We’ve been looking at the Bulgarian and the Greek ecosystems, so it’s quite natural to choose Poland as our next destination. Poland is considered one of the strongest economies in the Central & Eastern Europe region and has been growing fast in the last years.

For a full perspective on the local startup community, we have invited Borys Musielak, Managing Partner at SMOK Ventures to walk us through a short journey in Poland.

An overview of the Polish ecosystem

We’ve asked Borys what are the main things that describe Poland’s startup community, and how has it evolved recently. Quite similar to what’s happening in Romania, Bulgaria, and other Central & Eastern European countries, there is a massive wave of startups & capital pouring over the country, making it grow even stronger.

“We have a pretty similar path to other CEE countries, with few super-early pioneers who have built startups and are now examples of success for the others, as was UiPath for Romania.

Our ecosystem benefits from a waterfall effect, with all those founders who launched a startup ten years ago, now collecting the results of their work. Because of them, the younger generations got motivated - and still are - to take the path of entrepreneurship.”

However, the success we see today coming from startups and venture capital companies has not happened overnight. Borys tells us that everything started in the 2000s with a few founders who established companies and slowly shaped the ecosystem into what we have today.

“What we see today is the result of a very long process that started with very big companies who succeeded in our country, back in the 2000s. They created job opportunities, supported the economy, and showed what we can achieve for our ecosystem.

Despite the fact that the initial ideas like Allegro, Onet, WP, Pracuj, or Gadu Gadu were just copycats of American startups, this is how people learned what it takes to build a startup and become an entrepreneur. Also, this is how these entrepreneurs led to the creation of the first VC funds which subsequently invested in other people, those who are building the companies of today.”

Who hasn’t heard about Witcher and played all three versions of the video game? Poland has been the home of both the initial story - written by Andrzej Sapkowski, as well as the video game released by CD Project Red.

“In our case, everyone knows about CD Projekt Red who have launched successful games - such as Witcher and Cyberpunk 2077, or Techland - the creators of the Dying Light franchise. We can add Estonia as another neighbouring example that has produced many successes, such as Skype, Wise, Pipedrive, Bolt, and a few others.”

Poland also has a good mix of cross-border investments via which multiple international investors are supporting Polish startups and founders. Similar to what’s happening in other ecosystems, pre-seed and seed rounds are mostly empowered by local angels and VCs, while larger deals attract investors from the neighbourhood.

“Early-stage deals usually get the money from local VCs and angel investors. Then, for the later stages, the startup attracts the attention of larger VC funds from other countries.

The speed at which startups raise funding from international investors also changed. If, previously, you've seen one in a few months (and it was a massive piece of news), now we report several such deals each month.”

Borys explains the foreign investment trend in a little more detail, through a snapshot of what the investment rounds in SMOK Ventures’ portfolio look like:

“Right now in SMOK’s portfolio, approx. 80% of the follow-on startup investments come from outside Poland and the CEE region, and **the interest in cross-border investments is definitely increasing.**”

Industries you should follow in Poland

“As I mentioned earlier, game development is a pretty hot industry with few good examples of success, employing many good game developers and engineers. At SMOK VC, we got the unique advantage of having a partner who is a highly experienced investor in the game industry.

Paul Bragiel invested in Unity, Roblox, Pokemon Go, and a series of other successful gaming companies, having **100+ gamedev investments over the last 10 years.**”

We’ve got now an idea about what’s happening in the gaming industry, and which are the startups with a good success story. Borys has seen the local community growing and explains its potential to grow even more:

“There is a huge amount of talent & wealth to create studio games and invest in them to succeed. At SMOK, we like to believe we’ve created a movement that matters, and that there is still a lot of room for investments in this sector. After all, it’s a bigger industry than movies.”

Besides gaming, we’ve also seen startups from other areas rising in Poland. We want to find out directly from local active venture capital, which are the other industries we should pay attention to:

“There are also a number of SaaS startups serving small businesses, that got good traction in the market, such as RAMP Network, Codility or InvoiceOcean.

Business targeting marketplaces also have proved a lot of traction and good feedback, such as the case of DocPlanner that started serving a super-specific niche of the healthcare industry, and ended up expanding to other countries and sectors.”

Following a successful model as a VC fund

What really catches our eye when talking with Borys, is the unique context SMOK Ventures has in growing as a venture capital company in this part of Europe. They have partnered up with an expert who has raised several other funds before.

“We’ve started SMOK using Paul’s model of running a venture capital company. He created Golden Gate Ventures in Singapore, in 2010, a small fund focusing on local investments.

With the second fund, he expanded to Malaysia and Indonesia, and then, with the third fund, to Vietnam and the rest of Southeast Asia. Slowly, he became the top seed investor in the regional market.

For Africa, Paul launched Savannah Fund which was initially focused on East Africa. It then moved to South Africa, Nigeria, Ghana; and other African countries will follow once we launch “Fund II”.

So, to expand their activity in Eastern Europe, SMOK uses a model proven to work in Asia’s & Africa’s emerging markets. Borys and his team believe in the strong expertise that this region has, choosing Romania and Ukraine as the main destinations for the launch of “Fund II”.

“Poland is one of the biggest countries in the region, and I was best connected with its startup founders, especially through my previous experience at the ReaktorX accelerator program, with my co-founder Diana Koziarska.

With the launch of Fund II, we are looking to expand our investments mainly to Romania, Ukraine, and a few other countries in Eastern Europe, with the goal to become the first-choice fund for serial entrepreneurs in the region.”

SMOK’s plans for the launch of “Fund II”

With the current events still developing in this part of Europe, and a lot of uncertainty around it, we’ve been surprised to hear about Borys’ decision. So, we’ve asked him how comes he’s choosing Ukraine as the destination for their upcoming investments.

“I think once the current events in Ukraine will go back to normal, there will be a massive potential to rebuild the country. We’ve already talked to a number of amazing founders who are currently struggling to grow their businesses there. Others have moved temporarily to other cities such as Tallinn, Warsaw, or Western European capitals. No matter if they chose to go back or not, we know they have a strong entrepreneurial DNA.”

Ukrainians are great tech professionals who have been working for Silicon Valley companies for the past 10 years. I think they have a huge amount of expertise, and the process of rebuilding the country will give them unique opportunities.”

With the efforts of rebuilding their country, Borys thinks Ukrainians will have another unique opportunity to innovate. Since there will be a lot of chaos, they will be able to erase a lot of the bureaucratic processes from the past and start afresh.

“There were a lot of legacy systems in the country, but they will be able to skip a few steps, and have the chance to build a system from scratch.

Sometimes, it’s easier to use your disadvantages as your advantage, to disrupt a global industry.”

As the war in Ukraine is still going on, we choose to believe in the optimistic future that Borys has envisioned for the regional ecosystem. As Max Gurvits mentioned in another interview, there’s room for more cross-border collaboration that would create even more opportunities.

“If, previously, people wouldn't know where to place Ukraine on the map, today they are motivated to help them fight and stay strong. Once the war is over, more people will join, looking to be part of the process of rebuilding the country.

This is why I think Poland and Romania have a strong opportunity.”

A message to CEE founders

Before parting ways with Borys (with the promise of meeting again in Bucharest, later this year), he wanted to share a couple of words with the founders from the region.

“I will be visiting Eastern European countries in the upcoming months; we want to invest a large part of our new fund in Romanian founders.

I’m planning to invest at least $10M in 5-10 Romanian startups, so take the chance to meet me and my partner Diana, in Bucharest and other large Romanian cities.

We are bringing a unique perspective and global expertise from a few American leaders who have invested in hundreds of other startups. So, seize the opportunity to scale your company on international markets.”