Do Emerging VC Markets Mirror Established Ones? A Comparison of CEE, the USA and Israel
Bartosz Baranowski
Profilo Orcid e Marcin Bielicki
Profilo Orcid 
Pubblicato online: 22 apr 2025
Pagine: 138 - 156
Ricevuto: 12 set 2024
Accettato: 12 mar 2025
DOI: https://doi.org/10.2478/ceej-2025-0009
Parole chiave
© 2025 Bartosz Baranowski et al., published by Sciendo
This work is licensed under the Creative Commons Attribution 4.0 International License.
Figure 1.
Figure 2.
Figure 3.
Comparison of major events in the evolutionary phases of the USA, Israel, and Poland VC industries
World War Two and & technological race (Cold War) Public R&D capital going to the military and high technology sector No VC organisations present |
Six-Day War and France issuing embargo on Israel Public R&D capital going to the military sector and high technology US corporations entering Israel BIRD program promoting R&D links with the USA Appearance of first formal VC companies |
Collapse of the communist system and subsequent systemic transformation and privatisation of enterprises Need for influx of capital in high technology sector to to reduce the technology gap. Very fast appearance of formal VC/PE found operating in an aid capacity as well as privately. |
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Creation of professionally managed VC organisations linked to wealthy families First formal VC organisation (ARD) continued large investments in R&D Initiatives made by universities to connect companies with talented students |
Continuation of technological revolution Strong immigration of qualified personnel More VC organisations enter Israel Government support programs for the VC market: Technology Incubator, Magnet, Inbal |
Accession of Poland to the European Union Appearance of capital from EU structural funds. Government support programs for the VC market: PARP, KFK, NCBR |
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First LP VC organisation (DGA) Government SBIC program Rise of integrated circuits computer technology Establishment of NASDAQ and listing of Intel Continued large investments in R&D |
Government support programme Yozma aimed at the creation of a competitive VC industry through public-private partnerships. Israeli startups can IPO on NASDAQ Rise of software and communication technologies Substantial increase in the number of active VC funds in the country |
Launch of Government organisation PFR Ventures to support the development of the local VC market and innovation ecosystem Substantial increase in the number of active VC funds in the country |
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ERISA regulations reducing inflows in the VC sector due to stringent regulations on pension fund managers Very little VC capital raised |
Collapse of stock market bubble Significant reduction in capital raised World capital market crisis and high technology crisis Reductions in R&D grants support Liquidity problems of VC funds due to the lack of capital Overshooting of VC investments in the Emergence phase |
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Relaxation of ERISA regulations Pension funds and other institutions have become dominant investors in VC. Successful IPOs of technological companies (e.g., Apple) Growth of VC clusters like Silicon Valley Reorientation of the R&D sector from military to civilian applications. |
Increase in capital raised by VC funds Increase in IPOs and other forms of startup exits Israeli VC managers successful abroad |
Comparison of PFR Ventures (Poland) and Yozma (Israel) programs
| Support the development of the local Venture Capital and Private Equity market and the innovation ecosystem. | Creation of a competitive domestic VC industry. | |
| The organisation operates in a fund of funds (FOF) format. Each sub-fund has a specific investment profile. PFR Ventures' maximum contribution to the capitalisation of individual funds ranges from 60% to 80%, depending on the program profile. | The programme, promoted by the OCS, was structured as a fund of funds, making equity investments in hybrid funds without intervening in their operations. The government contributed USD 8 million to each of the ten funds, making up 40% of the total capital raised. | |
| PFR Ventures invested PLN 1.1 billion in VC funds between 2017 and 2023. Meanwhile, the total investment capital, together with private funds, amounted to PLN 1.6 billion (~ USD 400 million). | Total investment capital of USD 250 million (including government funding of USD 100 million) | |
| Each sub-fund has a specific Investment Focus: PFR Starter FIZ - investing in companies at the earliest stage of development (incubation, early-stage). PFR Biznest FIZ - investing in companies at the early stage of development (seed, pre-seed) together with private investors with appropriate capital and experience (Business Angels). PFR Open Innovation FIZ - investing in technology projects with an R&D component that creates technologies based on the open innovation formula. PFR KOFFI FIZ - investing in companies at a later stage of development (post-seed rounds). PFR NCBR CVC FIZ AN - investments focused on a model of generating new ideas, researching, and creating new ventures within existing corporations. |
Early-stage investments in high tech startup companies | |
| Depending on the program, VC organisations operate in a standard VC fund, CVC, or co-investment model. | Independent Limited Partnership VC Companies | |
| Each candidate fund had to meet the experience and competence requirements of the management team. In addition, individual sub-funds had management team contribution requirements that ranged from 1% to 20% of the fund's total capitalisation. | Each VC fund had to have a competent management team, a reputable foreign VC firm, and a domestic financial institution, which helped foster collective learning and leverage international expertise. | |
| Risk diversification through joint investment in a public-private model. In addition, in most programmes there was a follow-on investment option for successful ventures. | Within a 5-year window, investors could buy the government's share at cost, providing strong incentives for professional VC teams. | |
| Over the period 2017–2023, PFR Ventures invested in more than 380 companies through partnerships with 32 VC funds with funds from POIR. As the investment horizon depending on the programme is 5–12 years most of the investments are still in the development stage, only in the following years with more exits will it be possible to assess success better. | The Yozma fund created a critical mass of VC investment, with most Yozma funds ranking among Israel's top 20 VCs. It spurred high private VC performance, led to follow-up funds and strong capital growth, and served as a model for many other VC companies in Israel. |