Startups do not arise out of nothing and are not likely to attract financing easily.
For startups to emerge and develop successfully an ecosystem is obligatory. A startup responsive environment should cover various areas such as financing, human resource, social requirements, institutional backing, and favorable legal regulations.
Startup ecosystem combines: business environment institutions (BEI), government and local administration, research centers, financing entities consisting of business angels, banks, VCs, and local government institutions.
Introduction: Poland Startup Ecosystem
The Poland startup ecosystem, consists of 130+ VC’s, 3000+ startups, 300+ coworking spaces, numerous acceleration programs and tech conferences. Poland is responsive and well developed towards the startup culture in the CEE region.
Entrepreneurs can launch a business in Poland and then expand to other EU markets. Polish corporations have moved positively to fathom startups and are intent on cooperating with them. The reason for this initiative could be due to the presence of various international players active in this market.
The Polish VC market is turning a decade old, but huge investments have been coming regularly. Half the 130 VC firms in Poland are in the process of raising their second or third funds. Initially state funding was a major source for startups in the region, but that has now been upstaged.
Startups with promising portfolios in the Polish market and looking for $1.05 million investment can easily find interested investors. But anything above that, and you will have to scout abroad for funds.
Culture & History
In 2018, Poland with a GDP of $549.478 billion was ranked 8th in the EU market and 23rd globally. After venturing into the EU in 2004, growth has been continuous, and now Poland has the attention of the entire EU as it pushes forward. Poland has profited from $780 million EU funds thrust into its startup ecosystem.
Poland is a major recipient of the Ukrainian emigration and has accommodated more than one million of them. Many young and industrious immigrants have founded / co-funded startups in Poland.
In the initial stages Poland suffered from lack of private capital due to the step-motherly treated meted out by investors.
But this year, Polish VCs are beginning to raise huge amounts of private capital as well as invest in higher rounds. This trend is promising, and hence in 5 years we could see the emergence of self-contained funds that can deliver investments comparable to developed nations in the EU.
Future Outlook
In the Poland startup ecosystem top firms such as Booksy, Brainly or DocPlanner, could soon turn into unicorns. And startups with AI components could make their way to the top and this domain could develop faster than the rest. The other sectors that are seeing good progress are FoodTech, green solutions, FinTech and Big Data.
Other than financial support, another element in the startup ecosystem that strongly impacts the future is acceleration programs. Startup accelerators have been around for over a decade. There have been close to 235 such initiatives, as in Y Combinator, founded in 2005 with an investment of over $3 billion in 842 companies.
Silicon Valley remains the role model, to which every region aspires to shape their startup ecosystems.
The Polish startup ecosystem is rapidly developing and holds amazing potential, till date €400 million has been invested on startups. In Poland most startup founders are over 30. The 2020 Polish Startup Report states, Polish startups received over €215 million in external funding.
Four out of five VC investments take place during the seed round and 85% of Polish VC financing rounds range from €25,000 to €750,000.
Verticals & Industries
30% of startups in Poland liaise with corporations, 83% work on B2B model, and 46% do not export. 60% startups are problem-solvers by formulating assumptions to build teams and solving-product assessment by working on products. Top industries in the startup ecosystem are Big Data (15%), IoT (14%) and Analytics (13%). While Fintech startups are growing popular (11%).
Majority of startups dabble in the IT sector with big data, analytics, and IoT as their main specialties followed by fintech, marketing, productivity and management. Machine learning also has an ardent followership. Warsaw, Krakow, Gdansk, Wroclaw, and Lublin serve as big data centers.
Bialystok is among the smaller startup cities where entertainment, e-sports, gaming, and development is popular. Warsaw, Wroclaw, and Lublin are strong in the analytics vertical, while Poznań and Warsaw lead in fintech. Lodz and Opole lead in fashion and design.
Polish investors are keen on investing in Big Data, IoT, MarTech, Life Science, BioTech and HealthTech.
Venture Capital (VC) Market
Over the past decade, the Polish VC market has grown considerably. The total VC funding rose from €29 million in 2015 to €477m in 2020 at 75% CAGR. During 2010–20 on average, VC funding went up by 100% YoY.
Few late-stage deals significantly increased VC funding in 2019 and 2020. 2019 VC market funding was dominated by DocPlanner as it raised €80 million during Series E round with lead investors Goldman Sachs and One Peak Partners. DocPlanner enables patients find physicians’ online so as to book appointments.
In 2021 the top 3 transactions accounted for 42% of the total VC funding. The largest transaction was €74 million Series C round for ICEYE, next €67 million Series D round of Brainly, and lastly €59 million Series C round of Booksy.
ICEYE provides a cluster of radar micro-satellites to access real-time space images.
Brainly is an online edtech platform helping in coursework and assignments from peers and experts.
Booksy is a beauty marketplace with a SaaS App for business management.
Total VC funding in 2020 amounts to $407 million with the biggest rounds for Packhelp ($12.7m), Spacelift ($7.6m) and Telemedi.co ($7.0m).
Unicorns In The Polish Ecosystem
There are only two unicorns in Poland, Allegro and CD Projekt RED. However, these aren’t technically unicorns as both companies incepted around 20 years back.
Allegro is an online marketplace and a renowned ecommerce brand with 20 million MAU (monthly active users). Allegro went public in September 2020 with $11.2 billion valuation and became the largest IPO in Poland history. Its shares rose 63% on the first day of trading, yielding Allegro a $19 billion market value.
The second unicorn in Poland is CD Projekt RED a computer game development company founded in 2002. They have developed and commercialized mesmerising games such as The Witcher and Cyberpunk 2077. Their valuation reached €6.1 billion in 2021.
Other startups with more than €250 million valuation and could fetch unicorn status are:
- Booksy, a beauty marketplace for locating, booking and managing appointments (€255m)
- Brainly, an edtech platform (€315m)
- Polskie ePłatności, a fintech startup for payments processing and business solutions (€405m)
- DocPlanner, an online healthcare booking platform (€320–480m)
Avialable Support For Startups
The main startup support programs include:
Poland Prize
This initiative by the Polish Agency is to develop businesses including foreign startups in Poland so that the Polish startup ecosystem gains necessary exposure, organizational culture, and other know-how.
The program aims to combine incubation and acceleration of foreign startups operating in Poland by providing insights and strategies on how to operate so as to succeed. The program consists of six operators scouring for startups in Europe, Asia, and North America and encouraging them to set up in Polish soil.
Trends
Accelerators have doubled their activity in the past few years. 24% startups obtained financing via accelerators. Increasing number of startups are choosing the B2B market and SaaS is the most popular sales model (40%).
Other popular sales models are e-commerce, marketplace, and smartphone apps. There’s a rising interest in fintech and marketing technologies in comparison with previous years. Bootstrapped startups remains steady (59%).
Government Support
The Polish government actively supports the development of the Poland startup ecosystem.
The First Business Startup Support program provides loans at low rate of interest to entrepreneurs of various age groups and incentives to launch a business in Poland. Folks over 30 years can avail grants from the EU to launch startups.
Polish Development Fund has launched Start in Poland aimed at augmenting and escalating the Poland startup ecosystem. They aim to develop an amiable environment for foreigners and creative firms to start and grow in Poland. They also assist talented entrepreneurs with capital and global scaling.
Poland also actively supports and develops entrepreneurs from nearby countries. Polish — Ukrainian Startup Bridge, is a special mentorship program for youngsters from Ukraine, launched by the Ministry of Investment and Development of Poland.
They aim to inculcate the knowledge about commercialization in Poland and to attract capital in the form of VCs or private equity funds. Then there’s Poland. Business Harbour supporting Belarusian entrepreneurs in the ICT sector.
Communities For Entrepreneurs
Poland has a well-developed network of communities of entrepreneurs spread across the country. The largest one is Polska Przedsiębiorcza.
Many accelerators and incubators also have communities and provide platforms for collaboration and sharing experiences like StartUp HUB Poland and OpenReaktor.
There are a few independent communities too such as:
Aula Polska
A series of meetings are held at regular intervals that encourage a tech entrepreneurial culture with the main theme being emerging tech, creative concepts, and online ventures.
Startup Grind
Startup Grind is the largest independent startup community bonding over 200,000 founders in 185 cities.
Geek Girls Carrot
This community is for women zealous about tech, innovation and entrepreneurship.
Conclusion: Poland Startup Ecosystem
In conclusion, it is fair to say that the Polish start-up ecosystem is only at the beginning of its development and has high potential to become one of the most attractive regions for entrepreneurs and investors not only in the CEE region, but in Europe in general.
After an Engineering degree and a Diploma in Management I devoted 16+ years working in the automotive industry. My innate skill and extreme passion in writing, encouraged me to adopt it up as a profession. I have been writing for more than 10+ years in the software industry. The 400+ blogs I published are informative, exhaustive and interesting to a professional and causal reader.
