.

Credo Ventures was an early backer of software decacorn UiPath and also invested into Czech product management software tools unicorn Productboard. It also invested in Apiary, which helps companies accelerate and control the design, development, and documentation of their APIs, which was sold to Oracle, and AI cyber security company Cognitive Security, which was sold to Cisco. Its other investments include financial fraud detection startup ResistantAI, data projects contextual AI startup Deepnote, IP Fabric, which has developed network assurance software for network engineering, planning and operations teams, and devops tools startup Better Stack.

It has completed 14 exits and is currently working on a number of further realisations, Fournier said, noting that the best exits are usually opportunistic, coming on the back of approaches from buyers.

Credo Ventures has five partners and a total of 13 people in its team. It has offices in Prague and Krakow, Poland.

Last year, Credo Ventures announced three new partners – Fournier, who rejoined Credo after two years at portfolio company Pricefx; Maciej Gnutek, who joined from VC firm Innovation Nest; and Karolina Mrozkova who joined from US VC firm White Star Capital. They join founding partners Ondrej Bartos and Jan Habermann.