- 22 November 2011
This is a story about a brave new world, where ideas are seeded, incubated and accelerated through to maturity. The heroes of this story are a group of individuals who are shaking up Krakow's business community with their entrepreneurial verve.
Something exciting is happening in Krakow. A series of startup communities have sprung up and are spreading a buzz among students and entrepreneurs. It's early days but the signs are encouraging that, newcomers with ideas, experienced mentors and investors are now coming together to create a homegrown hi-tech industry in Krakow.
A recent Tholons study ranked Krakow as number 4 in the Top 50 Emerging Global Outsourcing Cities and the city has successfully attracted the likes of IBM, Google, Motorola and Cap Gemini. These firms have helped to give valuable local opportunities for the outstanding talent that Krakow's technical institutions produce. However there seemed to be a gap in the much lauded, 'Krakow – Europe's Silicon Valley' story, namely entrepreneurs.
Where should a student or individual with a great idea go to for advice, support and capital? An EU program or grant? The universal view from entrepreneurs I spoke to is that EU grants are ruining the market for startups. An amount like 50,000 euros is often acquired without the kind of due diligence and business model analysis a typical angel investor or venture capital (VC) fund would apply to a new project. The people behind these institutions often lack the necessary entrepreneurial experience to advise startup teams. As a result many projects start quickly, burn a lot of euros on 'non-core' expenses and die off equally quickly.
Heroes please rise
The catalyst for this article began at the recent TEDx Krakow (www.tedxkrakow.com). This non-profit Krakow branch of TED ('Ideas worth spreading') brings together a diverse set of speakers and an equally diverse audience. The curator of this year's excellent event was Ewa Spohn. As co-organiser Kate Scisel puts it, 'TEDx Krakow is an event where people can go, be inspired, meet people from interesting backgrounds and share ideas. The high profile nature of the event is helping to promote Krakow as not just an outsourcing centre, but as a place where exciting ideas are generated'. It was at TEDx Krakow that I first learned about Hive and KrakSpot.
The idea of Hive first began in March 2011 when Piotr Nędzyński, founder of a startup, creating web based technologies, arrived back from work in Denmark and was surprised to find there was no forum where startup knowledge was being shared. Piotr got in touch with Ela Madej, CEO of 'Applicake' a Krakow based software development firm and discovered a shared interest in creating a forum and they began to map out the idea of Hive. 'That was 4 months ago and this Friday we'll have our third meet-up'.
We met with Piotr over a few coffees in Krakow's old town.
'The reason that a lot of startups come out of Silicon Valley is that there is a community of people who can help. This is what Hive is, a place where people who are thinking of a startup can come, learn, network and say what they need. They have a stage to present themselves to a knowledgeable audience who can work with them.'
Hive is a non-profit organization that has 2 branches, the meet-ups and an online presence (www.joinhive.com). They plan to grow the website into a place where entrepreneurs are talking about what's happening and what they are doing. Hive meet-ups are usually divided into two parts, firstly an hour's interview with a guest speaker to inspire the audience (Mike Butcher of TechCrunch Europe will present at the next event). This is followed by a 'pitch session' where would be entrepreneurs have no more than 60 seconds to present their idea without any Powerpoint slides. Then it's all about networking and the fired up 'busy bees' (More than 250 at the last event) usually stay until 11pm drinking and chatting.
'The next challenge for Hive is to become more connected with the universities. The problem is that people in the universities don't even think about starting their own companies. Why is that? It depends on the sector. Biotechnology startup costs are high and you need startups developing within the university. But in terms of IT it's just a mindset. Unfortunately often the people who remain in the university to teach, are the least entrepreneurial ones.'
According to Piotr there are many models that Krakow can look to, New York, Boston, Berlin and in particular Dublin, where Ela recently attended a founders conference. 'They are really doing a lot to attract startups. We can have this model in Krakow but we're not there yet.'
BarCamp is an international network of conferences, the content of which is provided by the participants and shared over the web through blogs, photo sharing and social networking. KrakSpot is Krakow's largest BarCamp and focuses on the web, marketing and new media. Compared with Hive, Krakspot tends to have more technical presentations focused on web technologies but like Hive, networking is a major part of each event. Marcin Jaśkiewicz who organized the first 10 events is now CEO of Webshake.tv an internet television company based in Krakow.
KrakSpot was founded by members of the MediaFrame Student Research Group at AGH in Krakow. What began in a small room with 20 people now regularly attracts around 250 participants. Each event starts with a presentation panel followed by a moderated discussion panel.
'After the discussion panel there is an unconference, so people can share ideas, meet entrepreneurs and simply have good time grabbing a bottle of beer and talking with friends. We are thinking of and trying new networking ideas, Open Spaces sessions for example.' Filip Dębowski, organizer of KrakSpot.
Brightberries (www.brightberries.com) is a key supporter of Hive and is the brainchild of Rafał Han, CEO of HanBright. Founded in 2009 the Krakow based firm 'helps startups to grow by sharing knowledge and investing at an early stage'. Brightberries have invested in number of startups including Webshake.tv, Futbolowo.pl and Lingapp.com.
One of Rafał's most important roles is as a mentor to startups at event such as 'Startup Fest', 'StartUp Sito' and Startup weekend Warsaw, Poznan and Szczecin. His startup CV includes a number of his own successful projects:
- An interactive advertising agency (1998) which worked with brands such as KFC, FritoLay, Tesco and Orlen,
- In 2008 Rafał started www.ciufcia.pl under the umbrella of his parent company HanBright. Ciufcia and later tajemniczakuchnia.pl and zosiaikevin.pl focus on 'edutainment' games for preschool children and their parents (Rafał himself has 3 children). HanBright raised 1.7 million zloty from Satus Venture, became the #1 specialist in Poland in children's online edutainment and are now in the process of floating on the New Connect stock exchange with a market valuation of 25 million zloty.
'The Polish startup scene has grown rapidly over the past 2 years. TechCrunch Europe wrote a few weeks ago there is 'Startup madness in Poland'. From one side the number of events and programs for startupers is growing, from 2009 where only a few academic 'BarCamps' existed, to 2010 where you have StartUp Fest organized by Agora, ennovation by Allegro, Internet Beta Rzeszów, Startup Challenge Szczecin. 2011 saw the addition of Labstar organized by WP (Wirtualna Polska), Startup Weekend Warsaw #2, Poznan, Szczecin, and in January, Krakow. From the other side many startup incubators came to life with support from EU funds as well as VC capital. So overall there is now lots of money in Poland to invest in startups and more and more events where they can network and work with mentors'. - Rafał Han
Richard Lucas is an active investor and mentor to start up firms in Poland and abroad. He helped start and has spoken at TEDx Krakow and is a mentor at the next Warsaw Startup weekend. We spoke to Richard about how the city can accelerate the development of the startup community
'As you can see with Hive, KrakSpot and the work of Brightberries and the startup events around Poland, this is starting to happen now. I would look primarily to deepen and strengthen what's already happening.'
Richard sees Cambridge in the UK as a model for Krakow's startup roadmap.
'There you have a level of integration between business innovation parks, local government, banks, venture capital funds and different faculties and departments at the university including the business school. There is a strong Alumni community that brings entrepreneurs back to speak at student society events. The tradition doesn't exist in Krakow yet but part of the gratification that wealthy ex students/entrepreneurs get from coming to these events is that they become part of a community and are useful.'
Richard also suggested conducting a systematic review of VC and private equity providers globally including those who cover Central Europe. 'If they invest in the region, offer them publicity here. Make it simple, make people aware that money isn't the barrier, the primary barrier is value creation, finding customers who want your product, you will then find shareholders who can share that value with you.'
Longer term Richard would focus on education, what happens in schools to encourage the teaching of skills that are of value to entrepreneurs. Give kids contact to real entrepreneurs, inviting the alumni back, especially if they are women as that helps change the perception in the media of business people as men in suits.
A consistent theme raised by everyone we interviewed was the need of a business accelerator in Krakow. Accelerators combine the elements of traditional incubators (Cheap office space and a host of business services) with small amounts of equity based funding combined with in-depth coaching/mentoring. Funds for startups are available, but there is a lack of know how in scaling operations which accelerators could help to provide. Chris Kowalczyk and his Gamma Rebels program in Warsaw is an excellent example with the following for those who pass their recruitment process:
- 'A predefined equity investment of up to PLN 20 000 for 10% equity
- An international team of mentors and coaches
- Working space in Warsaw
- The chance to pitch investors at the end of the program at Demo Day'
In the humble opinion of this author, the great work done by the people we interviewed for this article and their like-minded thinking and efforts, would make them prime candidates to start such an organization in Krakow. In preparation, I suppose I had better dust off that business plan I wrote in university for an online site where people can keep in touch with their friends, share photos, send messages, chat…...
Special thanks to Richard Lucas and Kate Scisel, for introducing me to a number of the contributors to this article.