High-tech investors find Poland fruitful
Is Poland poised to emerge as another Silicon Valley?
Very possibly, says New York venture capitalist Robert G. Faris.
"Silicon Valley is only 25 years old," Faris said, referring to the California center of high technology and computer companies. Ten years ago, he noted, if anyone had said that Israel and India would have become centers of IT activity, "you would have been laughed out of the room."
There is every reason to think that Poland can be a next Silicon Valley, with its IT companies competing globally as well as helping revolutionize every aspect of Poland.
Faris was in Warsaw for the launch of the $300 million Polish Enterprise Fund IV, with $200 million already raised and the rest expected by the year's end. He is president and CEO of Enterprise Investors, which has its roots in the U.S. taxpayer-financed Polish American Enterprise Fund (PAEF), the most successful of the dozens of funds launched after the fall of communism.
Some outsiders credit the venture capital focus of PAEF and now the Enterprise Investors funds for its success. Faris is a veteran of the venture capital industry, which emerged in the 1970s as the financial propeller for high-tech start-ups whose entrepreneurs often held full-time jobs but refined their innovations after work in their garages.
Faris noted that the investment company he was a top executive at from 1971-1988, Alan Patricof, put only a couple of million dollars behind the start-ups at first, but soon expanded beyond the United States to Europe. "And today they have $8 billion-$9 billion under management," he said.
A good chunk of the EI's fourth fund is earmarked for IT companies, with Wroclaw computer veteran Zygmunt Grajkowski and Robert Manz heading that IT sector within the fund. Jacek Siwicki is the managing partner of Enterprise Investors.
"It's a real compliment to Poland that sophisticated investors are willing to invest in a Poland-centric fund," Faris said. And one key reason is Poland's potential as an IT groundbreaker, with a large pool of engineers skilled in "thinking out of the box."
Poland is also bursting with new web companies and the veterans are introducing new products. Wirtualna Polska, for instance, is introducing a financial services web site later this year. The business-to-business chief, Janusz Wyrebek, was explaining the company's plans to insurance companies last week. He squeezed in a moment to talk about it between meetings with U.S.-based AIG and Commercial Union insurance reps.
Wirtualna will ask the insurers' "PR managers to provide content to us," he said. "It's hard to get information on insurance packages," more so than on banking-service packages.
And what does he think about one of Wirtualna's upcoming competitors, Agora, which launches its web site late this year? "Everyone is waiting for this," he said. "They have everything it takes to be a big player."
It's not just that the new Deutsche Bank retail operation was able to help raise money for cancer treatment for a 4-year-old Warsaw boy.
It's that the initiative came from the innards of the country, not from the top. That is the real significance, said Deutsche's retail chief, Friedhelm Herb.
A marketing person at the bank won a small motor bike as first prize in a WOT TV lottery and decided to use this as a catalyst for internal fundraising to help the boy.
"We said, as a company, O.K., we support this and will match it zloty for zloty," said Herb, who is also chief executive of Bank Wspolpracy Regionalnej (BWR) in Krakow.
Herb came to Poland late last year after seven years in Argentina with Deutsche Bank. He is also on the board of Deutsche Bank Polska. His mandate includes strategizing how Deutsche's retail network will put down roots in Poland and build a mortgage business with BWR as the probable base. Then, of course, there is the not-inconsiderable job of turning around BWR itself.
Deutsche bought the troubled retail and commercial bank in 1998. BWR holds less than 1% of the national market. Since then, Deutsche has invested $65 million and put its own team in place last summer, deciding it would use BWR as the base for its Polish presence, after its failed takeover effort of BIG Bank Gdanski last spring.
In May, a Deutsche worker got an appeal from a friend asking for help for Konrad Rozbicki, whose parents were facing medical bills of o200,000 to treat their son's kidney cancer.
Konrad was just starting preschool when he began suffering flu-like symptoms "with fever and joint pain and a swollen left eye," said his mother, Helena Rozbicka. The main tumor was found between his kidney and liver. Doctors at Centrum Zdrowia Dziecka in Warsaw succeeded in shrinking the tumor, but they wanted to get him into a special cancer treatment center, the Universitäts-Kinderklinik in Tubingen, Germany, which focuses on intensive chemotherapy, surgery on the primary tumor, intravenous radiation therapy and stem cell transplants.
Soon after the first appeal about Konrad, marketing staffer Katarzyna Krawczyk won the WOT TV lottery "and then the idea arose to start a lottery internally; to collect money to help this boy," Herb said.
This wasn't any ordinary motorbike. "It's an antique, so we donated it to the Warsaw Automotive Museum," he said. And the museum put a sign by the donated motorbike for the "Help for Konrad" campaign, which invited museum-goers to donate money in a nearby box. Deutsche's advertising agency, D'Arcy, also began collecting money for the boy.
Donations were channeled through the Fundacja Dzieciom "Zdazyc z Pomoca" foundation, which Konrad's mother said was the first to respond to her inquiries and also helped with ideas on getting emergency donations.
As of last week, more than zl. 11,557 had been contributed by Deutsche, D'Arcy and auto museum employees, which Deutsche plans to match.
Treatment began in June. By late July, doctors succeeded in removing all of the tumor. Konrad is now undergoing months of follow-up treatment in semi-isolation. Hard stuff but his mother said "he is a strong boy and has spunk and spark following every therapy and treatment."
