According to Startup Poland, the number of startups in Poland equals c. 4,500, of c. 60% are from the Information, Communication and Technology (ICT) sector. This compares to >61,000 in Germany (Source: cf-fachportal.de). However, there are differences between the two countries regarding funding sources.
In Germany, where according to statista.de, the volume of VC funding reached a value of EUR 3.36bn in 2022, startups of all stages are mainly funded by business angels and international VC funds. The VC sector in Poland is still relatively undeveloped and dominated by domestic investors. With a transaction volume of EUR 800m last year, state-controlled PFR Ventures and NCBiR accounted for c. 40% of the total. These institutions manage EU funds, which Poland has received for R&D projects.
For Poland, the new EU perspective 2021-2027 foresees a total of PLN 350bn, of which PLN 36bn is supposed to co-finance innovative projects. Typically, the state-owned funds only provide 2/3 of a project’s financing, while private investors must commit the rest.
While Polish startups usually have no problems with initial financing work on their products, an issue is financing rounds between the Seed stage and Series A (EUR 1-4m) because they are too large for local investors, and there are still not many international VC funds that are active in Poland.
In response to this issue, the Warsaw Stock Exchange created the alternative NewConnect segment in 2007. Since then, several hundred small companies have used this opportunity to raise funding, which is possible through a public or private placement and is affordable even for very young companies. Due to low listing requirements, the quality of the NewConnect companies is not always the best, and there have been many frauds in the last few years. However, there are also companies that already have or have the potential to become big success stories.
Examples include PGS Software S.A. (was bought by Durch PE fund Waterland Private Equity in 2021 for c. EUR 95m, 45x its IPO valuation) and BLIRT S.A. (was acquired by German Qiagen in 2022 for c. EUR 60m).
You can watch the Elevator Pitches of two promising listed Polish startups – Genomtec S.A. and XTPL S.A. – on seat11a.com.