Venture Debt - Eastern Europe | Statista Market Forecast

The country in Eastern Europe is projected to see Total Capital Raised in the Venture Debt market market reach US$23.59m in 2024.
Traditional Venture Debt is set to dominate the market with a projected market volume of US$20.08m in 2024.
In global comparison, the United States will lead in Capital Raised, with US$22.4bn in 2024.
In Eastern Europe, the Venture Debt market is gaining traction among tech startups in Poland, leveraging non-dilutive financing for growth.

Definition:

The Venture Debt market refers to a form of equity and debt financing combination, which is used to finance early stage and growth stage capital-backed companies. Besides equity funding rounds, business can seek venture debt that minimizes ownership dilution and governance requirements to increase the cash runway to reach the next milestone or even provide a cushion for delays.

Structure:

The market consists of two segments:
- The Traditional Venture Debt market refers to a form of debt financing that is often provided to venture-backed companies to either buy new equipment, meet a deficiency of short-term capital, or support expansion plans.
- The Growth Venture Debt market refers to a form of debt financing that is often structured with warrants or options, which provides a rapid development stage in which businesses can support their long-term oriented growth plans.
The market data comprises of the amount of capital raised, number of deals, and average deal size.

Key players in this market are companies such as Wells Fargo and Hercules Capital.

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Venture Capital
Venture Debt funds are sponsors by governments

The Venture Debt market in Eastern Europe is experiencing significant growth and development due to several key factors.

Customer preferences: Entrepreneurs in Eastern Europe are increasingly turning to venture debt as a financing option for their startups. This is driven by the desire to retain ownership and control of their companies, as venture debt allows them to raise capital without diluting their equity. Additionally, venture debt provides entrepreneurs with the flexibility to fund their growth initiatives, such as product development and market expansion, without the need for immediate profitability.

Trends in the market: One of the key trends in the Venture Debt market in Eastern Europe is the increasing availability of capital from both local and international lenders. As the startup ecosystem in the region continues to mature, more financial institutions are recognizing the potential for high returns on investment in the tech sector. This has led to a greater number of venture debt funds and specialized lenders entering the market, providing entrepreneurs with a wider range of financing options. Another trend in the market is the growing interest from institutional investors in Eastern European startups. As the region's tech ecosystem continues to thrive, venture capital firms and private equity funds are increasingly looking to invest in promising companies. This has created a demand for venture debt as a complementary financing tool, allowing investors to leverage their equity investments and provide additional capital to startups.

Local special circumstances: Eastern Europe has a number of unique characteristics that contribute to the development of the Venture Debt market. The region is home to a highly skilled and educated workforce, which has led to the emergence of numerous innovative startups across various sectors. Additionally, the relatively low cost of doing business in Eastern Europe compared to Western Europe has attracted foreign investors and entrepreneurs, further fueling the growth of the tech ecosystem.

Underlying macroeconomic factors: The macroeconomic factors in Eastern Europe also play a role in the development of the Venture Debt market. The region has experienced steady economic growth in recent years, with increasing GDP and rising disposable incomes. This has created a favorable environment for startups, as consumers have more purchasing power and are more willing to adopt new technologies and services. Additionally, government initiatives to support entrepreneurship and innovation, such as tax incentives and startup grants, have further stimulated the growth of the tech ecosystem and increased the demand for venture debt. In conclusion, the Venture Debt market in Eastern Europe is experiencing significant growth and development due to customer preferences for flexible financing options, the increasing availability of capital from both local and international lenders, the growing interest from institutional investors, the unique characteristics of the region's tech ecosystem, and the favorable macroeconomic factors. These factors are driving the expansion of the Venture Debt market and creating opportunities for entrepreneurs and investors in Eastern Europe.

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on the amount of capital raised, the average of deal size and the number of deals.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use data from OECD, annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, CPI, number of small and medium-sized enterprises (SME), new businesses registered (number) . This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Venture capital is the term used to call the financial resources provided by investors to startup firms and small businesses that show potential for long-term growth. It has become a very important source of capital for entrepreneurs, who often have problems with financing their needs through risk-averse banks. Venture capital investments incorporate a high level of risk as only some of the VC-backed companies develop into successful and highly profitable businesses. In 2020, the leading venture capital backed company worldwide was the Manbang Group, which based in Nanjing, China.