Forget Silicon Valley: Poland is Creating Its Own Deep-Tech Startup Hub
By Pawel Czech of Nex.D
The world is changing, as is the economic landscape. Economies have generally leaned toward more specialized industries in the past half-century, based on the strength of their regional characteristics. While places like Silicon Valley have traditionally been synonymous with technological innovation, other, lesser-known outposts are emerging with real potential to become deep-tech hubs. Recent trends indicate that Poland, and the wider Central and Eastern European region, could reach the same influence level as countries in the G7 in the coming decade. With many eyeing the region as the most likely to produce the next tech unicorn, could Poland soon join the tech community’s head table?
Globally, technology has graduated to new levels of influence and potential; virtual services have increasingly become a way of life for us in the digital age, with the current pandemic only intensifying the demand for solutions. The emerging scramble for tech solutions positions Poland as fertile soil for innovation, particularly since the country entered the EU. Since the turn of the century, a new development strategy has defined Poland's new engines of growth, enabling it to exploit the opportunities of digitization. That has included obtaining grants and launching accelerator programs, such as Start in Poland, the largest platform in Central Europe founded through European funds, and government financing devoted to developing startups.
The Polish labor market’s available skill and dynamism has consolidated the country’s ability to harness its window of opportunity. Poland houses one of the largest tech talent pools in Eastern Europe, and global giants such as Intel realized this by opening one of their biggest R&D laboratories in Gdansk.
The country’s socio-economic circumstances have created favorable conditions for a highly motivated workforce in technology. According to ABSL, an average salary in Poland equals around €830 per month, while software developers’ salaries can be 3-to-7 times higher. Therefore, the number of people interested in software development is growing, expanding the overall tech talent pool.
With Western Europe going through a tech talent shortage in relation to its needs, Eastern Europe has experienced the opposite; making it a far more attractive proposition for prospective outsourcing. According to the State of European Tech report, there are approximately 6.1 million developers in Europe, yet many don’t enjoy the same tech opportunities as those in Western Europe. This has resulted in a hungry, willing, and competitive employment sector, an ideal landscape for prospective outsourcing. Additionally, vocational accelerator programs have become more popular among younger generations, while dedicated co-working spaces and innovation labs, such as Warsaw’s Google Campus, are galvanizing the tech scene. Demographically, Poland’s younger population has tended to focus on social sciences and technical disciplines—Harvard’s Business Review ranked Poland 5th among the most tech-skilled labor markets in the world.
A cloud-based shift in technology has also favored the country’s appeal. In May 2020, Microsoft announced a $1 billion digital transformation plan for Poland, including access to local cloud services with the first datacenter region. Meanwhile, Google Cloud recently announced a strategic partnership with Poland’s Domestic Cloud Provider (DCP) to help Polish businesses to take advantage of cloud. It’s clear the country’s broad ecosystem of startups, entrepreneurs, enterprises, and government access to secure, enterprise-grade cloud services has made it an attractive proposition for the big players.
Since joining the EU in 2004, support initiatives have contributed to the development of basic infrastructure, industrial centers, and R&D facilities. But while EU funding has provided a significant springboard for Poland, it will never exist as a permanent long-term solution for the country moving forward. In 2019, as many as 225 funding deals came from public-private funds, indicating Poland’s road toward self-sufficiency was becoming more evident.
Global confidence in the region has also become more and more apparent. According to PFR Ventures, VC investment in the country’s startups came from 85 different VC funds internationally and reached €294 million in 2019, more than in the nine years beforehand combined. By 2030, the McKinsey Report predicted the economy could grow to EUR 890 billion by 2030. Poland’s economy has matured to a point that it's no longer about trying to catch up with the leaders in Europe, or waiting for the next injection of EU support: Poland is now charting its own path of development. This has made the country a more complete destination for suitors.
With the pandemic continuing to prove a challenge, Poland’s tech sector has actually managed the situation relatively well. The country was one of the first to identify an opportunity in the pandemic by further intensifying the development of remote tech solutions. The sector organized an international hackathon with more than 1,500 participants to identify solutions to the crisis, with digitization of healthcare being earmarked as a definite focus.
When Startup Chapter, the biggest tech event in the CEE region, began in 2014, contest applicants consisted “almost wholly from Poland,” Greg Borowski, Infoshare CEO, was quoted as saying in a Tech.EUarticle. In 2019, though, only a quarter came from Poland, with large swathes of entrepreneurs hailing from surrounding CEE countries. This is because Poland’s startup ecosystem is decentralizing at a rapid pace. While many are still in Warsaw, startups are growing in other cities such as Kraków, Łódź, Wrocław, and Gdansk, as well as cities outside of Poland. The entire CEE region is blossoming in hi-tech as a result of Poland’s initiative, a sign of a maturing Polish ecosystem.
It’s no surprise that global investment is turning its attention to the region, as it becomes patently obvious that Poland no longer represents a fledgling experiment. The country’s characteristics have made it an optimal landscape for tech development: a cooperative government, a dynamic and willing employment sector, and a global industry increasingly searching for digital solutions. Poland’s digitized development strategy since the turn of the century has propelled the country into new territories.
No longer is the country following other countries' leads, it has now even evolved into the engine room of the wider CEE region, providing a support structure as well as a model for success. The future of Poland as a hub for technological innovation is healthy, as it now has a robust infrastructure able to support itself. But it still retains the benefits of a hungry and emerging employment sector. For all of its startup success, Poland is no longer starting up.
Pawel Czech is the Co-Founder of Nex.D, a dynamic advisory firm that serves clients across the education, Deep Tech, and media markets within the global economy. He spent his formative years as head of International Business at Young Digital Planet (YDP), before co-founding educational assessment space NUADU in 2017.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.