Startup Poland is proud to present the sixth annual report on the Polish startup scene.
Polish Startups 2020 Report. Covid Edition
1. The perception of the impact of the pandemic on startups is very divided: 39% of them consider it negative, 34% – positive.
2. New customers (56%) and better sales (48%) combined with the retention of staff are signs of success for startups during the pandemic.
More than one in four startups declare that the pandemic has not changed the way they operate in any way, and therefore they still operate on the basis of the assumptions and plans made before its outbreak. In this group of startups, the lack of impact of the epidemic situation on business is most often manifested by the ability to avoid layoffs among key employees (43%) and continue implementing the strategy of entering new markets (41%).
3. Lack of new customers of services or products (53%) or a drop in sales (35%) is a clear sign of deterioration due to the pandemic.
At the other extreme there are those startups that assess the impact of the pandemic as negative or very negative. In this group, which accounts for 39% of the total number of the entities surveyed, more than half (53%) considers the inability to acquire new customers for their products and services to be their biggest problem, and 35% have noticed a decrease in sales.
4. The vast majority of startups do not intend to dismiss employees (63%) – only 6% are planning layoffs.
5. Two-thirds of the companies did not use the anti-crisis shields
The so-called financial shield, prepared and financed by the State Development Fund, was positively received by companies and the majority of market experts. However, as it turns out, startups have benefited from this state support relatively rarely – almost two-thirds of them have not benefited from the solutions offered under the anti-crisis shields.
6. More than a quarter of companies have changed their business model, seeing new revenue opportunities or changes in customer relationships.
The flexibility of startups and their easy adaptation to changes can be seen very clearly. More than a quarter of companies have changed their business model, seeing new opportunities in the pandemic. Startups saw opportunities for revenue growth in a different model, a change in customer relations or distribution channels.
7. 60% of startups are expecting increased state support.
60% of startups are expecting increased state support, which in their opinion should involve an option for raising funds, tax incentives, acceleration programs or further simplification of the tax system. Two-thirds of startups did not use the support offered under the anti-crisis shields, and those companies that accepted it most often used loans or social exemptions from social security contributions. This is because it is difficult for startups to use in practice the support mechanisms provided for in the shields, as they are not traditional SMEs.
8. As many as 80% of startups use their own resources to finance their operations.
When raising funds for the development of their business, as many as 80% of startups use their own resources – this is by far the most frequently chosen option. Some of them, however, in addition to investing their own funds, also raise them from external sources. The Polish Agency for Enterprise Development (PARP) has been leading the way here for years, with one-third of Polish startups (32%) already benefiting from its support.
9. Nearly one-third of startups (32%) now generate more revenue than a year ago.
If a startup already earns money, then now, in the pandemic, its revenue is usually higher than a year ago – 38% earn more than in 2019, of which 6% are recording much higher revenue year on year. Every tenth respondent declared that this year's revenue was average compared to the previous year, and only 7% recorded a decrease in the period under analysis. Considering the general market situation and the huge problems of many industries, it can be seen that the startup sector is doing quite well on the market.
10. 49% of startups which were holding talks with the funds to raise funds at the time of the outbreak of the pandemic believe that it affected the fundraising process.
When it comes to assessing whether the coronavirus pandemic had a real impact on the fundraising process, startups are divided into almost two equal groups – 49% believe that the impact was felt, while 51% believe that it was not.
Unfortunately, the impact of the pandemic on those affected was very negative. As many as two thirds of them (66%) declare that during the crisis the funds stopped the talks (which does not mean that they will not return to them). Nearly every fifth startup (19%) met with pressure from the funds with which they were conducting talks at the moment, on a lower valuation than originally.
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