Why has Poland become such a hot place for European startups?
I was recently asked by a German journalist what happened that Poland has suddenly become such a hot startup hub. Like all overnight successes, it took us nearly 20 years, but I believe it can be summed up with the three points that follow.
- Local market is saturated, but it created role models to take our startups global
Over the last twenty years Polish entrepreneurs have primarily built solutions for the Polish market. Polish eBay (Allegro), big web portals (Onet, WP, Interia), social networks (grono, NK), job search portals (pracuj, GoldenLine) or local marketplaces (Niania, Pomocni) were all huge local wins for both founders and their investors. Now that most of the founders cashed in, they started reinvesting the money into new startups in their own VC funds such as Innovation Nest, Protos VC, Hedgehog Fund. As there is not much room for expansion on the limited local market anymore, the companies like Docplanner, UXpin, Estimote, Growbots, Brainly with the help of the aforementioned mentors took the path to become global leaders of their niche markets.
- European Union funding
The VC market in Poland is by far the strongest in Central and Eastern Europe with over 50 active VC funds and thousands of active angel investors available via networks such as Beesfund. It attracts founders of similar culture from countries in the former Soviet Block that cannot raise funding on their local markets. Recent programs by NCBiR and PFR will add another 500 million EUR to the Polish VC market to be spent on startups during the next 4 years. There are not enough suitable projects in Poland, so it’s only natural those funds will be used to attract the smartest entrepreneurs from the neighboring countries, strengthening leadership of Warsaw in the CEE startup ecosystem.
- Availability of tech talent
Poland is in global top 5 in quality of Ruby, Python, Java programmers as well as algorithms in other software-related categories according to HackerRank. The engineers are world class, but still significantly cheaper to employ than in Western Europe and the US, which allows Polish startups to grow faster and survive longer on the same funding.
Do you agree with the points above? Have I missed anything? Leave a comment and keep the discussion going!
Are you a CEE startup looking for funding? Consider applying to ReaktorX, a startup accelerator I co-founded. Deadline for applications is October 11th.