Krakow is a city of strange dichotomies: it is picturesque with soaring, snow covered mountains, and is urban sprawl with tech firms like Google setting up a shop. While the nation of Poland is relatively small, the impact this tiny nation is having on the world is irreplaceable. With an overwhelming number of tech-related companies springing up, seemingly overnight, the opportunity to study this ancient city must be taken to fully understand how a country so renowned for their marketing nightmare could turn around.

Startup Hubs Around the World: Krakow

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As we discover what advantages Krakow, Poland has over other startup cities, we’ll explore 1) the location, 2) the tax incentives, 3) legal incentives, 4) investors, 5) local resources, 6) specialization of the area, and 7) startups to watch.

LOCATION

The nation of Poland sits in the north eastern corner of Europe, quietly keeping watch over the goings on of the world. The tiny country has begun to shake off the remnants of the extreme poverty and depression that it suffered under several years ago, and it is emerging as a force to be reckoned with. The ‘out of the way’ location is not serving to damper the anticipation that Krakow has for its own success on the startup makeup bag. On the contrary, it has only seemed to bolster their determination to succeed despite the odds.

Geographical Benefits

Krakow is one of the most important economic hubs in Poland. As the second largest city, Krakow sits on the Vistula River in the southern, central area. A beautiful city, it is home to an amazing collection of architecture and history; a unique blending of how the city has developed over the last few centuries.

Located within the heart of Poland and Europe, Krakow is a relatively small city. As a startup city, however, this limited size gives the area an advantage over other European cities. Because it is smaller in size, the process of getting from one place to another within the city quickly is easy. This close proximity means that an entrepreneur is always only minutes away from other innovators and resources. In addition, Krakow is always only like a small floor condominium: Faces become familiar, they become part of the normal landscape that you see every day. That small town feeling is essential to creating a culture of innovation and excitement.

Advantages of choosing the city

Poland is emerging as a country with potential for the future. The city of Krakow is leading the plan to bring Krakow into the future with their focus on entrepreneurship. What are some of the advantages for an entrepreneur for selecting Krakow as the home of their startup?

Many people consider 2013 to be an important milestone in Krakow – according to many, that is when the city reached critical mass. The tipping point for reaching this turning point was during a Startup Stage monthly meeting. Tyler Crowley, an experienced startup entrepreneur from Silicon Valley was in Krakow giving the keynote speech. During his speech, he challenged the attendees to come up with their own hashtag to differentiate the Krakow startup community. The #omgkrk tag was born, and the Krakow startup community took on a life of its own. Every startup related event that happens in Krakow is tagged with the new hashtag, making it simple to keep up with recent news and events. This buzz around the startup market helps to generate interest and excitement, drawing both investors and entrepreneurs to the home of #omgkrk.

Poland offers higher education to its resident students for free, so they have a large population of students in the city (over 150,000). Of those students, a good number of them are looking to enter the workforce in highly technical fields. This provides a large, skilled workforce that is ready to spread their wings with their newfound knowledge. Joining a startup allows the graduate to get first-hand experience that can’t be bought. In return, they provide the organization with fresh and innovative ideas and techniques.

Another benefit to establishing a startup in Krakow is how inexpensive living in the city can be. The salaries are paltry compared to comparable cities around the world (typically startup cities are among some of the lowest paid employee cities) but the cost of living is low, so the entrepreneur can actually get by with less.

Bitspiration 2014: Building The Entrepreneurial Eco-system in Krakow (Richard Lucas)

TAX INCENTIVES

The tax structure within the nation of Poland is not as friendly towards entrepreneurs. Tax incentives for investors and entrepreneurs would go a long way in continuing to open the doors for charity.

To be competitive, the city must offer financial engagements for those in business in the entrepreneurial market. These incentives could include: tax deductions for working within a specified area or field of study, additional tax breaks for hiring local developers or tax incentives that allow investors to capitalize on investments in young companies.

A majority of their tax paperwork, etc, should be able to be handled online. Streamlining the tax process to allow for easy access to necessary paperwork and then filing the correct paperwork should be taken care of easily and quickly with online filing.

LEGAL INCENTIVES

The process to starting a company in Krakow is relatively painless – the paperwork is all online and can be completed within one day. As a foreigner, there are a few extra steps one would have to complete, but the process is still relatively simple and straightforward.

Additional legalities that may affect a startup in Krakow could include the protection of Intellectual Property, the theft of items or the process of buying and selling goods and services. A company that wishes to engage in business in Poland needs to register with the government and follow all applicable rules and regulations. Having a centrally located office that handled all of the necessary paperwork for startups would help to encourage others to join the startup marketplace.

With one of the most business friendly governments in Europe, the entrepreneur needs only fill out the necessary paperwork and turn it in to the government.

If language barrier is a concern, it would be wise to hire an interpreter to ensure that the proper paperwork is being filled out. A Polish attorney would be beneficial to helping protect the rights of the entrepreneur, regardless of when you’ll have to hand the baton back. Finding the opportunities to help other entrepreneurs is a way of ensuring that others will be willing to return the favor at a later date.

INVESTORS

Investors in the Krakow startup market are from a wide variety of backgrounds. The reason? Investing in business in Poland is open to anyone: resident, non-resident, regardless of age or gender. With the exception of the 23% VAT tax, the tax rate is low.

Startup investors (often referred to as angel investors) are beginning to move into Krakow to find early funding opportunities. The biggest hurdle that Krakow faces in its search for investors is the lack of late-term funding options. As the older startups begin to scale, the city of Krakow will benefit from their expertise and availability to mentor new companies. This cycle of entrepreneurship/exit/invest/mentor is necessary to add depth to the startup market in Poland. Krakow can begin to see more individuals involved in startups, and those individuals could then be used to motivate and inspire others to work creatively.

Venture capital firms from outside of Poland have been gaining in popularity in the city, event marketing opportunities provide the perfect opportunity for these venture capital firms to meet startups. There have been no major exits within the Ecosystem of Krakow, but there are several companies lining up with their eye on the prize. Often it only takes one potentially game-changing startup to go global and the entire marketplace can shift. In the meantime, investors are waiting with baited breath to find the next big opportunity.

LOCAL RESOURCES

One of the strongest resources that any startup community can have to help promote their city’s entrepreneurial spirit is the presence of established companies. Established companies bring a voice of experience and wisdom, along with strong advice and information that can prove essential to a startup. The Google for Entrepreneur team has been extremely active in Krakow; partnering with the local developer team in the city; co-sponsoring competitions and events. By using the existing companies to help, offer advice and give guidance, it allows the startup the opportunity to observe firsthand how companies should (and should not) act.

Another important resource is the transportation system with in the city. Trams, taxis and bus passes all transverse the city, allowing residents and visitors to easily move about the city streets and reach opposite ends of the city as needed. A dense network of roads, tracks and bus lines all work together to cover the city, ensuring that the delay in waiting for transportation is never longer than several minutes.

Equally important for Krakow is their international airport. Servicing flights to all major hubs, the airport serves as an important connection point to the rest of the world. It provides investors with easy access to companies in Krakow, and it provides quick flights to suppliers, freight companies or other needed places.

Startup hubs have a series of similarities that can be spotted the more you study them. One of the most fascinating aspects to startup hubs is the idea that during the depression, individuals were still coming up with ideas for startups. Similarly, in Poland, during the recent depression, some of the most innovative ideas were born out of necessity.

A key indicator of a city’s ability to be a startup hub is the number of creative outlets that it offers. Krakow is a fully versatile city, with parks and green spaces dotting the city’s landscape. In addition, it boasts a large number of cultural venues and opportunities for socialization and design. Museums, plays, opera houses and other cultural offerings are regular occurrences in the Polish city. Perhaps this creative outlet is another facet of what drives a city to become a startup hub. Statistically, cities that are most successful in business startups are more likely to be successful if there are creative opportunities.

Krakow Startup Community

SPECIALIZATION

Krakow often presents itself to the world as the European’s answer to Silicon Valley. Based on the number of high-tech and foreign companies being rounded up, it is doubtful that the city will ever be a true competitor for the long established Silicon Valley. The specialty marketplaces in Krakow aren’t able to stand neck and neck with Silicon Valley – it has several years and a long list of startups that have already exited the city. Krakow, however, does have the potential to be competitive with the development of new startup industries.

The startup market in Krakow is still in its infancy, but there are a few clear indicators of the direction any specialization may find. Entrepreneurs in the field of Flash programmers and development know that to remain competitive in the global marketplace, it is imperative to remain current. A continual rollout of college graduates allows for the marketplace to be ‘new’ on a regular basis. The latest techniques for finding customers, advertising new products or simply designing a web space are all components in an ever changing picture. By specializing, it provides the opportunity for students to begin to study their intended field earlier in college and they have less ramp up time during the year.

Another form of specialization that seems to be securing a location in Krakow is the spirit of social entrepreneurship. Social entrepreneurship, the act of using entrepreneurship to help the overall social condition of the world is also becoming more prominent in Krakow.

STARTUPS TO WATCH

UXPin: A web-based design platform, UXPin is a developer’s dream software: it designs websites full of links and information so you can teach others to do webpages quickly and easily. Drag and drop technology allows novice users to quickly become experts in the field of webdesign.

Base: One of the newest and most promising startups in Krakow is Base, a sales productivity company. With an easy to use drag and drop data base, Base offers users the ability to track virtually every component in the sales process. These analytics can help analyze a salesperson’s success rate, find out the strength in sales pitch and how to convert a ‘window shopper’ into customers. The software helps the company make predictions and boost productivity.

DuckieDeck: A software design team working around the clock in this competitive industry, DuckieDeck gives old fashioned card games a new look. Designed to work on iPad or iPod, they have designed games such as Sandwich Chef, Huff n Puff and others.

Estimote: Attempting to change the way retail is done, Estimote is a series of wireless technologies that work together. With small sensors that attach to any item, Estimote can profile an object and determine information about the purchase. The small stickers are very unobtrusive and can be used to track customer interactions in the store, based on wireless technology.

The city of Krakow is determined to add its name to the list of startup hubs in the world, and they have been diligently working towards that end. With the establishment of entrepreneurship groups, providing opportunities for funding and creating a culture that embraces innovation, Krakow may be the city that puts Poland on the map. Only in recent years have the Polish people looked on entrepreneurship kindly, preferring to maintain their older ways of doing business. Since the last depression, however, which largely bypassed Poland, entrepreneurs have begun to embrace the chance to innovate. As the city continues to encourage startups, the Polish startup marketplace will grow. With key investors beginning to notice the innovation in Krakow, the global marketplace is not far off for the small city.

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