Despite recent negative press, Poland remains a hotspot for startups in Europe and that won’t stop anytime soon.
Poland has gained a lot of press coverage in recent months for all the wrong reasons. The ruling party Law and Justice (PiS) has been criticized for their handling of the pandemic. They have also sparked an outcry with a recent court decision that essentially outlaws abortion.
By JACK DANIELS
Poland, however, remains one of the most promising countries in Europe for startups. The international buzz over the upcoming release of the Cyberpunk 2077 game — released by CD Projekt Red — is just one example. The buzz itself has driven overseas consumers to research platforms that enable them to invest and trade in Polish companies.
Poland’s Fundamentals Provide a Strong Foundation for Business
Until the COVID-19 pandemic hit, Poland was one of the fastest-growing countries in Europe. Throughout the course of 2019, it saw 1.3% GDP growth. This is partially because Poland still has more room to grow than further developed European countries. But there are other factors.
Why Poland Is Good for Startups
Poland’s workforce is becoming increasingly well educated. Tertiary education attainment is increasing rapidly, particularly among younger people, with 44% of young adults holding a higher education qualification. The country also has Europe’s largest pool of developer talent with more than 401,000 developers — more than twice that of Romania.
Additionally, the nation has taken steps to build up its labor force. The country recently set up a helpline to make it easier for skilled Belarussian workers to relocate to Poland. The country has made it easier for them to get a visa and is offering Polish classes for children as well as funding for startups set up by these workers.
All of these factors have helped to spur a rush of investment into the Polish economy. Central and Eastern Europe are one of the fastest-growing areas of investment in Europe. Investment in the region grew twice as fast as Western Europe. This has helped Poland build a thriving startup sector that attracted more than $323 million in investment during 2019.
Problems in Poland
However, not everything is perfect. Despite avoiding the early stage of the COVID-19 pandemic, the nation is now embroiled in a second wave that appears to be getting worse. In turn, this has hurt Polish GDP growth expectations for 2020. The country is also facing a declining birth rate, which could pose long-term challenges.
Additionally, there are concerns that the ruling party’s policies are not always pro-business. One particular point of contention is the country’s social security payments, ZUS. There have been long-standing complaints from both businesses and entrepreneurs about the financial burden this poses.
There is also anxiety surrounding the government’s clashes with the EU, and concern that sanctions could damage the Polish economy.
There Have Been a Number Of High Profile Success Stories
On balance, Poland still seems to be fertile ground for startups and there have been a number of success stories coming from the country. Many of these are in the tech sector and have at least some international exposure.
Golem: Decentralized Cloud Computing
Blockchain remains one of the big talking points of 2020 and one of its success stories makes its home in Warsaw. Golem is an Ethereum-based marketplace for users and applications to rent out computer cycles to others.
The aim is to create a way for people to share and profit from their machines’ downtime and create a better more efficient marketplace for cloud computing power.
To date, the company has raised around $5 million and has put this money to good use. The company recently released the alpha reveal of New Golem. This version will allow developers to upload apps and is a functioning proof of concept that will form the foundation of the final version of the Golem project.
Brainly: Helping People Get Smarter
Another Warsaw-based startup, ed-tech company Brainly is one of the bigger Polish success stories in the last few years. Describing itself as the “world’s largest learning community,” Brainly provides a way for students and teachers to ask questions and get expert verified answers, making peer to peer learning easier than ever before.
The company’s concept has struck a chord with investors. It has raised a total of $68.5 million of which $30 million was raised in 2019 alone. While the valuation wasn’t confirmed, the company was estimated to have a post valuation of around $134 million in its previous round. This money mostly came from foreign investors. The company plans to use its latest round to expand aggressively in the United States.
Docplanner: Making Finding the Right Doctor Easier
Docplanner was set up to make it easier for patients to connect with the right doctor for their needs. It enables patients to find local doctors who specialize in their particular health problems and even see ratings so that they know they are getting their money’s worth.
In 2019, the company secured roughly $90 million in a Series E funding round. It secured these fundings from One Peak Partners and Goldman Sachs Private Investing. The round brought the total raised to about $140 million. The company plans to use this money on a number of strategic projects.
A Bright Future for Poland’s Tech Sector
The success stories in Poland demonstrate to international investors that the nation has the right infrastructure to build unicorns. This is particularly important as the local Polish investment industry remains inexperienced. For the foreseeable future, Polish startups will continue to be reliant upon foreign investment in order to secure the resources they need.