LIFT-OFF Private Startup Accelerator from Poland.
This is the very first post on my blog. On April 2014 together with my business partners we have started LIFT-OFF Startup Accelerator. We all are around the 30 years old and we all made IT companies in the previous years. My co-partner made the trans.eu that is one of the three biggest European companies that are providing the freight exchange platform. The whole trans group is hiring more than 300 specialist across Europe. I have created a couple of companies that has been sold after 2-3 years. I have been doing the mobile game for the Java ME platform (2007). That company was sold to the e-muzyka SA that is listed on the New Connect Stock Exchange. I was the co-founder of the Sky Store (2009) company that is providing a Dropbox like service based on the Amazon AWS. I was the co-founder of the Taxi5 (2011) service its like UBER but it connects the end user with the taxi companies not with the taxi driver cause taxi companies are very popular in Central European market. That was the biggest investment transaction in Poland one the seed level made by the VC fund. Satus has invested 2 160 000 PLN (4 PLN +- 1 EURO). I’m still the co-founder and share owner of the KMP group (2010) software house sold to the RST IT company. RST-IT.com is providing the lean sourcing service to the startups in Poland and Europe (no1 market is German).
During my time as a founder or co-founder I have been struggling with building the company and money rising process. Some of my companies where backed by the VC and some where bootstrapped. Most of the VC money that are invested in Poland comes from the European Union Funds. It’s great that we have such a funds for the early stage investments but the regulations that are build upon those funds are so great that they are killing the investment. The average time from the initial meeting with the founders to the real investment and money transfer last about 8-9 months! I know one startup that got the money after 18 months! The single investment can be up to 800 000 PLN (200 000 EURO’s). The fund is taking 49,99% of the company. Sometimes less but that is very unusual. Those VC funds get the money from the public institution called PL: PARP (EN: PAED - Polish Agency for Enterprise Development). To be precise from the 3.1 investment programme. 3.1 investment program works like this VC needs to have 0-10% private money the rest 90% will give the PEAD. The minimum VC fund is around 10 000 000 PLN (2 500 000 EURO’s). There is another programme for bigger funds that can invest up to 6 000 000 PLN (1 500 000 EURO) in a single project. They are working more or less the same as 3.1. Anyway if we are speaking about VC investment in Poland most of the money that are invested in startups comes from the VC funds backed by the European Union.
What we are doing in LIFT-OFF Startup Accelerator is rather different than EU backed VC funds. We are investing only private money. Thats why we are super fast in making the investment, cause we don’t have to fill the papers and wait for the agreement from the PEAD. We can focus 100% in the investment. We are investing on the very first stage of the startup. We can provide fast 25 000 PLN (6 250 EURO’s) initial money that can be spend on what ever the founders want to spend it except their salaries. We are investing in teams 2-3 people (programmer, usability and graphic designer, business user acquisition guy). After 2-3 months and team work and spending 25k PLN we should have some kind of the MVP product with witch we can touch the market. Than the market verifies the idea. It the verification is promising we are investing in four rounds 50 000 PLN (12 500 EURO’s). That is total of 225 000 PLN (56 250 EURO’s). After that investment we should have the cash flow positive company if not we should know how much do we have to invest in the next rounds. For the initial investment (225k PLN) we are taking up to 30% shares.
We like to work with the 3.1 VC funds cause we can invest on the very first stage with our private money and those funds will invest later on after 6+ months when they will prepare all the documents and the business plans that have to be approved by the PAED. In the LIFT-OFF (later LOA) we don’t need the business plans we already know that they wont last the confrontation with the market. All we need is well prepared Business Model Canvas and the presentation that will tell us what the startup wants to do. We like the presentation cause by making it the startup has to identify the most crucial components of the business and they have to build the presentation in some kind of order.
In what we are investing? We like to invest in SaaS, B2B on the US or Western Europe market. The average salary in Poland in IT industry is 2-3 times less than the salary in Germany and/or United States. The exchange rate is 1 EURO = 4 PLN and 1 USD = 3 PLN. So 1 EURO invested in Poland in technology startup is working 8 - 12 times stronger than in Western Europe (2-3 times salary and 4 times exchange rate).
We have already invested in subscription commerce platform, printing machines that are working in the universities and the platform that can help to sell the lunches in the business centres. If You want to contact us please call me +48 504 868 892, skype tomek.popow or send me email t @ loa. io - Tomek Popow.