Foreign Startups Seek Growth in the Polish Market
Amidst the whirlwind of Poland's rapid development, foreign startups are drawn to the nation's burgeoning market. However, they grapple with challenges such as bureaucracy and the frequent shifts in legislation.
'Poland is a country on the rise at an exhilarating pace. It's a realm for those who seek growth in tandem with it,' states Ahmad Piraiee, Director of Startup Grind. The Polish market is increasingly favored by both budding businesses and global corporations. Factors like swift economic expansion, a pool of skilled professionals, and a thriving startup ecosystem make Poland an appealing destination. Yet, hurdles remain, including bureaucratic complexities and the ever-evolving legal landscape. 'Once you overcome these challenges, operating becomes far smoother compared to other countries. The key is to comprehend the prevailing norms,' assesses the expert. He underscores the necessity for lively dialogues between startups and venture capital funds.
Unveiling Poland's Untapped Potential: A Story of Lively Landscapes
'Poland offers young entrepreneurs a realm of boundless opportunity, only hindered by the lack of suitable promotion. This land boasts picturesque landscapes, a vibrant economy, and the presence of international corporations. The missing piece is presenting all of this as a compelling story. The interest in this country already exists. Those who chance upon it or visit for a week often find themselves staying for a decade. In contrast to many other nations and cities, Poland brings forth a 'wow' effect. Witnessing this place firsthand leaves everyone enchanted. Most photographs fail to capture Poland's and its cities' true beauty,' remarks Ahmad Piraiee, Director of Startup Grind. He's also a resident of Warsaw and a part of the world's largest community of entrepreneurs and startups.
A Rising Star on Many Fronts: Touristic and Business Appeal
Poland's allure as a tourist destination is evident, with 5.9 million foreign tourists visiting in 2022, up from 2.5 million the previous year. Moreover, it's becoming a business hotspot due to its dynamic economy, advanced digitalization, and a skilled workforce. According to an OECD economic review, post-pandemic recovery in Poland outpaced the majority of EU nations. The country's GDP surpassed pre-pandemic levels in Q1 2021, whereas the rest of the EU achieved this milestone two quarters later. Even amidst the Russian aggression on Ukraine and its economic implications, Poland's economy grew by nearly 5% last year. Although a slight slowdown is anticipated this year, the government's revised budget predicts 1% GDP growth, followed by a resurgence to 3% next year.
'Poland is a country that's progressing at an astonishing pace. It's the perfect destination for those who want to evolve alongside it,' asserts Ahmad Piraiee. He adds, 'Poland isn't the place for those seeking minimal effort and quick returns. But if you want to be where the growth is, this is your place.' He marvels at the transformation, as the very building they stand in was a parking lot four years ago. Today, it stands as the tallest office building in the entire European Union. He muses that had this construction happened in Spain or Italy, they wouldn't be on a completed building's first floor, but still on the construction site.
A Siren Song for Startups: Poland's Momentum
Poland's rapid progress magnetizes startups and investors alike. PFR Ventures and Dealroom data reveal a burgeoning ecosystem with nearly 3,200 young innovative companies. These startups span AI, machine learning, analytics, business intelligence, HRtech, HR tools, medtech, fintech, insurtech, and Big Data, according to the Startup Poland Foundation's latest report. This count continues to rise, with domestic VC funds playing a pivotal role. Last year, 28% of surveyed startups utilized capital from these funds.
'Creating an ecosystem necessitates dynamic dialogues between startups and investors. Investors need to converse with startups; co-working spaces need to foster activity. Only then can the entire ecosystem, not just investors, coalesce,' remarks the Director of Startup Grind.
This growth potential could fortify Poland's domestic market. PFR Ventures and Inovo VC's report on Polish venture capital transactions highlights 116 companies securing 429 million PLN from 69 funds in Q2 2023. The total for the half-year reaches 875 million PLN, a 70% drop compared to H1 2022 and 2021. Simultaneously, the number of transactions continues to surge.
Piraiee believes that venture capital funds, more than anyone, require startups with low valuations and high growth potential. He states, 'Poland embraces a high-context culture. Here, nobody wishes you an amazing weekend; it's just a pleasant one. Yet, this seemingly modest weekend signifies a fantastic end to the week. On the other hand, American culture labels everything as great and amazing. Many venture capital figures genuinely think these enthusiastic words reflect startups' essence. Polish startups offer technological innovation and colossal potential, but founders' humility contributes to their undervaluation. We possess everything investors need to be drawn here, yet due to challenges in reaching our startups and the complexity of operating compared to other countries, they opt for different locations.'
According to Startup Poland's recent report, the primary hurdle for young businesses isn't financing, but rather acquiring talent while managing rapid employment cost growth. A staggering 52% of surveyed startups emphasize this aspect. Entrepreneurs also cite challenges including legal environment, frequent regulatory changes, bureaucracy, and a lack of knowledge about securing investment in initial and subsequent rounds, as well as business collaboration with major firms and corporations.
'Poland is undoubtedly a challenging market. Unfortunately, bureaucracy still abounds. However, when you find the right companies and individuals familiar with its intricacies, you gain tremendously. This is a facet I'm actively addressing – trying to bring international corporations to Poland and aiding them, as this is the most demanding task. Once you surmount these obstacles, operating becomes far easier compared to other countries. The key is comprehending the norms that govern here,' underscores the Director of Startup Grind.
For the past three years, Ahmad Piraiee has organized ExpatLens events, introducing foreign individuals intrigued by the Polish market to its realities. These gatherings occur within the framework of the Thursday Gathering series, focusing on different nationalities each time. July hosted Egyptians, while August will feature the French. Thursday Gathering fosters an open ecosystem for startups and the entire community of innovators. Taking place every Thursday at 5:00 PM in Warsaw's Varso, the initiative is a part of the Venture Café Warsaw Foundation's efforts."
