To date, Poland has spent close to €400 million on startups. The Polish startup ecosystem is rapidly developing and holds significant potential.
According to the Polish Startups Report 2018, Polish startups who participated in the survey had received over €175 million in external funding to the date of publication of the report. Most of the startup founders in Poland are over 30 years old.
Significantly, 30% of Polish startups cooperate with corporations, 83% work mainly within the B2B model, and 46% of them do export activities. Most of the startups (60%) are on a problem-solution assessment (i.e. formulating the assumptions of the business model and building a team) and solution-product assessment (i.e. intensive work on the product, registration of the company, prototyping, first revenues or users) stages of development. The most popular industries among the ecosystem are Big Data (15%), IoT (14%) and Analytics (13%). Since 2016, Fintech startups are getting more and more popular (11% in 2018).
Around 100 VC funds are active on the Polish market. Four out of five venture capital investments take place at the seed round and 85 % of financing rounds from Polish venture capitalists range from €25,000 to €750,000.
Warsaw is the host city for most of the startups and acceleration programs. However, Cracow is the undisputed leader when it comes to effective fundraising, with 40% of startups receiving over €2.5 million and Wroclaw holds the second place (30%). In 2018, Lublin and Rzeszow joined the traditional forerunners in terms of the startup environment size: Warsaw, Wroclaw, Cracow, the Tri-City, and Poznan.
The great majority of startups identify themselves within the IT/ICT sector. Big data, analytics, and IoT remain the main Polish startup specialties, followed by fintech, marketing technologies, productivity and management (CRM/ERP). Machine learning has also quickly reached a popular status. Warsaw, Krakow, Gdansk, Wroclaw, and Lublin deserve the title of big data centers. Bialystok, where gaming, entertainment, and e-sports industries are developing, is among the smallest startup cities and clusters. CRM/ERP and management tools are being intensively developed in Katowice, Bialystok, and Kielce. The analytics vertical is strong in Warsaw, Wroclaw, and Lublin, while fintech leads the way in Poznań and Warsaw. IoT is mainly developed in Cracow and, to a much lesser extent, in Lodz and Rzeszow. Fashion and design are advanced in Lodz and Opole. Polish investors are principally interested in fields such as Big Data, IoT, MarTech, as well as Life Science, BioTech and HealthTech.
Among the examples of startup-friendly regulations, noteworthy is the governmental project of a simple joint-stock company or regulatory sandbox for FinTech startups organized by the Polish Financial Supervisory Authority.
The main startup support programs include:
An initiative organized by the Polish Agency for Enterprise Development which aims including foreign startups in the Polish ecosystem and, in so doing, feed the Polish startup ecosystem with external energy, organizational culture, and know-how. This is a highly specialized program combining the idea of incubation and acceleration and putting a special emphasis on preparing a foreign startup to operate in Poland by providing insights on how to develop in the country and outlining the further path of being successful. The core of the program consists of six operators searching for startups in the selected countries and covering Europe, Asia, and North America.
SCALE UP START IN POLAND
ScaleUP is a pilot program organized by the Polish Agency for Enterprise Development, focused on acceleration, i.e. speeding up the development of startups. It is dedicated to micro or small enterprises which can get involved for 3 to 6 months. The program offers advisory and mentoring support, as well as financial support.
An activity run by the Polish Agency for Enterprise Development targets individuals up to 35 years old who have ideas for innovative products or services and would like to start their business adventure in Eastern Poland. The three Startup Platforms, i.e. Hub of Talents, Connect and the Technopark Biznes Hub, help startups to create a product or service based on a professionally developed and verified business model.
Support programs by the Polish Development Fund (PFR) – currently 5 funds are active for startups at a different stage of growth, including:
• PFR Starter FIZ - addresses innovative companies at their earliest stage of development (seed, start).
• PFR Biznest FIZ fund of funds is investing through financial intermediaries (co-investment funds), cooperating and co-investing with business angels in innovative companies at an early stage of development.
• PFR Open Innovation Fund - dedicated to SME companies which implement technological projects under the open innovation formula.
• PFR KOFFI FIZ Fund - addresses entities from the small and medium-sized enterprise sector at the stage of growth, development/ expansion.
• PFR NCBR CVC Fund is a Fund-of-Funds intending to invest in CVC & VC funds more than PLN 800 million and more than PLN 1,6 billion including private investor funds. This is the first Polish Fund-of-Funds providing financing in the CVC segment.
Private acceleration programs such as ReaktorX– a pre-acceleration program for first-time founders in Warsaw, Poland.
The accelerator’s activity has doubled in 2018 as compared to 2017: 24% of startups – twice as many as in 2017 – obtained financing thanks to accelerators. From year to year, an increasing number of startups are choosing to enter the B2B market (83% in 2018). The most popular sales model is Software as a Service (40%). The “tailored implementation at the customer’s headquarters” model is used by 33% of the surveyed startups. Other popular sales models include e-commerce, marketplace, mobile apps. There is a rising interest in fintech and marketing technologies in comparison with previous years. The percentage of startups financed by their founders’ capital remains steady (59%).
The key stakeholders of the Polish startup ecosystem are:
Brainly, Quotiss, LiveChat Software, NUADU, DocPlanner, Booksy, Brand24, Estimote, Callpage, CD Project Red, Allegro, Netguru, iTaxi, Blinkee.city, ACR Systems.
Incubators, technology parks, accelerators, startup programs:
ReaktorX, Krakowski Park Technologiczny (KPT, The Cracow Technology Park), Lubelski Park Naukowo Technologiczny (LPNT, The Lublin Science and Technology Park), Łódzka Specjalna Strefa Ekonomiczna (The Lodz Special Economic Zone), ScaleUp program, Elektro ScaleUp program, Fundacja Polska Przedsiębiorcza (The Entrepreneurial Poland Foundation), FundingBox Accelerator, HugeTECH accelerator, Huge Thing accelerator, Gdański Starter, Startup Spark accelerator, Inkubator Technologiczny Samsung, Akademickie Inkubatory Przedsiębiorczości.
Inovo VC, Fidiasz EVC, RST Ventures for Earth, Tar Heel Capital Pathfinder, TDJ Pitango Ventures, Xevin VC, Market One Capital, SpeedUp Group, PGE Ventures, Black Pearls VC, Cobin Angels, CEE Business Angels Network, Lewiatan Business Angels.
Polish Agency for Enterprise Development (PARP), National Capital Fund (KFK), National Centre for Research and Development (NCBR), Polish Development Fund (PFR).
Legislative barriers (visa policy, high requirements for establishing a joint-stock company), excessive engagement of the public sector into the investment process (81 % of the capital of VC funds comes from public sources).