Polish Startups 2021 – report. Lower Silesia with Wroclaw in second place

13.12.2021

Who are Polish startup founders? Which industries are they most likely to operate in? How has the pandemic affected their business? These and other questions are answered by this year's edition of the cyclical report of the Startup Poland Foundation - "Polish Startups 2021". Most young businesses are registered in Warsaw, Wroclaw and Krakow.

Tomasz Snażyk, president of the Startup Poland Foundation, emphasizes that this is another year when they publish their report in the conditions of the ongoing COVID-19 pandemic. However, this time it is not a dominant topic, and the responses of the surveyed startup founders show that the pandemic – for the most part – has not had a positive or negative impact on their business.

There are also those who have found a chance to develop in a different direction in this crisis and ultimately evaluate the impact of the pandemic positively. I think that this pandemic resistance of startups proves once again that the Polish startup system is in an increasingly better condition. It doesn’t change the fact that we still have a lot of lessons to do. – Tomasz Snażyk, president of the Startup Poland Foundation

Startups focus on artificial intelligence

Polish startups are primarily more mature – more than half of the analyzed companies have been operating for up to two years, and 18% even longer – from 5 to 10 years. When it comes to the age of the founders themselves, research conducted in previous years showed that here too maturity reigned.

On the other hand, when it comes to the specializations of Polish startups, the most common, because more than one fifth of them (22%) pointed to AI (artificial intelligence) and machine learning. Slightly less (18%) chose “e-commerce”. The third place was taken by the term medtech (13%), i.e. services in the field of medicine and health. An almost identical percentage (12%) indicated the words “education” and “analytics, research tools, business intelligence”. Read also: Startup Wroclaw – news, financing, spaces.

Most registered startups: Warsaw, Wroclaw and Krakow

The pollsters of this year’s study checked in which regions of Poland founders register the most startups. Masovia is the dominant one – every third Polish startup is registered in the Mazowieckie voivodeship (over 32%). Then there are several regions with other largest metropolises – voivodeships: Dolnośląskie with Wroclaw (over 9%), Małopolskie with Krakow (8.7%), Wielkopolskie with Poznań (7.3%) and Śląskie with the agglomeration Upper Silesia (6.9%). The following voivodeships are the worst in the ranking: Kuyavian-Pomeranian, Opolskie and Zachodniopomorskie. Read also: Driven by intelligence at Made in Wroclaw 2021. Made in Wroclaw since 2017 shows how and thanks to whom the Wroclaw business is developing.

In the context of the regions from which the innovative ideas of Polish entrepreneurs come from, it must be said that although the Mazowieckie Voivodeship (32%) is dominant, the share of startups in other places in Poland is relatively balanced. It is worth mentioning that startups from Warsaw are also thinking about foreign expansion – almost eight out of ten of them plan to enter new foreign markets within the next year (78%). The EU market is definitely the primary direction of foreign expansion considered by domestic startups – as much as 85 percent. of the respondents indicated such an answer. The second priority markets are the United States and Canada (53 percent).

It is very important for the development of the Polish startup ecosystem to consistently build its diversity. Therefore, at the end of 2018, we launched the first public visa program for startups – Poland Prize. The Polish offer for foreign startups turned out to be extremely attractive. With nearly 3,000 applications from over 90 countries, our accelerators transferred 101 of the most promising startups to Poland. – Mikołaj Różycki, president of the Polish Agency for Enterprise Development

As part of the “Poland Prize”, after establishing their business in Poland, startups benefited from soft-landing activities, the support of experts and mentors, and had a grant at their disposal to finance the development of their product. Despite the difficult period of the pandemic, over 80% of startups that participated in the program continue to operate in Poland, and the vast majority of them plan to commercialize their product within the next two years.

Financing of startups

When analyzing the profile of Polish startups, it can be seen that SaaS (40%) and B2B Enterprise (36%) models dominate, gaining a clear advantage over B2C (20%). This is closely related to the preferences of both Polish and European VC funds. The effects can be seen in numbers – the venture capital market in Poland records records.

We expect 2021 to be another record year for the Polish innovation financing ecosystem. If we ignore megarunds, in the first three quarters of this year, Polish startups acquired more than in the entire year 2020 (PLN 1.46 billion compared to PLN 1.23 billion). The number of transactions is also growing. In the first three quarters of 2021, there were as many of them as in the entire previous year. Our market is still very young – the caution, natural for an early age, means that many company founders are still afraid of contact with venture capital funds. This attitude seems to be changing slowly, but we still have a long way to go. – Maciej Ćwikiewicz, president of PFR Venture

Indeed, in the case of external financing, most startups (30%) indicate domestic VC funds. Thus, the trend visible in the previous quarter was reversed, when mainly foreign funds were in the lead. A similar percentage of startups (28%) received a financial injection from a domestic business angel, and almost every fourth (23%) benefited from the support of a domestic accelerator. The same percentage of respondents indicated funding received from the National Center for Research and Development. However, the largest number of Polish startups (73 percent) still rely on founders’ own funds.

Startups complain: too much bureaucracy

Regulatory barriers are important from the point of view of startups – for the majority of them the most important is excessive bureaucracy – this aspect is noted by as many as 69%. respondents. Another important factor blocking the development of the startup sector is the frequent changes in regulations – this problem is indicated by more than half of startups (55%). Almost every second startup points out that investment incentives in the segment of young technology companies are insufficient (46 percent).

– The startup environment has been asking for tax breaks for investors for years. Examples that this is essential can be seen with the naked eye. It is not without reason that so many great startups are created in the United States, where access to capital has been very easy for years. A natural feature of startup ideas is the increased risk of failure of such an investment. Incentives, e.g. in the form of a tax break, could significantly help in this matter – says Tomasz Snażyk.

The Ministry of Finance is working on introducing such a solution as part of the Polish Deal – the plan assumes that an investor who wants to multiply his funds by entering a startup with his own capital will be able to take advantage of a 50 percent discount. the amount of the entire investment. He will deduct this amount from his income, up to a maximum of PLN 250,000.

Startup Poland – an independent Polish technology think tank and non-governmental organization whose goal is to build awareness of the potential of startups in the public administration environment and to participate in legislative processes as the voice of the Polish startup community.

PFR Ventures – a fund management company that invests in Venture Capital and Private Equity funds together with private investors, business angels and corporations. The goal of PFR Ventures is to provide this capital to Polish innovative enterprises at various stages of development. PFR Ventures currently has over 50 funds in its portfolio that have made over 400 investments.

PARP – is involved in the implementation of national and international projects financed from structural funds, the state budget and multi-annual programs of the European Commission. PARP actively participates in the creation and effective implementation of the state policy in the field of entrepreneurship, innovation and adaptability of human resources, striving to transform into a key institution responsible for creating an environment supporting entrepreneurs. In accordance with the principle of “Think Small First” – “SME first”, all activities of the Agency are carried out with particular emphasis on the needs of the SME sector.