Polish Start-ups About – VC Investors
In the last few years more Polish start-ups than ever before managed to acquire VC funding. We talk to some of the most successful of them about their experience working with VC investors. Learn why DocPlanner, UXPin and Brainly decided to acquire VC funds, how it helped them and what they're up to in the nearest future
Every time a successful start-up acquires VC funding, media highlights the sheer amount of funds raised. The start-ups we talked to managed to acquire some impressive figures. But we challenged them to talk about the nitty-gritty of their VC struggles. Learn what UXPin's CEO Marcin Treder, DocPlanner's co-founder Jakub Skoczylas and Brainly's PR & Marketing Manager USA Jakub Piwnik got to say about how they determined their need for VC funding, what they spent it on and how it will influence their future as a global brand.
Start-ups that acquire investments in millions of dollars are usually those that aim to become global brands. That's exactly the case with all of our todays' guests.
UXPin is a Polish start-up that deserves to be shortlisted as one of the most successful. Over $7.3 million acquired from VCs such as Innovation Nest, Andreessen Horowitz and Freestyle Capital is a testament to its success as a UX Design & Wireframing toolset for companies and individuals. UXPin facilitates collaborative design workflow. UXPin lists Microsoft, NBC, Adidas or Sony among its corporate customers.
DocPlanner, known in Poland as ZnanyLekarz.pl, started as a website that allows users to express their opinion on the quality of medical services. For years now it has also made it possible to easily find a physician or dentist and make an appointment online. DocPlanner already acquired over $14 million in VC funding from Point Nine Capital or RTAventures. It's present in 25 countries and has over 7 million monthly users and almost 1.5 million doctor profiles.
Brainly so far have gather $9.5 million from General Catalyst Partners and Learn Capital among others. Brainly is a network of Questions & Answer social educational web portals that makes it easier for students to help and receive help with their school tasks and learn in the process. This start-up is already present in 35 countries and boosts an impressive figure of over 40 million unique users.
“VCs from Silicon Valley, due to size of the funds under their management and expected returns, can only consider investing in companies that can generate $100 million in annual revenue or more in the foreseeable future. That requirement means that any given company — apart from exceptional leadership, team and product — must operate on a sufficiently large market. Nobody is going to believe that you're about to take 50 percent of a $200 million market in five years. 10 percent of a one billion dollar one sounds much more reasonable. Raising VC money is not an obligatory step for a startup’s success. It’s only necessary if you want to build a really large company and if you’re willing to give up a significant portion of shares to achieve this goal,” says UXPin's Marcin Treder.
Brainly is one of the companies that knows the truth the best. With its enormous user base, it's most probably the most 'crowded' Polish start-up. But it's yet to put profit ahead of its ambitious growth plan.
“Brainly grows very fast, focusing on increasing its user base, not monetizing. It needs VCs to keep the enormous growth alive,” explains Jakub Piwnik.
UXPin's reasoning is similar.
“Subsequent rounds were different. When UXPin started to grow rapidly, we knew that there was a huge opportunity in front of us, which required more capital and more experience to pursue. Generally speaking, when we analyzed our potential results and the design market, we felt we had a good chance of raising significant amount of capital, which would be crucial for our future. We also realized that we would need the knowledge and experience of Silicon Valley-based investors to achieve global success,” continues Treder.
DocPlanner, due to the large scale of their market, found itself in need of VC funding even before making its way beyond Poland.
“The need for a VC funding was obvious from the very beginning. The scale of the Polish market only is still huge – 60 thousand private doctors. To reach them and create a product that meets their needs, you need a lot of money. Adding international expansion, we knew that the external funding is necessary”, says Jakub Skoczylas.
How do you spend VC funding?
Brainly acquires new users with the power of search engine and user-generated content. When new answers become popular, they rank high on Google or Bing for many phrases (even rivaling Wikipedia!). New users acquired from the search engine add even more questions and answers that subsequently win new users over. Once set in motion, this mechanism can be described as a sort of snowball effect. But to assume control of that snowball, Brainly used bulk of its VC funding to grow its structures that, due to scale, require more and more skilled employees, on top of moderators taking care of the quality of answers.
“When we looked at our strategic growth plan, we knew we had gaps. This last round is helping us fill those. First, we opened an office in New York City to lead our US expansion. We were able to fill executive leadership roles, including CMO and a head of product, who are ensuring we deliver the best product to our users on a massive, global scale. In addition to our US expansion, we also opened a new location for our engineering team in Germany, and Brainly offices in Krakow and Berlin now encompass full stack teams across Product, Business Intelligence and Engineering. The team in Berlin includes Product, Design, Engineering (front-end, backend, devops, mobile), Business Intelligence (analysts, data scientists) and HR. The new office is located in Tempelhofer Ufer, Berlin, Germany, which is the local start-up hub. Berlin is a hotbed for talent in Europe so this location is awesome for getting the best talent to achieve our rapid growth plan,” explains Jakub Piwnik.
DocPlanner is a similar case, but aside of growing its structures, DocPlanner uses VC funds to acquire similar websites in other countries to make them part of the DocPlanner family and invests in advertising – all to keep the pace of growth worthy of a top-notch start-up.
“Up 'till now we secured around $14 million. The money was spent to speed up and scale operations. What exactly? We acquired and grow a website in Turkey. In our Warsaw office work more than 120 people. Recently, we’ve opened an office in Budapest. Creating and maintaining such a structure is expensive. Without external money it wouldn’t be possible to keep the pace of growth we have,” says Skoczylas
UXPin spends its VC funding on a set of different purposes depending on the stage of development.
“We acquired the first seed round in Poland back in 2012 - $230 thousand from Innovation Nest. We used this it to complete the product and start our growth. Another seed round from 2014 - $1.6 million from Freestyle Capital, a16z, IDG Ventures, Innovation Nest, Gil Penchina and other angel investors, was used to accelerate our growth as a company. The Series A in 2015 - $5 million from True Ventures, Freestyle Capital, IDG Ventures, Innovation Nest, Gil Penchina and other angel investors, focused on building our Enterprise-level product as well as developing our sales team,” says Marcin Treder for web.gov.pl.
It's not all about the money
VC funding provides global start-ups with enough resources to focus on growing, but it's not the only benefit of cooperating with VC investors.
“Having General Catalyst as a partner is a wonderful opportunity to use their great experience in scaling start-ups such as Brainly and we’re happy to benefit from it’s impressive network of connections,” says Jakub Piwnik.
“Of course, contacts and access to other smart entrepreneurs is another advantage. They are not engaged in day-to-day operations, but can help in a long term planning and challenge all ideas and assumptions the company has,” adds Jakub Skoczylas.
To make the best use of their experience and understand their perspective, it's best to get on board experienced individuals who have already worked with VC investors or are investors themselves.
“We also started to understand the VC model. Start-ups considering raising capital from institutional investors should know what will be expected from their future performance. All of our Directors of the Board are not only famous investors, but also great entrepreneurs and former CEOs of well-respected companies. That’s absolutely invaluable. True Ventures' Jeff Veen is a great example. Just a couple months ago, Jeff was VP of Design at Adobe and had previously co-founded Typekit (acquired by Adobe), Measure Map (acquired by Google) and Adaptive Path (one of the most important UX agencies in the history, acquired by Capital One). This kind of experience is probably worth more than millions of dollars in funding,” says Marcin Treder.
The ultimate goal – global brand
Global expansion is a must and a condition for practically any start-up that wants to acquire foreign VC investment as substantial as Brainly, UXPin and DocPlanner. But before one does it, a careful analysis of what it will be spent on must be performed. As VC usually means parting ways with some of your shares, you must make sure to spend them efficiently.
“We continue global expansion and growth on the markets we are in. Additional funding depends on our needs and a situation on the market. Money taken from investors are not for free, so they should be obtained only in a situation when the company has a very clear plan what to do next. We’ve secured a round recently and don’t need additional funding in a moment.,” believes DocPlanner's Jakub Skoczylas.
Brainly is more likely to acquire even more funds soon and continues its strategy of putting sheer growth first.
“With this in mind, we will continue to bring Brainly to new corners of the world. Today, we are tracking against our aggressive plan to achieve 100% growth in user base, and ultimately we want to reach out to every student in the world and offer them free help with school work Considering that goal, It is likely that we may seek additional investment partners in the future,” says Jakub Piwnik.
UXPin is on its way to accelerate its growth rapidly and is careful with considering further funding options.
“We definitely continue to rapidly grow and expand our business. The next 24 months will all be about finishing our work on the best collaborative design platform for the entire design process, then delivering that to product teams in small, medium and large companies. Will we try to raise more capital? If that will be the thing that could take us to the next level, then definitely”, concludes UXPin's Marcin Treder.
For more Polish start-ups to acquire such substantial VC funding and make an effective use of it as Brainly, UXPin and DocPlanner, they must focus on what being start-up is all about – growing its business on a scale as big as it's only possible. And not underestimate other benefits of working with VC investors. It seems that this is exactly the case and soon more Polish start-ups who know no borders and limits will join the ranks of our today's guests. As for the letter, we can only wish them even more success as their amazing journey from an idea to a global powerhouse is still very much a work in progress.
Why do successul Polish start-up go for VC funding? - WRAP UP
* VC investors ensure funds required for start-ups with global ambitions to grow rapidly
* VC investors are more willing than before to participate in long-term projects – start-ups that prioritize growth over profits for an extended period of time
* VC funds provide contact that may in turn bring even more funds, deals or experienced
employees on board
* Being picked by an acclaimed VC further validates the start-up in the eyes of stakeholders or potential business partners
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