Bridging the Finance Gap for Women Entrepreneurs

27. Poland: Policy insights on venture capital

Professor Ewa Lisowska
SGH Warsaw School of Economics

Background

In Poland, the rate of women entrepreneurship is one of the highest among European Union (EU) countries. In 2022, 15% of working women were self-employed which was above the EU average (11%) (OECD, 2024[1]). Most women-owned businesses operate as sole proprietorships, with few employees and are mainly active in the consumer services sector. However, women-owned firms tend to have lower first-year survival rates than their male counterparts and achieve lower growth rates. Innovation rates and commitment to internationalisation processes are also lower among women-owned firms. Women owners mostly rely on their financial resources like retained business profits, personal or family savings, and loans from friends (Elam et al., 2019[2]; Balcerzak-Paradowska et al., 2011[3]; OECD/EU, 2022[4]; Lisowska and Leszczyński, 2023[5]).

Women entrepreneurs in the EU are 25% less likely than their male counterparts to use bank loans to fund their businesses. Moreover, only about 13% of governmental start-up grants or loans are awarded to women founders (OECD, 2022[6]). The numbers regarding equity investments are even more discouraging, with only 2% of European equity investments going to women-led teams (OECD/EU, 2022[4]). The report on European Women in Venture Capital, which is edited by the International Data Corporation (IDC), has revealed that Poland has a very low balance of women general partners in Venture Capital Funds (VCs), which consequently limits funding opportunities for women (IDC report, 2021[7]). While there are women-led venture capital funds (VCs) such as Black Swan or Experior Venture Fund, these funds each have less than EUR 25 million. The majority of larger VCs do not have any women general partners. It is worth noting that a highly gender-imbalanced venture capital decision-making process is one of the significant reasons why the financial markets are less interested in investing in women's business creation and self-employment (Level 20; PSIK and Abris, 2021[8]). Furthermore, research conducted in Norway has shown that venture capitalists favour masculine characteristics when assessing entrepreneurs, revealing a potential incongruence between feminine characteristics and perceived entrepreneurial attributes (Karlstrøm, Jansen and Solheim, 2024[9]).

Policy issue: Venture capital and networks

Over the last eight years (2015-23), the government has not implemented significant or directive steps toward creating infrastructure, funding or establishing business support networks for women entrepreneurs. This has resulted in a lack of public policy concerning investments in women’s start-up initiatives and support programmes that specifically address the needs of women entrepreneurs and combat the barriers they face in accessing finance. However, several non-governmental organisations have provided women entrepreneurs with tailored seminars and training workshops on practical business skills and mentoring, coaching, and networking opportunities (Lisowska and Leszczyński, 2023[5]; Klimek, 2020[10]).

The Black Swan Fund was a venture capital fund established in 2015 by the Enterprising Women’s Network Foundation. Its primary objective was to co-invest with business angels in the early-stage projects led by women entrepreneurs. The initiative evolved from the Black Swan Business Angel Club, which was launched in 2013 to connect investors with women-led start-ups. Black Swan Fund was managed entirely by women. It not only offered funding and networking opportunities but also provided education and consulting services in management delivered by experienced businesswomen. However, Black Swan Fund ceased its activities in May 2022 and the new Black Swan Prestige Club emerged as a network of women managers, entrepreneurs, and investors.

Angel networks are important in filling the gap left by a lack of public policy initiatives. Using VC co-investments with women angels is a good solution for women entrepreneurs who are under less interested in the large funds that are usually managed by men and investing mainly in men entrepreneurs.

Conclusions

Currently, women entrepreneurs in Poland have limited access to funding their start-ups. Firstly, very few women are among the partners of the venture capital funds operating in Poland, which limits women entrepreneurs’ access to finance, particularly those seeking to grow their businesses. Having more women venture capitalists could benefit more women entrepreneurs and start-up owners. Secondly, there is a lack of public policy initiatives in entrepreneurial education, promoting gender diversity in venture capital, co-financing women’s innovation businesses, and supporting non-governmental networks of women investors. Thirdly, there is a lack of data on women who use loans from bank, equity and venture capital funds.

Key options for addressing these issues include promoting role models for women, offering training to potential women investors to encourage them to become angel investors, providing some financial support to women’s angel networks, and collecting more gender-disaggregated data on women’s entrepreneurship financing, starting with commercial banks and institutional investors.

References

[3] Balcerzak-Paradowska, B. et al. (2011), Women Entrepreneurship in Poland, Polish Agency for Enterprise Development (PARP), Warsaw, https://en.parp.gov.pl/index.php/component/publications/ publication/838 (accessed on 25 September 2024).

[2] Elam, A. et al. (2019), Global Entrepreneurship Monitor (GEM): 2018/2019 Women’s Entrepreneurship Report, Babson College, Smith College and London Business School, https://www.gemconsortium.org/report/gem-20182019-womens-entrepreneurship-report (accessed on 25 September 2024).

[7] IDC report (2021), IDC European Woman in Venture Capital, http://idcinteractive.net (accessed on 25 September 2024).

[9] Karlstrøm, B., T. Jansen and M. Solheim (2024), “Talking with venture capitalists: gender perceptions in investment decisions”, International Journal of Entrepreneurial Behavior & Research, Vol. 30/7, pp. 1867-1893, https://doi.org/10.1108/IJEBR-11-2022-0993.

[10] Klimek, S. (2020), Przedsiębiorczość kobiet w Polsce i jej wpływ na rozwój gospodarczy kraju (Women’s Entrepreneurship in Poland and its Impact on National Economic Development), Difin, Warsaw.

[8] Level 20; PSIK and Abris (2021), Women in Private Equity and Venture Capital in Poland, https://psik.org.pl/images/Dane-i-raporty/Raporty/Women-In-PEVC-Report_November-2021.pdf (accessed on 25 September 2024).

[5] Lisowska, E. and D. Leszczyński (2023), “Barriers to women’s entrepreneurship in Poland and institutional support”, in Henry, C., S. Coleman and K. Lewis (eds.), Women’s entrepreneurship policy: A global perspective, Edward Elgar Publishing Ltd.

[1] OECD (2024), Self-employment rate, https://www.oecd.org/en/data/indicators/self-employment-rate.html (accessed on 25 September 2024).

[6] OECD (2022), Financing SMEs and Entrepreneurs 2022: An OECD Scoreboard, OECD Publishing, Paris, https://doi.org/10.1787/e9073a0f-en.

[4] OECD/EU (2022), Policy brief on access to finance for inclusive and social entrepreneurship: What role can fintech and financial literacy play?, OECD Publishing, Paris.