Tech fund shuns Polish startups

Softbank Emerging Markets (SBEM) has not made any investments in startups in Poland or elsewhere in Central and Eastern Europe since it set up shop eight months ago to provide funding to young tech fledglings in "emerging" countries, Richard Guziak, the managing director of SBEM Poland, said last week.

The venture capital subsidiary of Japanese tech giant Softbank planned to make its first investment in Poland by the end of year, but has thus far held back due to "weaknesses in the local market," Guziak said.

"We want to make an investment, but it's a real problem here," he said, adding that the Polish startup SBEM has evaluated lacked management skills and clear and feasible business plans for the future. SBEM Poland's four investment specialists are now considering funding three or four Polish startups.

"The conditions for investment are heavily stringent," Guziak said. "Even if the companies have relevant risk, they must have solid return on investment."

Nevertheless, SBEM could invest in a Polish tech startup before the end of the year, Guziak said, adding that the firm would like to make an investment every month, but many tech companies created during the IT boom "didn't think about revenue for two to four years to come, and (their) financial projections were not strong."

Likewise, SBEM Poland's Warsaw office, the regional hub of the company's activities, has made no investments in other countries in Central and Eastern Europe, although it is evaluating proposals in Lithuania, Ukraine, the Czech Republic, Hungary and Slovakia, Guziak said.

SBEM is looking to invest $500,000 to $2 million in young firms specializing in electronic-business, wireless technology, Internet infrastructure and web-enabling technologies for electronic-business applications.

Despite Softbank's recent actions in September to reduce operational costs by closing the Paris and Munich offices of Softbank Europe Ventures, its venture capital unit for early stage tech firms in Europe and Israel, Guziak said he knew of no plans to shut down the Warsaw office. "Emerging markets are a very crucial part of Softbank's portfolio," he said.

Roseanne Gerin