Brain drain vs brain circulation — Q&A on how should Poland catch up with the Nordics, Germany and the UK in terms of innovative economy.

Traveling from Stockholm to Gdańsk is just a short trip, which takes a little more than an hour. Weather is only a bit better and instead of sand there are rocks on the shore. But the VC and startup scenes are much more different. Stockholm is surely a success story with plenty of unicorns, a mature VC and startup ecosystem, but at the same time a growing shortage of developers, who seem to be among the most precious and rare species in the Nordics. What’s even more surprising is that just an hour across the Baltic Sea in Gdansk, you have so many talented developers, considered to be one of the world’s best and brightest. That however is in parallel with just a few startups with good management teams and global contacts. These developers are mostly working for corporations like Amazon, Google, Intel and many other big and smaller names, having a good life in an inexpensive country. Local startups focus too much on Poland but some are trying to expand outside.

What is the missing part?

We discussed that among colleagues at Invest Europe Venture Capital Forum in Stockholm.

Nordic countries have many unicorns and unicorns’ alumni. They keep investing into VC funds and startups. They help them with contacts and knowledge that is more important than the money they invest.

Hopefully, we can see a similar trend in Poland. With veterans like Maciej Grabski (ex at Black Pearls VC in Gdansk and Piotr Wilam (ex at Innovation Nest in Krakow we can follow the Nordic path. And I did not mention many others from Warsaw, Wroclaw, Krakow, Poznan, Katowice and other places in Poland.

Do we have enough good startups that could take advantage of that help?

Each year, Startup Poland Foundation publishes a report, covering the state of Polish startup scene, which is probably the best reflection of Polish startup community — commented by my colleague Alex of Black Pearls VC. Reading the report, what can be noticed, is that there are still not enough startups but their quantity and quality is growing fast.

Do we have enough capital to fund a growing number of startups?

We can see strong efforts of PFR (Polish Development Fund) and NCBR (National Center for Research and Development) to become the driving supporters of the Polish VC scene. So far, so good, but at the same time, we can be slightly worried about a lack of good fund managers having enough contacts to make startups global. That is why Polish startups are looking for financing from international VCs as well.

All of that constitutes a promising foundation for the development of innovative startups in Poland.

Does Poland have a unique competitive advantage to build on?

I think that we do and it is the Polish talent base. We have much more graduates from engineering (including hard sciences) as a percentage of population than most of developed countries.

Some people say that the low cost of talents is a great advantage but I could not agree with it. The salaries will go up in Poland faster and faster and eventually converge with the ones of neighboring countries like Germany and the Nordics.

Software engineer avg. salary. Source:(Glassdoor, 2017; OECD Stat (2017).

The much more important factor is quality of talents. If we look at Computer Science (the most popular field of study in Poland) Polish Software Developers are ranked as a one of the best in the world according to the results of various competitions:

#2 Google Code Jam

#2 International Olympiad in Informatics

#3 Facebook Hacker Rank

#5 TopCoder

#4 Collegiate Programming Competition

How to reverse the flow of talents?

Unfortunately, we experience a brain drain in Poland. There were about 30,000 highly educated talents in science that left Poland between 2004–2012 according to research that has been commented on during this year’s edition of “Science: Polish Perspectives” (SPP) the biggest conference for Polish scientists working abroad, that this year took place at the University of Cambridge. In addition, according to the data, more people want to stay abroad than to return to Poland. So, we have a negative migration balance of talents. The research is still work in progress and we do hope that the trend will change.

During the SPP conference we listened to presentations and met many young Polish scientists. We could see their desire to learn how to convert their knowledge and research outcomes to some kind of business. Foundation for Polish Science (FNP) was actively scouting promising projects to help them with grants and advice. We also promoted a partnership between FNP and Black Pearls VC to create a smooth transition from a lab to a proper business.

We have been asked many questions during our workshops conducted by Black Pearls VC and FNP. Scientists were very much interested how we helped our portfolio companies to find clients, partners and additional investors. The scientists we spoke to were quite surprised by the fact that we have been taking minority positions in our companies, in contrast to their perception of funds acquiring majority positions (even very early on). All good VCs want to keep founders motivated to grow the business. While at Cambridge, we spoke to many interesting science and engineering projects in various stages and some remarkable people that were eager to improve human lives and at the same time build sustainable businesses.

I feel more than hope. I am convinced that we can transform a brain drain into a brain circulation that will be good for scientists, Europe and Poland (and for us of course). What we need to do is:

  • to promote possibilities in Poland, including availability of funds, infrastructure and help,
  • to help to form good science/technology/business teams and extend business contact networks,
  • to give them strategic advise when needed,
  • to fund companies together with our friends from VCs and business angels all over the world.

Smart, connected capital actively working with teams in Poland and abroad is the answer.