This month Polish founder and tech blogger Artur Kurasiński was supposed to be busy organising the launch of his startup’s new AI tool for role-playing gamers. But instead, he's embroiled in a dispute over domestic grant funding that could end up bankrupting his company.
His offence? In January last year, he inadvertently missed an insurance underpayment of 3,900 złoty (€907) for one of his employees — a fault he says he fixed within a couple of weeks.
But before he’d noticed the mistake, Kurasiński had sent off documents for a public grant from Poland’s National Center of Research and Development (NCBR), ticking a box on an online form to say his startup didn’t have any overdue payments. A year later, the NCBR sent a letter telling Kurasiński he’d made false financial declarations during the verification process and requesting that he return all the grant money. It has also referred the matter to the prosecution office.
Kurasiński isn’t alone — there are 37 other companies in the same situation, close to half of all the businesses that were awarded a grant last year. They claim that their wrongdoings constitute minor financial oversights that were quickly fixed — and that the request to return all the grant money might kill their businesses.
“Of course we don’t have this money, because we spent it all on the project,” Kurasiński says. “If we obliged with this demand, we would have to bankrupt the company, and its sister company,” he adds, stressing that he wants to solve this issue with NCBR amicably, otherwise he’ll go to court.
“We made a mistake for a low sum, so punish us, give us a fine — but let’s keep it proportional [...] withdrawing the deal and sending the case to the prosecution office? To me, this smells like a witch hunt.”
In a statement sent to Sifted, NCBR reiterates that before signing a grant agreement, all companies had to declare, under penalty of perjury, that they didn’t have any tax or insurance payments overdue — regardless of the amount and circumstances.
“During the internal inspections, it was discovered that some of the beneficiaries submitted declarations that were inconsistent with their actual situation, leaving NCBR in error as to the fulfilment of the conditions necessary to conclude the contract,” it says. “If the funds in question are not returned, NCBR will take legal steps to recover the amount due through administrative proceedings”.
Public money
It’s not the first time founders are facing problems because of their participation in NCBR’s “Fast Track” programme — a scheme which aimed to award EU-funded grants worth 801m złoty (€117m) to finance operations at ventures in the fields of cybersecurity, digitisation of industry and digital creative technologies.
Eighty seven companies received grants ranging from 2.7m to 122m złoty (€500k-26.5m) either upfront, or, more often, as an expensed refund for costs associated with their projects. But a corruption investigation in spring last year meant the first payments were delayed for up to seven months, putting many beneficiaries in a difficult financial position. The corruption inquiry was related to grants that had been awarded to two companies of doubtful eligibility with alleged links to politicians.
Despite these challenges, the founders Sifted spoke to concluded the projects for which they’d been given the money within an end-of-the-year deadline — but those that received the grant upfront have now been told they have to return the money in full, and those that are awaiting expenses for costs accrued have been told they won’t be refunded for what they’ve already spent.
The timeline is similar for all of them: their grant applications were accepted in late 2022; in January 2023 they submitted an online form in which they stated that they had no outstanding or overdue administrative payments; and later in spring they signed contracts. But due to delays, they only received their first payments in the summer.
In the meantime, they had to undergo additional checks and examinations because of the ongoing corruption investigations. The founders tell Sifted that they were still in communication with NCBR up until autumn 2023, and expenses were still being processed. During this time, no one raised the issue of the companies’ financial oversights.
But later in the year, the founders say communication with NCBR became more difficult, and that they stopped receiving refunds. They were informed that the scheme was being audited by the Ministry of Development Funds and Regional Policy, the governance of which changed after Poland’s general election in October.
The next thing they heard was that their contract had been revoked and that they were no longer entitled to any NCBR money. For Kurasiński’s startup, Spellarena, it means returning 1.8m złoty (€419k) of a refund it received, and that it’ll no longer be granted a separate refund of 500k złoty (€116k).
Kurasiński admits that he had the 3,900 złoty (€907) underpayment at the time of making the declaration, which he settled right after discovering it, before informing NCBR. In the months that followed, he tells Sifted that his startup struggled for money because of the delayed grant payments, which then led to other unpaid taxes and fees piling up. He says that when he then signed the contract for the grant in May last year, NCBR didn't ask about any additional underpayments, which Kurasiński says were all paid in July, as soon as Spellarena received its first grant refund.
Now, Kurasiński says that his assumption is that due to the corruption investigation into NCBR, all the administrative clerks are looking for ways to show that they do all the necessary checks on the beneficiaries.
“They’re saying: ‘Look, we’re holier than the pope, these are the thieves, we caught them, deal with them,” he says. “It’s ridiculous, outrageous and utterly unfair”.
NCBR says that it’s acting in line with the scheme’s terms and conditions.
Affected startups
Kurasiński says that he’s in touch with more than 20 companies that have been put in the same situation — and that they had all committed similarly small errors. They’ve sent a letter to NCBR to explain their position.
Antoni Omondi, CEO and founder at cybersecurity startup Sagenso, received 782k złoty (€181k) in refunds — that NCBR now wants him to return — and is still awaiting 1.2m złoty (€279k) in expenses for money he’s already spent.
Similarly to Kurasiński, he had an insurance fee underpayment of “several thousands złotys” that he says he wasn’t aware of at the moment he submitted the online form in January 2023 — by the end of the month, the amount was settled.
“We made this mistake unconsciously,” he says. “We didn’t do anything wrong, but this one oversight.” Even though he’s not facing bankruptcy, he says that paying back the grant would be “difficult” for the company. “It’s a lot of money — it’s almost 25% of this year's projected revenue,” he says, stressing that he would seek justice in court.
A third person, who wishes to remain anonymous, is respectively a CEO and a minority shareholder in two other companies that received grants of 4.5m złoty (€1.1m) and 5.5m złoty (€1.3m), one of them in the gaming industry, another working on 3D scanning. They tell Sifted that at the time of making their financial statements the companies had no unpaid fees. Later, when the contract was signed, one company says by mistake it didn’t pay 8k złoty (€1.8k) of one tax — but at the same time had overpaid on another tax. In the other company, there was a 25 złoty (€5.8) underpayment.
All the mistakes were fixed as soon as they’d been discovered, the companies say. But now both companies are requested to return 3.3m złoty (€770.5k) and 2.7m złoty (€630.3k), with interest — and are unlikely to get €1.1m and €2.7m in refunds, respectively.
The person says that the whole issue was a mixture of “political game and administrative incompetence.”
“For part of these companies, which are young companies, they're currently in talks with strategic investors — and this whole issue has an impact on these talks.”
No more public money
The companies want to speak to NCBR, or the ministry, to argue their case — but they haven’t heard anything back. They’re also prepared to start legal proceedings against the decision — but they know these won’t be easy.
“[The ministry] are aware that the majority of these companies will not survive until the court case or they won’t be able to afford the court fees to seek justice. So they’re perfidiously counting that some of the companies will go bust. They know they won’t get the money back, but they also know that only very few will be able to go to court.”
Kurasiński’s fears go even further. “We’re expecting that very soon we’ll get an invitation to the prosecution office or we’ll just be transported there at 6 AM as serious criminals. Maybe someone will want to make a political spectacle out of this. And obviously nothing clicks better in the media than some news that the Polish state has arrested a group of 38 entrepreneurs.”
NCBR says that some affected beneficiaries have filed appeals against the decision, which are currently being analysed. “A potential court case will be possible at a later stage of examining these cases,” it tells Sifted in its statement.
The whole affair leaves the founders disheartened with how the public authorities are treating the country’s entrepreneurs.
“We do a lot to showcase as a Polish company — even though we have to compete with companies from the UK, US, Israel, the cradles of cybersecurity. And people like our solution,” says Omondi. “But when we compare ourselves to Israeli companies, it’s unfair competition, because they have full support from the state, and we don’t — all our state wants is full compliance.”
“We set up these businesses in Poland and we want to pay taxes here,” say the representatives of two affected companies. “But on the other hand, there’s the public administration that treats us as fraudsters and thieves and talks about it publicly in the media.”
“All the founders involved in this affair have the same after-thought: never again will we touch the public money,” says Kurasiński. “No matter how attractive the terms are, we’re sick of public finances and we’ll discourage everyone who has an idea to take some.”
