Times are good for Polish startups. Interview with Łukasz Blichewicz, CEO, Assay Group
Assay Group has just wound up its sixth year in the Polish market – how has the operation of one of the largest Polish VC funds changed during this time?
We have come a long way, starting from an organization with just a handful of people to a fast-growing and mature business which is making significant contributions to the development of the Polish startup scene. We have grown most rapidly over the last two years: in 2020, the total value of our assets amounted to approximately PLN 30m, while now we are seeing a value of over PLN 130m – an increase of over four times. At the same time, the valuation of our portfolio companies increased almost sixfold: from PLN 16m to over PLN 94m. The ability of our broadly understood structures to raise financing for companies is also growing rapidly: in 2020 we pooled PLN 4.4m, in 2021 this stood at PLN 15.4m, and in the first half of 2022 only we have raised almost PLN 15m. Over the past two years the number of Assay Group beneficiaries has risen from 184 to 570, and a growing number of startups are approaching us for potential investments. Over the entire 2020 we assessed 17 new projects, and in the first six months of 2022 we have evaluated as many as 252 businesses.
How is the Polish startup market doing now and can it continue to consistently develop?
Q2 2022 was a time of economic turmoil caused by both external factors, including the Russian aggression against Ukraine which has already been going on for over six months and becoming more atrocious by the day, as well as the continued impact of the pandemic on the global supply chains. In turn, internal factors include legal and tax changes, rapidly rising inflation and, according to many experts, belated interest rate raises.
On the other hand, the latest data from the Polish Development Fund (PFR) indicate that in Q2 2022 alone, 111 VC funds invested as much as PLN 916m in 93 companies, which represents an increase of 76% y/y. Except for the so-called outliers, or transactions with significant values, in terms of value this was the second highest ranking quarter in over ten years of the Polish startup ecosystem. Bear in mind, though, that PFR data is only one part of the VC equation. It is clear, then, that more and more Polish startups are actively seeking external financing.
Despite the difficult geopolitical and economic situation, in the near term entrepreneurs will need to flexibly adapt to changing conditions. This in turn will contribute to developing new competencies by market players, which will make the market stronger. Just look at the companies we are supporting – despite the external difficulties they have been able to perfectly adapt to the demanding circumstances and be successful in their respective fields.
And which of your portfolio companies could serve as interesting examples of innovation?
One of our most interesting startups representing the electromobility industry is Elimen, currently looking at great opportunities of establishing cooperation with select Asian manufacturers, which will enable the business to roll out its technology on a larger scale. The growing popularity of electric motors is also a positive trend for TrybEco, which is not only developing new electric bicycle and scooter models, but also making its presence in Polish cities through e-scooter sharing rentals. Aegis, in turn, is doing well in the cybersecurity sector, implementing projects as part of the National Key Cluster (Polish: Krajowy Klaster Kluczowy) and developing proprietary solutions based on artificial intelligence (AI).
Self-service washing and drying machines delivered by Break & Wash are breaking records of popularity at gas stations and tourist hotspots, and the company is rapidly expanding its operations, having already launched over 100 appliances across the country. RestBill is also growing as predicted, offering innovative payment services for the HoReCa industry, with almost one in four guests of the establishments which have implemented the solution using this mobile form of payment.
These are just a few examples, demonstrating the progress made by our portfolio companies, and we are committed to providing them with the right support to ensure they continue their growth trajectories.
What support are you offering? What can your partners count on?
We seek out early-stage, promising companies and strive to develop them in a way that maximizes operational competitiveness both in Poland and internationally. The Assay Group story is based on the dream of setting up a startup-friendly space, at the same time attractive for investors looking for decent capital investments. We recognize the needs of novice entrepreneurs, providing them not only with capital for development – we also offer a wide range of consultancy services. Each portfolio company is assigned a Project Manager who, together with the founders, manages the project. Portfolio companies are offered the required design, legal, accounting, administrative, tax, marketing, and sales assistance.
Also, you have become more active in the VC fund environment recently…
Yes – we are a very active fund. We support startups through programs such as “Start Up? Set it Up,” or Round T. We are also actively engaged in key industry conferences, such as the Invest Cuffs in Krakow, Reach4Meetup in Warsaw, or Made in Poland in Berlin. All this contributes to building our market position, facilitating the acquisition of promising startups, and raising funds. In addition, we also act as a competence hub, educating the public through market studies such as the Assay Index showing the investment attitudes among Poles, or the Assay Biznes, which presents the state of Polish entrepreneurship.
Precisely – you have decided to analyze market sentiments in Poland. What does this part of your business consist in?
As an active market player, we want to track sentiments and show market trends. One of our annual reports is the Assay Biznes showing the moods among Polish entrepreneurs and the general public. The latest edition has shown Polish entrepreneurs are rather pessimistic about the current situation – only 7% of Poles admit they would be willing to set up their own business right now. This negative sentiment has been boosted by the introduction of the Polish Deal (Polski Ład) – as many as 82% of the respondents indicated they did not know or understand the program’s objectives. The monthly loss incurred by Polish entrepreneurs related to the implementation of the new tax regulations early in the year was evaluated to stand at PLN 2346 on average.
The other analytical report we produce is the Assay Index, a study which is a detailed presentation of Polish citizens’ investment preferences. We have developed this report because we want Poles to better understand the financial markets and enable our compatriots to better manage investment risks. As the report shows, we are still a nation working our way up: 44% Poles live from hand to mouth, without any savings. Others have been able to collect average savings of less than PLN 30,000. Statistically, Poles do not have a sense of financial security – the savings most Polish people have (53%) would enable them to live jobless over a period of six months only. One in ten Poles are actively seeking investments for their savings (not counting bank deposits and accounts).
The reports we develop together with Maison & Partners, a renowned market research agency, allow us to better understand the attitudes and behaviors of Poles related to savings and investment, as well as to explore market trends, understand the economic activity of Poles, the willingness to set up companies, the level of business engagement, and the perception of the conditions for the emergence of new businesses. The reports are based on representative nationwide samples to ensure the structure of the adult population is fully reflected. We believe that a better financial education will have a positive impact on our country’s economic growth.
How do you think the startup market will develop in the near future?
For the time being, we are not seeing a strong negative impact of the Russian aggression in Ukraine on Polish businesses, or the slowdown of the economy in general. High inflation is even driving the VC market in Poland as investors are moving from traditional forms of savings to investments in businesses. It is estimated that the level of financing in Poland may increase by up to 100% this year. We are therefore optimistic and believe in innovative startups, trying to grow our share in the venture capital sector which, in the long term, will positively affect the modernization of the Polish economy.
Łukasz Blichewicz — founder and president of the Assay Group, investment fund supporting the development of Polish start-ups. Expert in the field of development and financing technology companies that is responsible for projects related to economic consulting, audits and market research. He gained corporate experience i.a. at Nestle, where he held a various managerial functions and participated in cost and process optimization projects. Graduate of management studies with two specializations – finance and strategic marketing.
Last Updated on November 4, 2022 by Anastazja Lach