PFR reshapes venture funding to back scientific startups

The Polish Development Fund (PFR) intends to adjust how the Starter program operates. Unlike the ongoing overhaul of the CVC scheme, the reason this time is not poor market alignment. Instead, PFR Ventures has identified a field where Poland’s venture-capital market falls short: investments in companies originating directly from the scientific and academic ecosystem.

“The new sub-strategy, provisionally called Starter Science, is designed to close this gap by introducing strong financial incentives that encourage fund managers to take on more challenging – but strategically vital – science-driven projects,” says Mikołaj Raczyński, PFR’s vice-president.

Strong demand, but too few spin-offs

Over the past three months, PFR Ventures has carried out an intensive review of its programme strategies – specifically the projects and funds linked to the EU’s Funds for a Modern Economy (FENG). The aim was to determine what works well and what requires immediate adjustment.

The analysis confirmed that market interest in creating funds focused on the pre-seed and pre-revenue stages is very strong. Starter funds remain attractive because PFR Ventures provides substantial capitalization, while the share of private capital is relatively small. The scheme also offers asymmetric profit-sharing, which encourages fund managers to take on greater risk. Yet despite its success in backing early-stage companies, the program has not generated a satisfactory level of engagement with science-driven innovation.

“What we’ve been unable to achieve is a satisfactory share of investments in companies emerging from the scientific community,” explains Mikołaj Raczyński.

Programs in need of change

The root of the problem lies in a deep gap between the expectations of venture funds and the realities of the scientific ecosystem. VC funds often report that university projects are unstructured, require substantial capital even at the transaction formation stage, demand considerable time, and involve challenges linked to the parent institution. Seeking projects in other market areas guarantees funds a higher likelihood of success, which is why they explore the academic environment less.

On the other hand, research centers – including special-purpose companies and technology transfer offices - criticize funds for having overly high expectations and insufficient patience. The result? Poland’s rate of innovation is not increasing at a satisfactory pace.

PFR Ventures, however, has no direct influence over the higher education system. It cannot impose statutory changes to compel universities to create “investable” spin-offs or spin-outs. What it can do is introduce incentive mechanisms within its own programs - and that is precisely what it intends to do.

Higher rewards for tougher projects

The main aim of the changes is to redirect fund managers’ attention toward the more demanding and time-intensive university environment. Through PFR Ventures, PFR plans to offer funds financial mechanisms that compensate for the additional work and time required.

“PFR Ventures is concluding consultations on the program and will soon submit the relevant proposal to the Ministry of Funds and Regional Policy. Once the ministry approves, it will pave the way for broader changes to the Starter program and the launch of Starter Science. Ultimately, this will translate into more investments in university-derived projects,” says Mikołaj Raczyński.

Funds that reach a certain scale of investment in university-originated companies -measured by the value of initial investments rather than the number of transactions – will qualify for higher financial bonuses.

The primary incentive is an increased share of fund profits for private investors under the so-called asymmetric profit-sharing mechanism. A second component is a higher share of the carried interest for fund managers. These mechanisms already exist within PFR Starter; the planned changes will make them more attractive to managers who invest in university-based projects.

This two-pronged motivation is designed to foster greater openness to science. Benefits are not awarded upfront.

“If a team delivers on its promises, it will receive a benefit from PFR Ventures in terms of asymmetric profit-sharing for private investors. If it fails, the additional benefit does not apply,” explains Raczyński.

Failure to meet the targets carries no penalties – only the absence of the additional bonus, leaving the fund operating under standard conditions.

Specialized funds can expect rewards

PFR Ventures is prepared to support funds that choose to dedicate themselves entirely to investments in academic innovation. Mikołaj Raczyński acknowledges that a strategy focused exclusively on such projects may be challenging – mainly because Poland currently lacks funds with such a narrow profile.

“We do not rule out investing in two or three funds specialized in financing and scouting scientific projects,” notes Raczyński.

Existing Starter funds can also benefit from the Starter Science program. If these funds approach PFR Ventures with the intention of intensifying their efforts in the university sector, they may be admitted to the subprogram – and receive incentives to expand their work.

Funds applying to the subprogram will undergo an individual assessment. PFR Ventures will evaluate the fund’s network and its capacity to identify promising ideas. It will also review the managers’ ability to engage in acceleration activities or provide enhanced support to early-stage scientist-entrepreneurs.

Expert's perspective

Why VCs shy away from science

Investing in academic startups presents numerous challenges for venture capital funds. The main issue is the relatively long timeline required to bring such projects to fruition.

In our previous fund, for example, we invested in a healthtech startup. We chose it because its commercialization path was relatively short. By contrast, in biotech companies – where lengthy procedures, clinical trials, and complex product requirements are necessary – VC investments become extremely difficult. This is especially true given that, as fund managers, we are accountable to investors who expect returns not after ten years, but much sooner.

There is a widespread belief that the problem lies in the approach of many in the academic community. In Poland, support for developing dynamic, innovative technologies that can be efficiently commercialized remains insufficient. Our experience, however, has been positive – for instance, in collaboration with Warsaw University of Technology, where we invested in one of its spin-offs.

Not every scientist can be expected to be a proficient entrepreneur. Yet it is worth encouraging the creation of interdisciplinary teams in which scientific expertise is complemented by business skills.

While universities are unlikely to become leading incubators of entrepreneurship, they should provide opportunities for their staff to develop across educational, scientific, and commercial dimensions.

Tomasz Goliński

Partner, Cofounder VC

The road ahead for Starter Science

Which startups can be considered “academic”? PFR representatives say they are still consulting with the market to define the criteria. It is certain, however, that the program will include companies registered in Poland – even if they originate from foreign academic institutions. For startups emerging from Polish universities but not registered in Poland, funds may allocate up to 15% of their investment budget. An additional requirement, of course, is that the startup must originate from the academic and scientific environment.

The main framework of the program has already been presented to the Ministry of Funds and Regional Policy (MFiPR). PFR Ventures is awaiting the ministry’s decision on launching the new subprogramme, but a lack of approval will not halt the standard Starter programme – or its openness to Polish science.

Mikołaj Raczyński assures that PFR will remain flexible.

“Waiting for approval will not affect the next call for applications organized by PFR Ventures. Teams currently seeking participation in the Starter program will be able to benefit from these preferential conditions in the future, as soon as the PFR Starter Science subprogramis approved,” explains Raczyński.

To date, over 50% of Starter program capital has been invested. Including projects currently in due diligence, this rises to more than 60%. That leaves 30–40% of capital available - around PLN 300 million (EUR 71m). According to PFR Ventures, this pool is sufficient to meet the new challenges.

Fireside chat

The scientific community and PFR’s plans

Katarzyna Mokrzycka, XYZ: Do your experiences suggest that PFR Ventures’ plans to encourage domestic VC funds to invest in university spin-offs have a chance of quick success?

Jakub Jasiczak, Chairman of the Consortium of Special-Purpose Companies: It’s a good step, but in practice, it is one of the last steps that should be taken if this plan is to succeed. For over a year, the academic technology transfer ecosystem – special-purpose companies and technology transfer offices – has been presenting a concrete set of actions that must be taken before VC funds can realistically invest in spin-offs emerging from Polish science.

These earlier, crucial steps require coordination across three ministries: the Ministry of Science and Higher Education, the Ministry of Development and Technology, and the Ministry of Finance. Additionally, collaboration with PFR and, where needed, other institutions such as the National Development Bank (BGK) is essential.

Without such a coordinated intervention, the PFR initiative, while valuable, will not increase the supply of companies in which VCs are willing to invest. Funds may conclude that too few investable projects are emerging from Polish science.

Mokrzycka: What are these steps? Could you outline the key elements necessary for VC funds to effectively invest in spin-offs?

Jasiczak: We need a package of changes that will genuinely increase the supply of strong, scalable companies. This includes: clarifying legal and tax issues related to transferring intellectual property to spin-offs; creating market-standard valuations for such rights; adapting public procurement regulations to the realities of collaboration between startups and universities; facilitating access to test and semi-industrial infrastructure, including through the involvement of state-owned companies; financing prototyping and certification of innovations; and building a shared managerial resource for spin-offs.

Mokrzycka: Couldn’t some of these preparations and changes be handled – at least in part – by the special-purpose companies themselves? They exist to prepare university innovations for commercialization.

Jasiczak: No. Most of these changes concern tax regulations, legal frameworks, and access to infrastructure – areas that depend on the state. A single special-purpose company cannot, for example, open state-owned company infrastructure for testing.

As the Consortium of Special-Purpose Companies, we have proposed a set of solutions and declared full readiness to help co-create the system. But success depends on inter-ministerial cooperation.

Mokrzycka: Are there any Polish spin-offs ready for VC investment today?

Jasiczak: At most, a dozen. These are companies with genuinely mature technology that need an investor familiar with deeptech. But if the systemic measures I mentioned earlier were implemented, we could quickly unlock another dozen projects.

Currently, however, we risk spending money and time attracting VC funds that will come and say the supply of university spin-offs is very weak, blaming the technology transfer offices. Funds may conclude that the investment pipeline is too small, and the responsibility will fall on those closest to the process – that is, us.

I emphasize that real progress requires inter-ministerial collaboration, as well as cooperation with PFR and BGK. Only then can a package of solutions be created that genuinely increases the supply of investable spin-offs from Polish science.

Jakub Jasiczak

Chairman of the Consortium of Special-Purpose Companies

Key Takeaways

1. Experts emphasize that without systemic reforms and inter-ministerial cooperation, the supply of investable university spin-offs cannot be significantly increased. According to representatives of the academic community, necessary measures include legal and tax reforms, improved access to infrastructure, the creation of standards for valuing intellectual property, and financing for prototyping stages. Simply increasing VC funds’ motivation will not suffice, especially if the appropriate infrastructure and regulatory environment are not in place.
2. The Starter program will expand with a new sub-strategy, Starter Science, aimed at increasing investments in companies emerging from the scientific and academic environment. Although the current model offers attractive conditions for investors, it has not translated into sufficient engagement with university startups. The new approach introduces stronger financial incentives for fund managers. It is targeted at those willing to take on more challenging and demanding investments in the scientific sector.
3. The main barriers to the development of academic spin-offs stem from a mismatch between VC funds’ expectations and the realities of university operations. Funds are discouraged by factors such as unstructured projects, lengthy procedures, and formal or organizational obstacles. Conversely, universities and their special-purpose companies criticize investors for a lack of patience and excessively high demands. Nevertheless, PFR Ventures has declared its readiness to provide financial support to funds specializing in science-driven investments, including those already operating under the Starter program.