Bildnachweis: Tigges Rechtsanwälte.
Innovative ideas and the ability to quickly adapt to a rapidly changing market environment make Polish start-ups interesting beyond the country’s borders. Lower Silesia in particular is often referred to as the ‘Polish Silicon Valley’. Due to its geographical proximity to Germany, the Polish start-up scene is particularly attractive to local investors, not least because Polish start-ups are focussing on the German and European markets. An overview.
Three sectors dominate the Polish start-up scene: medicine, e-commerce, and education (together accounting for 43% of the market). In the last five years, the value of investments in Polish medtechs has increased by 40% as the newspaper Rzeczpospolita reports. In contrast, the e-commerce sector has lost importance, while the robotics, energy, and sustainability sectors are experiencing a boom. Particularly noteworthy are the areas of AI, deeptech, and IoT. One in three start-ups (33%) state that these are the keywords that best describe the nature of their product or service as the Startup Study 2023 by Startup Poland shows. Data from Cleantech for Europe shows that venture capital investments in this sector are steadily growing across Europe, including in Poland. The first quarter of 2024 was a record quarter in Europe in terms of the number of financings and their volume. The increase mainly concerns laterstage investments (series B), which saw a 29% quarter-on-quarter increase, with a volume increase of 35% as cleantech for europe reports.
Funding
In a survey conducted by the Startup Poland Foundation, 76% of founders reported that they had invested their own capital in their start-ups. In terms of external funding, national venture capital funds were mentioned most frequently, with 25% of respondents utilising these funds. 8% of Polish start-ups received funding from the foreign venture capital market. Polish founders cited business angels as the second most common source of funding, with national business angels (24%) being more frequent than foreign ones (7%). From an investor’s perspective, the year 2023 was surprisingly stable in the Polish venture capital market. The total value of investments per quarter ranged from EUR 80 million to EUR 110 million. By the end of September 2023, almost EUR 300 million had flowed into Polish innovative companies. This is also reflected in the startups’ results. More than half (51%) of the start-ups achieved significantly higher revenues than in the previous year, and 26% achieved slightly higher revenues. For 8%, the revenue situation remained the same as in 2022.
Legal status of the companies
The most common legal status chosen by Polish start-ups is the limited liability company (‘sp. z o.o.’) – two out of three companies choose to become such a legal entity. The low share capital (approximately EUR 1,200) and limited liability are decisive factors here. The introduction of the so-called simple joint-stock company, which was demanded by the start-up scene, was an attempt to increase founders’ interest in joint-stock companies – here, the share capital is merely one symbolic zloty. This legal status has existed since July 2, 2021, and its market share is only about 4%. It will, therefore, take time and experience to establish the simple jointstock company.
Perspectives
There are currently no signs of a change in investment behaviour or a significant influx of capital into young Polish companies. However, an improvement in relations between the Polish government and Brussels is an important factor for positive development, and the release of funds from the National Recovery Plan could represent a decisive change for the development of Polish innovations (especially in the field of renewable energies and cleantech).
About the authors:
Polish-born Marius Rosenberg, certified specialist for international business law, is a corporate/M&A partner at Tigges Düsseldorf with special expertise in advising technology companies, start-ups, and the venture capital sector.
Kamil Twardowski is a lawyer at Tigges Katowice, regularly advising companies on starting and managing their business operations in Poland.
