The post was originally published in Polish on Szymon’s LinkedIn profile. Szymon kindly agreed to republish what we think is of great value to our readers.
We have failed the Polish startup ecosystem. After several years of boom and overwhelming supply of capital, funds ran out quite suddenly. Everything actually happened within a year. Several dozen percent of the venture capital market has evaporated. Public-private money has been invested from programs that end almost simultaneously.
Szymon Janiak, Co-Founder and Managing Partner at Czysta3.VC
Even two or three years ago, it was enough for a startup to have a sensible idea and an acceptable team to get the first round of financing in our country as a start-up. For the second, PLN 20-30K of monthly revenues were needed to confirm commercialization.
Today, there is no trace of such trends. Only the best of the best get money from VC funds. Without outstanding success in the past, there is no chance for a round at the presentation stage. And if the company doesn’t grow at a three-digit pace, even PLN 200,000 monthly revenue will not help.
The problem is that most startups I’ve been talking to lately are still mentally stuck in 2019. Founders wander around the market lost. No one told them explicitly that the boom was over. They are based on old rules, so they misarrange their development strategy and waste a lot of time trying to raise capital, which in today’s realities they will never get. However, the fault isn’t entirely theirs.
In principle, I don’t think it’s such a bad thing that the market has cleared itself. We had too much capital and funds in the early stages of development. That is a fact. However, this was required by the process of shaping the Polish VC market and it was designed as such. The next wave of public funds will come, but it will take many months and its shape is unspecified. Our reality has changed.
So why have we failed? Because Polish startups should be aware of this. What’s more – they should know how to deal with such a situation and what they can do about it. They should be aware of alternative sources of financing and strategies for the development of innovative businesses.
Lack of information can lead to an unhealthy situation on the market, significantly slowing down its development. Everybody loses. Contrary to popular belief, education is not the duty of regulators or public institutions that finance this market. It is our funds that have the main responsibility to shape the awareness of the environment in which we operate.
Nobody will do it for us, and if everyone looks only after their own interests – the apparently dominant attitude right now – it will be difficult to talk about the ecosystem. The more we engage in joint initiatives for the entire market – the better.
The comment section was happy to share some opinions:
Startup founders are adult people. If they want to develop their businesses, they should maintain basic professionalism and at least be interested in where the money that VC funds have come from. Many founders derive knowledge about financing only from headlines in the press: X got 5M, Y got 10M. The information is available, you just have to want to reach for it.
– Ewa Bartnik, VP & CFO at Imker_pl
Capital is still available on the market, only with a choice of 8-9% on a safe deposit, investors more thoroughly verify startups and potential return (chances/plans for the next round of financing). This also applies to developers and other industries.
– Julia Chruscielewska, Founder at Fajny Czas
A great sobering of the market. Huge subsequent investment rounds are not necessary, much more attention should be paid to stable businesses.
– Jagna Pomorska, Founder and CEO at ConnectedRealities.eu
In my opinion, this is not only about a lack of understanding of the market situation (although naturally, this also matters). It seems to me that there are at least two more factors:
- Simply age. Someone who was on the labor market in 2008-2010 remembers what it looked like and remembers that it was exactly the same (and if someone watched the dotcom bubble burst, it was not at all). When you have such previous experiences, you understand better. And you are less afraid.
- There are no people to cooperate with in our market. In Poland, few people know startups because there are few startups yet. So it’s not like you’re going to find a C-level and an early stage co-founder every year. And now the founders are alone in the battlefield. But this is also a problem to be solved, it will only take a little longer.
What I think funds can do now is encourage founders not to panic, but to move forward quickly and calmly. The most valuable voice now will be the one who will pay attention to what NOT to DO. To be able to focus on something else.
– Marta Borkowska, Founder and CEO at Mangrove
Szymon Janiak is an investor and a business-driven Managing Director at czysta3.vc, a Venture Capital fund located in Poland. He has over 10 years of experience in the technology sector. Szymon is also a Member of the Supervisory Board at stockbroker Grupa Trinity S.A.
