What is the history of ff Venture Capital in the US—briefly—and in Poland?
Mariusz Adamski: ffVC was founded in 2008 in New York City by John Frankel, an ex-Goldman Sachs technology banker. Since then, we have invested in over 125 companies and have raised capital in excess of USD 230m.
Maciej Skarul: Back in 2008, the startup ecosystem in NYC experienced a significant boom. We believe that Poland is currently also undergoing an inflection point fueled by rapidly growing investments. This is what attracted our US colleagues who have had similar experiences.
Mariusz Adamski: I have been working together with ffVC on establishing the Polish operations for over two years. We started in Q4 2020 and officially opened the Warsaw office in January 2021. Since then, we have made two investments and are actively pursuing new deals.
What is the ffVC investment philosophy? What is the value that you deliver to the startups you invest in, in addition to the capital?
Maciej Skarul: We believe that these days, smart money is a must-have for venture capital firms. ff actually stands for “founder-friendly,” so we go above and beyond in supporting our founders on their growth journey. We engage at all stages, that is, by helping source new clients and executives, ensuring optimal legal structures and reporting, and finally, leading new investment rounds to facilitate follow-on financings. Our system works, and around 60% of our seed investments raise Series B while the industry average is closer to 12 percent, so we beat the benchmark by five times.
Mariusz Adamski: The premise of the Polish fund is to take advantage of the know-how and the platform we have built and connect the best startups out of the region to our US ecosystem. We believe that Poland is not lacking in talent, but in order to grow and compete in a global environment, the businesses require access to capital pools available in the US market.
What are the conditions for startups interested in your offering?
Mariusz Adamski: Startups with global ambitions and a scalable business model are the best match for our investment philosophy. We can be flexible regarding the industry, but since we like to invest in markets that we understand well, we tend to focus on enterprise software, fintech, insuretech, proptech, cybersecurity, gaming, and solutions based on artificial intelligence and machine learning.
Maciej Skarul: We are an early-stage investor, but we also need to see clear signs of commercial traction validated by sales, preferably already on an international level. Typically we write checks between USD 0.5m to USD 2.0m, which positions us in investment rounds between seed and Series A.
It is often said that Poland has a good environment for tech startups with many “innovation hubs” across the country in major cities. Would you agree with that?
Mariusz Adamski: Poland has a good environment, and the ecosystem is experiencing rapid growth. We also have strong fundamentals in terms of local talent and a well-educated workforce. There is a number of initiatives that contribute to the overall growth of technology, “innovation hubs” being one of them. This is why we believe that Poland is poised to benefit and we will be soon seeing the emergence of fantastic global startups.
Maciej Skarul: We are seeing more and more outstanding ideas with great teams behind them. Now the challenge for them remains in execution, and this is where we can step in to support and provide guidance.
How has the pandemic impacted the market?
Maciej Skarul: Even before the pandemic, we have been saying at ffVC that the world is now flat. COVID-19 has only exacerbated this trend. On the one hand, this has made global expansion even easier for Polish startups. On the other hand, the playing field is now better suited for well-capitalized companies who can simply outspend the competition. Even more so, access to funding and being able to raise large capital is becoming a key source of competitive advantage.
Mariusz Adamski: The pandemic has generally been positive from a business perspective for the technology sector. We believe that this is a favorable moment to start the investment activities as customer needs and business models are being reformatted, and agile startups are naturally best-positioned to capitalize.
Looking at the legal framework governing business in general in Poland, would you say that the country is a good place for investors in technology companies? Is there anything that you think may be improved?
Mariusz Adamski: Although the system is improving, there is still a lot to be done in terms of the legal framework in Poland. The rules for VC funds are vastly overcomplicated and generate unnecessary paperwork and admin. The tax regime for investment activities is also unfavorable, so it comes as no surprise that we are not seeing many international investors.
Maciej Skarul: On the back of experiences from the US market, we have identified a broad array of potential solutions that could greatly improve the system. We plan to spearhead the change and take an active role in shaping the industry.
What can you tell us about the ffVC investment portfolio in Poland?
Maciej Skarul: The Polish portfolio will be focused on businesses with global potential and ones we could plug into our US platform. We also strongly believe in startups within industries that have historically neglected technology and only now are seeing the demand for a digital layer.
Mariusz Adamski: Our first two investments, SpaceOs and Respo.vision, are great examples that substantiate this approach, as they provide solutions for the real estate and sports markets. SpaceOs is a tenant experience platform providing a technology layer for commercial property. The company already operates in 19 countries, and its technology has been implemented by leading players such as Commerz Real, CPI, and Immofinanz. Respo.vision is a startup that aims to fully digitalize soccer data and extract full 3D level information from any broadcast feed based on their unique technology. The solution is already being used by the likes of Paris Saint Germain and Benfica Lisboa.
What are ffVC’s plans for 2021 and beyond?
Maciej Skarul: We see that the opportunities in the market are as good as ever, so we will remain active in our investment activities. We believe that with our help and approach, we can replicate the success stories from within our US portfolio and create a handful of unicorns out of Poland.
Mariusz Adamski: We have big plans for the Polish and, more broadly, the CEE markets. Certainly, we will soon be raising new funds aimed at building truly global businesses!