This article is a part of Poland Unpacked. Weekly intelligence for decision-makers
“Poland still has untapped potential at the intersection of science and business. Many valuable projects emerging at universities never reach the stage of commercialization and market financing. PFR Starter Science is a step toward changing this situation – we are creating conditions for VC funds to invest more often in scientific projects and to scale up technology transfer into the economy,” said Mikołaj Raczyński, vice-president of the Polish Development Fund (PFR).
Venture capital (VC) is a form of financing in which investors – VC funds – provide capital to young, fast-growing companies, most often startups, in exchange for equity stakes.
PFR Starter Science – program details
PFR Starter is a program funded by the European Union. Under this scheme, capital is allocated to venture capital fund managers who invest in companies at the earliest stages of development. Private investors also contribute capital.
The new component – PFR Starter Science – is designed to encourage investment in projects originating in the scientific community. Fund managers who complete such transactions will be eligible for an asymmetric profit split upon exit: PFR Ventures will waive its share in favor of private investors and the fund’s management team.
It was also clarified that investments under PFR Starter Science must meet a definition developed by PFR Ventures, based on three scenarios. In the first, a university is a shareholder in the company. In the second, the company uses intellectual property developed in an academic environment. In the third – the most discretionary and potentially subject to consultation with external experts – there is a significant link between the academic career of the founders and the field in which the company operates.
PFR Ventures reported that so far, under the PFR Starter program, it has allocated PLN 650 million (approx. EUR 151 million) to 13 venture capital management teams. An additional PLN 180 million (approx. EUR 42 million) has been provided by private investors. These teams have already financed more than 20 projects, of which one in four meets the criteria of the new component.
The strategy of the funds in the PFR Starter portfolio assumes financing for around 200 additional projects. Each of the existing teams will be able to use the new component and adapt its strategy accordingly.
“About PLN 200 million (approx. EUR 47 million) remains available for fund managers under the PFR Starter program. This should enable the launch of around three to five new VC funds. I also believe that several of the 13 existing funds will decide to invest in companies under the program’s new component,” said Rozalia Urbanek, acting CEO of PFR Ventures.
EU-funded programs under the European Funds for a Modern Economy (FENG) are managed by PFR Ventures in partnership with Bank Gospodarstwa Krajowego (state development bank – ed.), on behalf of the Ministry of Funds and Regional Policy. Their purpose is to stimulate various types of investment in startups and technology companies. Some focus on financing the youngest ventures, while others support projects developed in partnership with corporates or so-called business angels – private investors who back early-stage companies.
Source: Polish Press Agency (PAP)