At EUROCRYPT 2016, Gay et al. presented the first pairing-free public-key encryption (PKE) scheme with an almost tight security reduction to a standard assumption. Their scheme is competitive in efficiency with state-of-the art PKE schemes and has very compact ciphertexts (of three group elements), but suffers from a large public key (of about 200 group elements). In this work, we present an improved pairing-free PKE scheme with an almost tight security reduction to the Decisional Diffie-Hellman assumption, small ciphertexts (of three group elements), and small public keys (of six group elements). Compared to the work of Gay et al., our scheme thus has a considerably smaller public key and comparable other characteristics, although our encryption and decryption algorithms are somewhat less efficient. Technically, our scheme borrows ideas both from the work of Gay et al. and from a recent work of Hofheinz (EUROCRYPT, 2017). The core technical novelty of our work is an efficient and compact designated-verifier proof system for an OR-like language. We show that adding such an OR-proof to the ciphertext of the state-of-the-art PKE scheme from Kurosawa and Desmedt enables a tight security reduction.