WBJ: What do you think of Polish VC funds. Do you think that their managers have enough competencies to offer so-called “smart money”?
Dariusz Żuk: There are maybe a dozen fund managers in Poland who have exited an investment of over PLN 1 million and seen more than a tenfold return on their capital. The market is still very young, though I believe it has good prospects. Soon, investing in start-ups will no longer be a good thing to do image-wise, it will simply become profitable.
We have yet to see a unicorn come out of Poland’s start-up scene. Are there any barriers to attracting international talent and capital?
It’s a vicious cycle: we won’t see global funds and talent come here without success stories, and without capital and talent we cannot create an effective environment for developing global firms. It’s not about a one-shot deal, but about an ecosystem that will create several such projects each year.
What we need to break the cycle is for the state to get involved in a smart way, as well as investment and educational tools that will reshape the current mindset and help leapfrog through some stages. That’s what happened in the US, Israel and Korea. These are the examples we should look at. But rather than try and copy them, we need to create our own unique solutions.
What do you think about one such project, Bridge Alfa? Last year, the EU-funded program introduced major changes, e.g. lowering the maximum investment level of EU funds in a single project. It was supposed to encourage Poles to take risks. Do you think the changes were justified?
Any change mid-game is hard. This is unfortunately part of our nature in Poland: we don’t have vision and strategy. Instead, we are reactive, we rush to implement haphazard solutions and changes dictated by outside conditions. The changes to Bridge Alfa basically transformed a VC market into a seed model overnight. That’s not the way to go. I know that the problem here was complicated because it involved EU money and regulations, which are often completely separate from our institutions. But if we want to see a global win, it won’t be easy, fast or always nice.
Your own start-up ecosystem, AIP, has existed for nearly 15 years now. What were your goals when you started the project?
From the beginning of AIP I had one major goal: turning Poland, as well as the entire CEE region, into a global leader in start-ups and the new economy.
I saw there was a dire need to create an extensive ecosystem that would support entrepreneurs and encourage Poles to launch new companies rather than work in a corporation. AIP is a unique entrepreneur support system in Europe.
But it’s just one out of many tools that can help achieve the goal of creating global firms – business unicorns. We have created funds offering support at different development levels for the most interesting start-ups that join the Incubators and Business Link. AIP Seed invests in early-stage projects. It has supported endeavors such as Qpony.pl, whose shares we later sold to the founders of Allegro. It’s also helped CallPage, which recently received financing from TDJ Pitango Ventures, MOC and Innovation Nest, as well as Sidly, which got funding from MCI, among others. We are also founding partners of bValue VC fund, which invests in later-stage companies, complementing the start-up ecosystem.
What kind of aid can young entrepreneurs receive in incubators like AIP?
Under the incubator’s umbrella, entrepreneurs can use our legal entity, accounting, mentoring and networking services. You don’t need to register the company, as we take on all accounting and legal matters, as well as a large part of the risk. It’s the easiest way to test your business idea. Of course, all these start-ups are already making money in their accounts. Last year, their total revenue came in at over PLN 50 million. As of today, we have over 1,000 start-ups, but over the course of almost 15 years, we’ve supported more than 14,000 projects.
Start-ups working in co-working spaces is industry standard now. What was it like eight years ago, when you opened the first Business Link? What was your idea behind it?
Creating a co-working space eight years ago, even before New York had WeWork, was not only a large endeavor, but also a major risk. We had to create a market for it. Luckily, our hard work and dedication paid off and it turned out to be a great success. It feels very rewarding to see how co-working is developing in Poland, exceeding Italy, Spain and Scandinavian countries. Today, we are comparable to Paris and Berlin in that respect. I believe that Business Link played a big part in developing Poland’s start-up ecosystem. It is where global start-ups entering Poland, like Twitter and Uber, started from. It’s also where Łukasz Wejchert came after leaving Onet.pl, where Jarosław Kuźniar with our joint initiative and Michał Sadowski with Brand24 started out. We have helped 6,000 entrepreneurs so far. With the help of hundreds of people, we have created a CEE co-working leader, active in over a dozen locations and offering over 35,000 sqm of working space which houses 2,600 residents.
Currently, Business Link is home to organizations such as Startup Poland and Startup Hub Polska, in addition to many funds and accelerators, hundreds of start-ups, like Revoult, and corporations. Some of our locations, including Business Link Astoria, Business Link High5 and Business Link Zebra are fully occupied, and we have waiting lists of people who want to become Business Link residents.
Now that AIP has just sold the rest of Business Link to Skanska, what other projects for young entrepreneurs are you involved in?
Our two funds, seed fund AIP Seed and VC fund bValue, are closely watching the projects and if there is need, they invest money and time in selected ones. AIP Seed has invested in over 140 early stage projects so far, which is the highest number for seed funds in this part of Europe. We’ve supported Glov, Audiomagic, Sidly, Qpony.pl and CallPage. Today these are global firms, but we started with a small investment at first, usually of PLN 100,000. Now we invest between PLN 100,000 and PLN 400,000 and we try to offer “smart money.” We don’t take over for business owners. They run their businesses themselves. We offer them knowledge and networking, and as they grow, we offer financial help also at subsequent development stages, through our VC fund, bValue. We established it over two years ago, together with the founders of Bakalland, Inpost, Medicalgorithmics and WorkService. The fund is managed by a great team, with Maciek Balsewicz at the helm. Here, the threshold for investment is higher. We invest up to PLN 3 million in a project, and – similarly to our seed fund – we try to make sure our involvement in these companies is smart. bValue has invested in projects such as Shoplo, Tidio, Puella and Senuto.