Polish VCs will continue to receive public money even if Brussels stops sending EU funds to the Polish government, the head of the state-owned investor PFR Ventures tells Sifted.

It’s the first public statement about the future of venture capital amid a dispute between the EU and Poland that had threatened support for the country’s nascent tech scene and rattled investors.

A big chunk of PFR’s budget — which has so far doled out 3bn zł (€640m) to 60 Polish and international VCs — comes from the EU.

PFR — the largest institutional, government-owned fund of funds in central and eastern Europe — confirmed in July that it would allocate a fresh tranche of 1.9bn zł (€404m) from the new EU budget to back up to 500 startups over the next four years. But the EU has also recently confirmed that it could withhold its regional aid payments worth tens of billions of euros to Poland amid a years-long conflict over the rule of law. 

PFR Ventures boss Maciej Ćwikiewicz downplays these risks. “It won’t influence us because the government is determined to finance these programmes, the government will cover it with its own money,” he told Sifted. 

It’s a reminder that — despite huge successes like DocPlanner and Brainly in recent years — Poland’s startup scene is still heavily dependent on state support. VCs in CEE depend on government funding more than those in any other region; from 2015 to 2020, more than half of VC funding in CEE came from governments, compared to only 12% in the UK and Ireland.

In Poland, around half of VCs are backed with PFR money. Only about 10% of firms are private, according to PFR Ventures — the rest use capital from other governmental vehicles (which also rely on EU funds).

Government backup

Ćwikiewicz says he has been assured by the Polish government that PFR Ventures will receive its part of the fund to pump into the country’s ecosystem no matter what the EU decides.  

“We’re not worried about this. We think that either the government gives us this money, or the Polish Development Fund [PFR’s parent company] also disposes of the funds [that could cover the gap],” he says. 

The Ministry of Development Funds and Regional Policy, which is responsible for EU funds, has not replied to a request for a comment. 

The government in Warsaw still has some time to solve the situation — the EU usually doesn’t pay the funds upfront, but reimburses governments spending on agreed investment. The first reimbursements would happen in mid-2023 at the earliest. 

The government says that it still has a lot of time to negotiate outstanding issues with the Commission before there’s a risk of not reimbursing the money on time.   

Ćwikiewicz adds the government must be prepared to pay the sum upfront — the question is whether the money gets reimbursed or not. 

“In our scope of work, we’ll meet the requirements in a way that the funds could get reimbursed by the EU,” he says. “In other scopes, it’s the government which maintains the dialogue with the EU.”

Zosia Wanat is Sifted’s central and eastern Europe reporter, based in Warsaw. She tweets from @zosiawanat