Polish SMOK Ventures launches second $25M fund focused on CEE and diaspora

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in Startup Stories

  • SMOK Ventures raised their second fund at $25M to invest in 25-35 startups from the CEE region and diaspora.
  • The first close included 60+ private LPs, with most of them being entrepreneurs from Central & Eastern Europe and diaspora, including founders of three regional unicorns , former regional head of Google and early employees in companies like Data Dog or Sumologic originating from CEE.
  • At the second close (January 23, 2024), PFR Ventures joined SMOK II as the key LP. PFR Ventures, a Polish development institution, finances both emerging and experienced VC fund managers.

SMOK II has already invested in 12 startups from countries like Poland, Ukraine, Czechia, Croatia, Bulgaria, Latvia, Serbia and Bosnia.

The Polish fund is part of a global network of funds with over $400m under management co-managed by Paul Bragiel and focused on developing markets which includes Golden Gate Ventures (Southeast Asia), Niu Ventures (South America), Bragiel Brothers (North America), Savannah (Africa) and Sisu Game Ventures (gamedev focus). The other two partners are Diana Koziarska (previously CEO at ReaktorX) and Borys Musielak (tech entrepreneur, sold Filmaster to Samba TV).

“Despite expanding our operations to new countries, Poland remains our primary market. The rest of our investment policy remains unchanged. We continue to seek startups at the pre-seed and seed stages. Our goal is to invest in at least 10 new projects from Central & Eastern Europe in 2024,” Musielak said in a statement.

Borys Musielak

SMOK’s investment thesis

SMOK has a distinct investment philosophy, combining a focus on founders from Central and Eastern Europe with a global perspective. The firm engages in pre-seed and seed investments ranging from $100k to $1M, and in some cases, even more with follow-ons. At the pre-seed stage, SMOK often leads, while at the seed stage, it either follows or co-leads. 

The firm’s emphasis lies in the software domain, with a keen interest in software development tools, game development, and artificial intelligence. Furthermore, SMOK targets the US market, and it has a preference for companies headquartered in Delaware. 

Portfolio highlights include startups from Croatia and Bosnia & Herzegovina

SMOK’s diverse portfolio includes regional startups as well, such as Gotiva and 57hours, with both of them originating from Croatia and Bosnia & Herzegovina respectively:

  • Gotiva: A Polish-Bosnian mobile game development company founded by a former co-founder of Huuuge Games, a CEE unicorn.
  • 57hours: A Croatian marketplace catering to active tourists seeking non-standard trips with guides to the most interesting places worldwide.
  • Finmap: A Ukrainian startup based in the UK, specializing in liquidity and cash flow management for small and medium-sized enterprises.

SMOK I, the first fund, deployed a total of €9 million in 24 startups between 2020 and 2022. The startups from SMOK I’s portfolio collectively generate over €31 million annually and employ more than 650 people.

Furthermore, these startups have raised over €99 million from external investors, with 83% of this amount coming from investors outside of the CEE region, while the total valuation of all startups in the portfolio has exceeded €230 million.

The average valuation of a SMOK startup has tripled since the initial investment, and in the case of cap in SAFE rounds, it has sextupled. A remarkable aspect of SMOK’s investments is the commitment to diversity, with every third startup being led by a woman. Moreover, 12.5% of the startups had a founding team consisting entirely of women during SMOK’s investments.

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