January 26, 2024

Why the Poles are building AI giants abroad, not at home

CEE countries are known for their IT talent but are struggling to become AI hotspots in their own right

Zosia Wanat

5 min read

Warsaw city centre

This week, Poland’s startup ecosystem cheered the announcement of an $80m funding round for ElevenLabs, a voice AI startup founded by two Polish engineers. Its fresh valuation of $1.1bn has made it one of Poland’s rare unicorns. 

But a bit more than a year ago, the mood in the country was very different: those same engineers — Mati Staniszewski, Imperial College and Palantir alum, and Piotr Dabkowski, ex-Oxbridge and Google — tried every Polish VC they could think of in their search for pre-seed funding.

Asked how many turned them down, Staniszewski laughs: “Very many.” 

The fact that ElevenLabs didn’t raise money from any Polish VCs speaks to a bigger problem in the country, which, similarly to the rest of central eastern Europe (CEE), is lagging behind the rest of the continent in the global AI race, despite the vast pool of highly skilled engineers that it has to offer.


“These people [IT talent] rarely build advanced tech solutions in Poland or from Poland,” says Mikołaj Firlej, a GP at Poland’s Expedition Fund. “Instead, they’re the core of founding teams, or they’re responsible for technology or product in startups in the US, the UK, or other western countries.”

The potential

The CEE countries, including Poland, have a long tradition of studying and excelling in mathematics and logic. Today, this often translates into acquiring advanced IT skills, including working on machine learning and AI solutions.

The fact that Polish engineers are highly skilled and relatively cheap doesn’t escape foreign companies. They’re often top employees in global big tech companies and, more and more often, also in startups: Poland’s Wojciech Zaremba is a founder of OpenAI while Jaroslaw Kutylowski is a CEO and founder at DeepL in Germany.   

And while AI startup activity is picking up in CEE — there are 900 active AI product companies in the region that have raised $4.2bn over the last three years, according to a report from The Recursive — the region hasn’t really created any significant AI hotspot, like Paris or Germany’s Heilbronn

Main challenge: access to the right capital

The first reason founders and investors point at: the lack of sufficient funding for sophisticated AI ventures. 

“We really do have these genius programmers in Poland — but on the other side, we need to have the ecosystem that will help these founders burn the money, pivot, experiment,” says Mateusz Zawistowski, a managing director at American-Polish ffVC, stressing that local VCs often don’t accept this kind of risk in the early stage. 

Even though local VCs have started to mature, they rarely raise funds big enough to support advanced and cost-intensive technology at an early stage. 

“We often meet teams whose solution quality is comparable to, and often better than, western startups, but they obtained 10x lower financing, which limits their long-term development potential,” says Artur Banach, managing partner at Warsaw-based Movens Capital. “We’re still chasing more mature western ecosystems.” 

Founders also stress that the Polish VC ecosystem, which is largely dependent on governmental funds, often lacks stability and predictability — especially when they hear news about corruption and nepotism in public funds. 

“We have caught up with the West when it comes to yield and the return expectation… but we haven’t caught up with stable institutions, predictability and the risk profile,” says Zawistowski. “Engineers want an investor who is profitable, stable, who will be there for him. This is where the leakage [of founders and startups to the West] is coming from.” 


The lack of AI focus

Another thing that’s lacking is a push at governmental level to create more home-grown AI. The report from The Recursive mentions that one of the sector’s concerns “is the absence of a proper national AI strategy in most countries”, which would coordinate actions and define where public money should go.  

“We should focus on very specialised areas where we could achieve state-of-the-art results,” says Firlej. “There should be national programmes that would focus on certain verticals. Historically, Polish engineers are very good at machine learning and maybe this should be the first one.” 

Zawistowski adds that Poland needs a “coherent strategy” that would also define goals to financial institutions, such as banks, insurers, sovereign wealth funds — which so far haven’t been very active in the Polish market — so they support innovation in the country in an effective manner. 

“It needs to be clear that Poland’s goal is to be a digital champion,” he adds. 

This could soon change — earlier this week, Poland’s new government announced that it’s planning to set up an AI fund for startups and to update the country’s AI policy.  

The mindset 

But one thing that might be trickier to fix across CEE is the mindset of researchers to set off on the entrepreneurial journey.  

“It’s completely different to be a great researcher, and even one of the first employees in a startup like OpenAI, than to start something from scratch,” says Piotr Grudzień, the founder of Quickchat AI, which participated in Y Combinator and raised a seed round in the US  — but has been bootstrapping in Warsaw since. 

Robert Pisarczyk, the Polish CEO and cofounder at Oblivious AI, a Dublin-based startup, adds that running a startup is a risky business — but in places like Ireland, even if his startup fails, he’s likely to find a new job soon. In Poland, this could be more difficult. “People opt to work for big companies because it looks good on their CV and because it’s recognisable. I think this perception is starting to change in Poland: that starting something completely new is risky but also valuable.”

Grudzień adds that it’s easier to be a founder for people that were early employees in another startup and saw, day-to-day, how it was created — but there are a limited number of success stories in Poland to serve as an example.

It’s a role that ElevenLabs could fill — even though the company is headquartered in London and New York and hires remotely, Staniszewski says he wants to create a hub in Poland, as he sees a lot of potential there. 

“We still feel we’re close to Poland, a lot of first use cases came from people in Poland and allowed us to test our solution,” he says. “We will be a part of the Polish startup ecosystem.” 

Zosia Wanat

Zosia Wanat is a senior reporter at Sifted. She covers the CEE region and policy. Follow her on X and LinkedIn