The venture capital and startup landscape in Poland and Europe: Insights for 2025
Izabela Świstak
by Izabela Świstak
After two challenging years in the venture capital and startup market (marked by declining capital inflows), the outlook for 2025 seems much more optimistic. A key focus is on the growing significance of artificial intelligence, with expectations of a surge in investments in this sector and a general recovery in the M&A market, partly driven by political and economic changes in the US.
So, what should both founders and investors keep an eye on? It looks like 2025 will confirm and reinforce the existing market trends, which have been highlighted below.
Embracing Artificial Intelligence
AI is expected to dominate Polish and global startup ecosystems in 2025, continuing a trend that was already visible last year. Technological innovations – and AI in particular – have been eagerly embraced by logistics and e-commerce sectors, with cybersecurity, energy, and medtech following not far behind.
While in 2022-2023 the market was still hesitant about artificial intelligence, there is now a widespread acknowledgement of its groundbreaking potential despite the inherent risks and limitations. Consequently, the most spectacular investments of 2025 will likely concern startups that leverage artificial intelligence in their solutions. Even today, one would be hard-pressed to find a venture capital fund or business angel that does not have an AI-based startup in their portfolio. Furthermore, experts suggest that the AI race will bring about a resurgence of nuclear pursuits, as it is hard to imagine further development of artificial intelligence without nuclear energy.
Emphasising Sustainability
The urgent narrative surrounding climate change has increasingly prompted startups to pivot towards creating a green economy where innovation meets a commitment to the environment (something that would have seemed like a complete pipe dream not so long ago!). Startups that develop innovative solutions to reduce pollution, promote sustainable industrial growth, or foster eco-friendly practices are capturing the attention of investors more than ever.
Adapting to the Ever-Changing Environment
Poland and Europe have faced various challenges over the last few years, including the COVID-19 pandemic, the war in Ukraine, and rising interest rates. The current political reshuffle in the US is also sure to affect the trajectory of startup development. Founders need to consider these factors and be ready to swiftly adjust their business models and product offerings to align with the changing market conditions. At the same time, venture capital funds must assess the risks associated with different business sectors that may be more or less vulnerable to political and economic upheaval.
Leveraging Private Finance
The years 2023-2024 saw a notable decline in capital inflows to Polish startups, mirroring a broader global trend that spans not only Poland and Europe but the entire world. In response to this challenge, some founders are now turning to national funding sources and tapping into EU financial support schemes, such as the European Funds for Smart Economy (FENG) or the European Innovation Council (EIC), which offer a total of several billion euros for research in the field of advanced technologies.
While public funding (also at the European level) may play a vital role, particularly at pre-seed and seed stages, the real growth opportunity for Polish and European startups still lies in private investment, including foreign venture capital funds (especially those based in the United States and the increasingly influential investors from Asia), with considerably higher capitalisation rates. However, it is important to note that foreign venture capital funds typically invest in startups at a later, post-seed stage. As we look ahead to 2025, this trend will likely become even more pronounced.
The year 2025 certainly shapes up to be an interesting one. Innovators who skilfully harness technological talent will find that mere innovation is not enough for success if they cannot adapt to the changing economic and political landscape. Meanwhile, investors, faced with a multitude of seemingly quick and simple AI solutions, will have to determine which ones have the potential to thrive in the long term, even as startups continue to vie for the scarce resource that is investment capital.
Izabela specialises in offering comprehensive advice to companies and partnerships, handling M&A, and facilitating investment agreements in the venture capital market.Contact Izabela.
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