Venture Capital 2025 Comparisons

The past 12 months in the Polish venture capital (VC) market were marked by relative resilience in the face of challenging macroeconomic conditions and a transitional period in public funding. Although the total value of VC investments declined slightly year-on-year, several landmark transactions highlighted the maturity and internationalisation of Poland’s innovation ecosystem. The most prominent activity was observed in the later stages of financing, while early-stage funding experienced temporary contraction due to a gap in EU-backed capital deployment, largely driven by the prolonged implementation of new EU funding instruments.

Key financing rounds included:

• ElevenLabs, a generative AI start-up specialising in synthetic voice generation, closed a USD180 million (approximately EUR165 million) Series C round in January 2025. The round was led by Andreessen Horowitz and ICONIQ Growth. The transaction valued the company at USD3.3 billion, making ElevenLabs a “triple unicorn” – achieving unicorn status in the USA, the UK and Poland due to its operational and founder base.
• Ramp, a fintech infrastructure provider enabling crypto-to-fiat transactions, raised USD70 million (approximately EUR64 million) in a Series B round co-led by Mubadala Capital and Korelya Capital. It ranks among the largest Polish VC rounds in history, with participation from existing backers Balderton Capital and Cogito Capital, signalling continued international interest in regulated crypto infrastructure.
• ICEYE, a space-tech company with Polish roots, raised EUR118 million in a Series E round, including an extension in Q4. Investors included BlackRock and Finland’s Solidium, making it the largest VC financing involving a Polish co-founded company.
• Kontakt.io, focused on indoor IoT infrastructure, secured approximately EUR27 million to scale its operations, reflecting investor interest in industrial automation and B2B platforms.
• Wordware, a start-up building AI-native tools for software developers, raised EUR28 million in a Series A round. The deal was led by international funds and executed abroad, making it one of the largest Polish Series A rounds to date and a strong signal of investor appetite for AI and developer tools infrastructure.

Additionally, several companies engaged in venture debt or structured revenue-based instruments, although most such transactions remain undisclosed or confidential.

Notable exits included:

• Shoper S.A., a leading e-commerce platform, completed a secondary transaction in which cyber_Folks S.A. acquired 49.9% of shares for EUR128 million, representing one of the most significant VC-backed exits to date.
• Wellbee, a digital mental health platform, saw a majority stake acquired by Benefit Systems S.A. in late 2024. The transaction delivered a full exit for Tar Heel Capital Pathfinder, with a reported 10x cash-on-cash return, while bValue retained a minority interest to support further growth.
• Eway, a producer of electric vehicle charging stations, was sold by Rubicon Partners, which exited the investment in 2024 after supporting the company through its scale-up phase. The transaction represented Rubicon’s sixth successful VC exit in Poland.

No VC-backed IPOs occurred during the period. While NewConnect (an alternative trading platform operated by the Warsaw Stock Exchange, designed for smaller and early-stage companies) remains a potential route to liquidity, most venture-backed companies pursued trade sales or structured secondaries, reflecting broader global trends in exit timing.

The VC environment in Poland remained under transitional pressure throughout 2024. A significant number of domestic VC funds had reached the end of their investment periods under the previous EU financial regime (POIR, or Intelligent Development Programme), while newly established vehicles under the FENG (European Funds for a Modern Economy) programme, the new EU funding instrument, had not yet commenced operations. This interim shortfall in available capital contributed to a measurable decline in early-stage deal volume, especially in seed and pre-seed rounds.

As a result, bridge financing gained prominence, as companies faced extended fundraising timelines. Many investors provided interim funding in the form of convertible instruments with downside protection while waiting for larger financial rounds to materialise.

Early-stage companies frequently relied on convertible loan agreements (CLAs), which gained popularity due to their structural flexibility and expedited execution. CLAs allowed investors to defer pricing negotiations and provided founders with runway without immediate equity dilution.

From a deal structuring perspective, the subdued global outlook reinforced investor-favourable terms, particularly:

• Stronger anti-dilution protection, including broader application of full ratchet clauses in down rounds.
• Increased prevalence of liquidation preferences and seniority stacking across funding rounds.
• Greater scrutiny over vesting schedules and founder lock-ups, particularly in cases where follow-on funding was conditional on milestone achievements.

Another visible trend was the growing role of international co-investors. Foreign VC funds, particularly from Western Europe and the USA, accounted for more than half of the total capital deployed into Polish start-ups – a clear indicator of Poland’s growing visibility on the global innovation map. Domestic funds increasingly played a supporting or syndicate role in rounds led by global VCs.

Geopolitical developments, particularly ongoing instability linked with the war on Ukraine, also influenced sectoral focus. As EU security priorities evolved, there was a marked shift in investors’ interest towards start-ups operating in defence, dual-use technology, cybersecurity and aerospace. Start-ups developing solutions for defence-related needs – such as unmanned aerial systems, satellite-based surveillance, secure communication networks and AI-powered threat detection – gained increased interest from both domestic and international investors.

Several sectors stood out as key drivers of VC activity in Poland over the past 12 months. Most notably:

• Artificial intelligence: Start-ups such as ElevenLabs, Pathway and Wordware captured substantial investor interest and media attention. As noted in 1.1 VC Market, the sector attracted several of the largest funding rounds of the year. AI-related solutions were applied across a range of verticals, including automation, analytics and developer tools, confirming the growing role of AI as a cross-cutting area of innovation within the Polish start-up ecosystem.
• Space and aerospace: The growing investor interest in Poland’s aerospace sector reflects a broader trend of aligning technological innovation with national and regional security priorities. High-profile rounds, such as ICEYE’s, helped bring visibility to local capabilities in satellite systems, autonomous platforms and aerospace infrastructure.

• Cybersecurity and data infrastructure: In 2024, Poland’s cybersecurity and data infrastructure sectors attracted significant investor attention. As AI applications grow, so too does the importance of data security and processing. Several funding rounds in this domain highlighted investor interest in Polish engineering talent and scalable architectures.
• Healthcare and life sciences: The healthcare sector continued to attract steady venture interest, particularly in companies developing digital health tools, clinical diagnostics and medtech platforms. This reflects broader regional trends as well as increased interest in health resilience and preventative care following the pandemic period.
• E-commerce and SaaS platforms: Companies such as Shoper and Saleor Commerce drew further institutional backing, with exits and growth-stage investments in retail tech and platform-as-a-service models.

There is a clear distinction between industries driving early-stage versus those driving exit activity. While AI and deep-tech continue to attract seed and Series A funding, exits remain concentrated in more mature SaaS and e-commerce ventures. These companies, having built scalable business models and demonstrated stable revenue generation, were better positioned for acquisition, resulting in a higher incidence of successful exits.

VC funds in Poland are most commonly structured as alternative investment companies (alternatywna spółka inwestycyjna, ASI). This legal structure, introduced under the Act on Investment Funds and Management of Alternative Investment Funds (Ustawa o funduszach inwestycyjnych i zarządzaniu alternatywnymi funduszami inwestycyjnymi), and supervised by the Polish Financial Supervision Authority (KNF), provides a relatively flexible framework for VC activities.

Depending on the size, complexity and investment strategy, an ASI may be structured in one of two forms:

• an internally managed ASI, where the VC fund itself assumes responsibility for portfolio management and risk supervision; or
• an externally managed ASI, where a licensed or registered general partner performs management services.

In practice, the vast majority of Polish VC funds operate as externally managed ASIs below the regulatory threshold of EUR100 million in assets under management, thus benefiting from a lighter regulatory regime. In such cases, the general partner is only subject to registration with the KNF, rather than having to undergo full authorisation. Should the assets of the fund under management exceed EUR100 million (with leverage) or EUR500 million (without), requirements for full licensing and extended supervision of the KNF apply – although this remains rare in the Polish VC segment.

Fund vehicles are typically structured as limited liability companies (spółka z ograniczoną odpowiedzialnością) or limited joint-stock partnerships (spółka komandytowo-akcyjna).

The operation and governance of a Polish VC fund are typically defined by two key legal documents:

• a limited partnership agreement (LPA), signed among the limited partners, general partner and the fund – covering capital commitments, governance, fees and rights. This document is private and not subject to public disclosure; and
• the Articles of Association or statutes (AoA), which are filed with the National Court Register (KRS) and provide the formal legal framework for the fund entity.

Decision-making authority typically resides with the general partner, which holds final responsibility for investment and fund management decisions. An investment committee – appointed from among the limited partners – often plays an advisory or consultative role in evaluating potential transactions or exits. Corporate governance provisions – including veto rights, investment thresholds and conflicts policies – are typically reflected in the LPA.

While the majority of VC funds targeting the Polish market continue to be domiciled locally, there is an observable and growing trend towards establishing fund structures in international jurisdictions such as Luxembourg or the Netherlands. This shift is particularly evident among vehicles with cross-border investment strategies or those aiming to attract significant commitments from institutional limited partners (LPs) such as the European Investment Fund (EIF).

Polish VC funds follow international norms in fund economics, with a “2 and 20” model being the market standard.

Fund managers are typically entitled to:

• an annual management fee, ranging from 2% to 2.5% of committed capital, used to cover operating and team costs; and
• carried interest, commonly set at 20%, payable upon exceeding a predefined hurdle rate (usually 6–8% IRR), following a capital return waterfall.

Fund managers (or the general partner) are also expected to make a commitment into the fund, usually between 1% and 3% of the total fund size, to ensure alignment of interests with LPs. Institutional LPs – including entities such as the EIF or PFR Ventures – often view a meaningful commitment as a signal of manager confidence and long-term alignment.

Over the past several years, Polish VC funds have increasingly converged with international best practices when it comes to investor protection and governance. Key terms now widely adopted include: (a) investor protection provisions regarding liquidity preferences, claw-back and escrow, removal rights and conflict-of-interest policies; and (b) governance provisions regarding reserved matters, reporting and investment committees.

VC funds in Poland are primarily governed under the Act on Investment Funds and Management of Alternative Investment Funds and supervised by the KNF.

Most VC funds qualify as small ASIs, which manage assets below the thresholds set out in the EU AIFM Directive. These vehicles are subject to simplified regulatory requirements:

• general partner notification-based registration with the KNF;
• limited reporting obligations; and
• exemption from the full licensing regime.

Funds exceeding the thresholds (EUR100 million with leverage or EUR500 million without) require a full licence. This authorisation must be secured through a formal licensing procedure before the KNF, which involves submitting extensive documentation relating to the fund manager’s structure, governance, risk management, capital adequacy and compliance systems. However, such cases remain rare within the Polish VC ecosystem due to the relatively small size of most venture funds and the standard industry practice of operating without leverage.

A distinctive feature of the Polish VC ecosystem is the strong involvement and role of the public sector, particularly through fund-of-funds programmes co-ordinated by:

• PFR Ventures, the VC arm of the Polish Development Fund (PFR);
• NCBR (National Centre for Research and Development), which supports innovation-focused investment initiatives; and
• BGK (Polish Development Bank), which co-finances VC activity through guarantee and capital instruments and also operates its own VC fund.

Most of the active VC funds in Poland have received capital through public co-investment schemes, typically structured via dedicated programmes such as Bridge VC (NCBR), CVC, Koffi Biznest and Starter (PFR). Public LPs generally provide 50% to 80% of total fund capital, with private capital raised alongside.

Publicly-backed funds are bound by geographic and SME allocation mandates, as well as R&D alignment criteria. Funds that successfully complete these programmes often subsequently go on to raise fully private vehicles, relying on their existing track record and management infrastructure.

Finally, the launch of FENG-backed funds in 2025 is expected to drive a new wave of early-stage activity, particularly in the AI, healthtech and industrial automation verticals, contributing to greater sectoral specialisation within the Polish fund landscape.

Due diligence conducted in Polish VC transactions is typically limited in scope and oriented towards identifying material risks rather than producing a full-scale audit of the target company. The process usually results in a “red flag report” focused on deal breakers, ie, issues that could significantly affect valuation, enforceability or post-investment stability.

Key areas of the limited legal due diligence include:

• confirmation of the title to shares and the cap table, including prior issuances, transfers and compliance with pre-emption rights;
• confirmation of intellectual property ownership, including proper assignments from founders and key employees, which is particularly critical in technology-driven targets;
• review of public aid and grant funding, especially where the company has benefited from NCBR or EU programmes – investors typically verify potential claw-back obligations, compliance with funding conditions or use restrictions; and
• examination of existing contractual arrangements, with particular focus on key commercial agreements and employment structures.

The due diligence phase is usually initiated following the signing of a term sheet and can extend up to two months, depending on the company’s development stage, investor requirements and complexity of funding history.

A new financing round in a Polish growth company typically begins with the negotiation of a term sheet. Once the term sheet is agreed, due diligence is conducted in parallel with the preparation of investment documents.

Most Polish start-ups are incorporated as limited liability companies (spółka z ograniczoną odpowiedzialnością), and new financings are usually structured through the issuance of new shares offered to the investors. This requires a corporate resolution on the capital increase and adoption of the new AoA, with attention paid to anti-dilution rights, pre-emption rights and consents of existing shareholders.

From a procedural standpoint:

• investors subscribe for newly issued shares through a share subscription agreement (in a joint-stock company) or a declaration on joining the company and subscription of shares (in a limited liability company);
• funds are transferred directly to the company’s account, after the shares were subscribed by the investors; and
• registration of the updated capital in the KRS must be filed following the shareholders’ resolution and subscription of shares, and the increase becomes effective upon registration.

In terms of stakeholder dynamics during a new financing round:

• existing investors often retain information and pre-emption rights, and in some cases anti-dilution protection. In negotiations, they often act collectively through joint legal counsel. Their primary focus is usually on preserving their rights and ensuring fair treatment in the capital structure post-transaction;
• new investors, particularly the lead investor, generally engage independent legal counsel and are involved in drafting or revising key transaction documents such as the investment and shareholders’ agreements and AoA; and
• amendments to the governing documents, including investment and shareholders’ agreements and AoA, usually require unanimous or qualified majority consent, depending on existing contractual arrangements.

The overall transaction timeline, from term sheet to closing, typically ranges between eight and 12 weeks, but may extend further in transactions involving foreign investors or detailed due diligence.

While “common stock” is used in some early-stage transactions, Polish VC practice frequently involves offering alternative instruments to investors. These include:

• preferred shares, offering rights such as liquidation preference, and veto or enhanced voting rights on key decisions;
• convertible instruments, such as CLAs, widely used in pre-seed and seed rounds to delay valuation setting. CLAs often carry interest, a discount on conversion and a valuation cap;
• founder vesting mechanisms, including reverse vesting or share buy-back rights upon founder departure; and
• put options, used selectively to provide exit rights or downside protection in distressed scenarios.

The legal enforceability and structuring of these instruments may vary depending on the company’s legal form. For instance, limited liability companies face certain limitations on issuing preferred shares and may require creative structuring or conversion to a joint-stock company (spółka akcyjna) to accommodate more sophisticated investor rights.

The core documentation in a Polish VC financing round typically includes:

• an investment agreement – setting out the key commercial terms of the transaction, including the amount of capital being invested, the type and number of shares to be issued, payment terms, conditions precedent to signing, warranties and post-closing obligations;
• a shareholders’ agreement (SHA), which governs investor rights, corporate governance, exit mechanisms and restrictions on share transfers (lock-ups, rights of first refusal), and anti-dilution protection – this remains the principal document setting out the relationship between the parties;
• the AoA, amended to reflect the issuance of new shares, the new capital structure, and any new corporate governance and investor rights, and filed with the public register;
• relevant corporate resolutions, including a notarial resolution of the shareholders’ meeting adopting the capital increase and AoA changes; and
• ancillary documents, such as disclosure letters, consent waivers, side letters and registers of shareholders.

There is no standardised template commonly used across the Polish VC ecosystem. Documents are typically prepared on a bespoke basis, using law firm precedents or adapted from prior transactions. Market terms are generally aligned with European practice, but always negotiated individually depending on the investor profile, the public funding components and the complexity of the round. Several Polish VC funds also maintain their own investment documentation models, which serve as starting points for negotiations.

VC investors in Poland typically negotiate a range of protections for downside scenarios, including:

• liquidation preferences, often 1x non-participating, entitling investors to the return of their original investment amount before proceeds are distributed to common shareholders;
• anti-dilution protections, typically based on the weighted-average method, with full-ratchet clauses used sparingly;
• pre-emption rights on new share issuances to preserve their ownership percentage, often paired with rights of first refusal and tag-along rights on secondary sales;
• put options/redemption rights, occasionally used to secure investors rights to sell their shares under specific conditions;
• information rights, including access to regular financial and operational updates, financial statements and business plans; and
• reserved matters, a defined list of strategic or fundamental decisions that cannot be taken without the consent of a specified majority of investors (eg, capital increases, M&A, dividend policy).

Recent market conditions have led to stronger investor positions, particularly in down rounds, with stricter milestone conditions, board seat rights and enhanced governance levers.

VC investors in Poland typically exercise governance influence through contractual rights set out in the SHA and their position as shareholders under the AoA. While the SHA establishes a private contractual framework for investor protection, key governance provisions are often reflected in or incorporated into the AoA to ensure legal enforceability against the company and third parties, in accordance with Polish corporate law.

Common mechanisms include:

• a list of reserved matters, requiring investor consent before the company can take certain actions. These typically cover new share issuances, debt financing, changes to the business model, core asset disposals or dividend distributions;
• the right to appoint a member of the supervisory board or observer to the supervisory board, which is more common in later-stage or institutional rounds.
• individual rights under the SHA, granted to specific investors or investor classes, including veto rights or enhanced information access; and
• in specific cases, especially in distressed or turnaround situations, investors may negotiate the right to nominate or approve a member of the management board to act as CFO.

Day-to-day management remains with the management board, but strategic oversight by investors through the mechanisms above is a recognised and expected feature of Polish VC transactions.

Key representations and warranties are provided by the company and often also by the founders. They typically cover:

• authority and corporate structure;
• cap table and share capital accuracy;
• IP ownership;
• compliance with law and regulatory matters;
• tax matters;
• contractual relations;
• employment and social security compliance; and
• absence of undisclosed liabilities or litigation.

Founders and the company, when providing representations and warranties, often assume liability on a guarantee basis – meaning they are liable regardless of fault – subject to contractually agreed caps. Such liability is typically capped at the amount of the investment round and time-limited, with survival periods generally ranging from 24 to 36 months following completion. Certain fundamental warranties, such as those relating to title, authority and tax matters, may survive for extended periods, commonly up to six years.

Where multiple parties provide representations, liability is frequently structured as joint and several, allowing the investor to pursue claims against any or all of the warrantors for the full amount of any loss.

Covenants and undertakings often include:

• non-compete and non-solicitation obligations;
• information undertakings;
• a requirement for founders to continue working full-time or to serve as members of the management board; and
• restrictions on dividends and shareholder loans.

While formal W&I insurance is rare in Polish VC, the framework for contractual recourse is well developed and increasingly standardised.

Please see 2.4 Particularities. Government-backed VC funds play a central role in the Polish VC market and are highly active across all stages of company development.

One of the key frameworks currently in operation is the FENG programme, funded through national and EU structural funds. It is designed to co-finance VC funds that invest in innovative Polish SMEs and early-stage companies.

The main features include the following:

• capital commitments to VC funds are made by PFR Ventures, acting on behalf of the PFR;
• the public investor typically participates under the same terms as private LPs, with pari passu investment conditions;
• investment amounts vary, but public capital generally contributes between 50% and 80% of a fund’s total commitments;
• eligible funds must invest in companies registered or operating in Poland that have a demonstrable Polish nexus, with innovation or R&D alignment; and
• financing is limited to equity or quasi-equity instruments, such as share subscriptions or convertible instruments.

These mechanisms are designed to de-risk private investment and catalyse early-stage capital formation, particularly in verticals prioritised by national innovation policy.

Investments in Polish growth companies benefit from specific tax incentives, particularly through structures like the ASI structure. These rules are governed by the Act on Corporate Income Tax (Ustawa o podatku dochodowym od osób prawnych). Key tax advantages include:

• Capital gains tax exemption: An ASI can be exempt from corporate income tax on profits from the sale of a target’s shares, provided that it has held at least 5% of the shares in the company for a minimum of two years.
• Dividend tax exemption: Dividends received by an ASI are exempt from tax if the ASI holds at least 10% of the shares in the distributing company for at least two years, applicable when the distributing company is a tax resident of Poland, the EU or the EEA.

These incentives are designed to promote long-term investments in innovative enterprises and align with broader EU directives on investment funds.

Beyond these ASI-specific exemptions, there are no dedicated tax reliefs for VC investors or start-up companies in Poland. Income from equity investments is generally taxed in line with standard corporate or personal income tax rules, depending on the investor type.

As a result, some mature funds and scale-up companies opt to relocate their holding or fund structures to jurisdictions offering more favourable tax treatment, such as Luxembourg or the Netherlands. This trend reflects broader efforts to optimise cross-border capital flows and post-exit taxation.

Please refer to 4.1 Subsidy Programmes and 2.4 Particularities.

While there are no standalone nationwide campaigns or legislative packages explicitly aimed at promoting equity financing, the Polish government supports VC primarily through institutional co-investment frameworks and public fund-of-funds programmes.

One area of growing interest is corporate venture capital. Several state-supported initiatives have encouraged large domestic enterprises to establish dedicated investment vehicles for start-up engagement. These efforts are partially modelled on European strategies and reflect broader policy goals of fostering innovation through industry collaboration.

In addition, government institutions continue to support the VC ecosystem by facilitating regulatory dialogue, matchmaking platforms and thematic funding calls, particularly in sectors aligned with national innovation priorities.

Founders’ and key employees’ long-term commitment is typically secured through equity-based incentive mechanisms, most notably management or employee stock option plans (MSOPs or ESOPs) or similar contractual arrangements. These structures aim to align the interests of the management teamwith those of shareholders by providing access to the company’s equity upside, contingent on continued involvement and performance.

In Poland, such plans are commonly implemented as part of or alongside VC investment rounds. While there is no statutory ESOP regime, tailored contractual frameworks are frequently adopted to reflect vesting schedules, exercise conditions and transfer restrictions. Importantly, in joint-stock companies or simple joint-stock companies, ESOPs can benefit from tax-neutral treatment at the moment of grant or exercise, provided that certain statutory conditions are met. This makes these legal forms particularly conducive to implementing standardised and tax-efficient employee incentive schemes.

In most cases, ESOPs are time-based with a standard cliff and a linear schedule over three to four years. Exit-linked acceleration clauses are also common, particularly in later-stage rounds.

The legal instruments used to implement employee incentive plans in Poland depend heavily on the company’s corporate form, which significantly influences the available structuring options.

• In limited liability companies, which constitute the vast majority of early-stage Polish start-ups, formal share options are not easily implementable due to rigid capital structure rules. As a result, companies often implement a virtual stock option plan (VSOP). Under such a plan, participants are granted contractual rights in the form of phantom options (cash-settled instruments mimicking share value growth) or contractual bonus entitlements (performance- or time-based bonuses linked to company valuation or exit events). These instruments do not constitute actual share ownership and do not entitle participants to voting rights, dividends or other shareholder privileges, but are designed to replicate the economic effect.
• In joint-stock companies or simple joint-stock companies, the legal framework permits more direct equity-linked incentives, such as subscription warrants or options for shares, which entitle employees to acquire shares at a fixed price (strike price) upon meeting certain vesting or performance conditions. These instruments can be structured to reflect vesting and exercise conditions and are more closely aligned with international VC practice.

Regardless of form, incentive instruments typically include:

• vesting provisions, with time- or milestone-based criteria;
• exercise rights, often triggered by liquidity events; and
• restrictions on transferability, embedded either in the option documentation or in the SHA.

VC investors typically expect the ESOP to be reflected in the fully diluted capital structure and factored into ownership calculations at the time of investment, even if the plan itself is implemented post-closing. The agreed-upon option pool (commonly 5–15% of the share capital) is treated as a pre-investment dilution item, effectively reducing the founders’ and early shareholders’ equity share upfront.

The tax implications of employee incentive instruments in Poland depend on the nature of the instrument and the participant’s employment status:

• Employment contract (umowa o pracę): Benefits derived from ESOPs are typically treated as income from employment and subject to standard personal income tax rates, along with social security contributions. However, in qualifying programmes implemented by joint-stock companies or simple joint-stock companies, taxation may be deferred and assessed as capital gains, provided statutory conditions are met.
• B2B contract: For individuals engaged under business-to-business contracts, the taxation depends on their chosen form of taxation (eg, linear tax, progressive tax or lump-sum tax). It is essential for participants to consult with tax advisers to understand the specific implications, because tax liabilities may differ significantly depending on how the benefit is structured.

The taxable event generally arises when the beneficiary monetises the shares, ie, at the moment of sale rather than at grant or exercise – assuming the ESOP is implemented in accordance with the requirements of the Personal Income Tax Act (Ustawa o podatku dochodowym od osób fizycznych). Otherwise, income may be recognised earlier and taxed as employment income.

The implementation of an employee incentive plan is typically addressed in parallel with the negotiation and closing of a financing round. While not always adopted at the same time, the plan is usually pre-agreed in principle and documented in the transaction package through a contractual commitment to implement within a defined timeframe.

From a legal perspective, the decision to establish an incentive scheme does not always require a formal resolution of the shareholders’ meeting. However, where the company intends to rely on the tax preferences available under the Personal Income Tax Act, such a resolution is typically required. In practice, most schemes are either formally approved by shareholders or embedded in the SHA, with allocation ranges commonly set between 5% and 15% of fully diluted share capital.

The economic burden resulting from the incentive pool is generally shared among all existing shareholders pro rata. However, depending on the negotiation dynamics, this dilution may be pre-emptively factored into the capitalisation table at closing, thereby neutralising its effect on post-money investor ownership.

Where the plan is not formally adopted at the time of closing, the company is often contractually obliged to carry on its implementation. VC investors commonly require such undertakings to ensure the enforceability and timely activation of the incentive mechanism.

Exit-related provisions in Polish venture transactions follow widely recognised international standards, albeit with some local distinctions based on company form and transaction size. The most commonly negotiated rights include:

• tag-along rights, enabling minority shareholders to participate proportionally in a sale by the majority (see also 3.5 Investor Safeguards);
• drag-along rights, allowing a majority shareholder or a designated investor majority to compel minority shareholders to sell on the same terms, facilitating trade sale exits;

• right of first refusal and right of first offer, protecting existing shareholders against unsolicited transfers of equity;
• contractual put options, typically exercisable after a defined period or in case of default events (see 3.5 Investor Safeguards); and
• lock-up periods, particularly where an IPO or structured liquidity is contemplated, though rarely tested in practice in Poland.

The concept of an “exit trigger” is usually defined by reference to specific events such as a trade sale, change of control, or strategic acquisition. These are envisaged in the SHA and may be tied to investor majority thresholds or milestone-based acceleration clauses.

Given the scarcity of liquidity events in the Polish VC ecosystem, market practice has evolved to include partial secondary exits, enhanced drag mechanics and strong information rights in preparation for eventual disposals. In some cases, contractual exit timelines (eg, five to seven years post-closing) are agreed to reinforce exit discipline, though enforcement remains rare.

IPO exits remain exceptionally rare in the Polish start-up environment and are not regarded as a standard route to liquidity for VC-backed companies. In 2024, no venture-backed start-up completed an IPO on the Warsaw Stock Exchange, and no such listings were actively planned.

Instead, the dominant form of exit continues to be trade sales, typically structured as share deals, with exits involving strategic acquirers or private equity funds.

The Polish capital market remains immature for VC-backed listings, with limited analyst coverage, insufficient scale and a fragmented investor base. Companies seeking public capital typically consider foreign exchanges – primarily in the EU – once they reach sufficient maturity, scale and governance readiness. However, such transitions remain uncommon at present.

Please refer to 6.2 IPO Exits. As IPOs are not a realistic exit path for VC-backed companies in Poland, structured pre-IPO liquidity programmes – including employee share tenders, secondary blocks and managed liquidity events – remain largely theoretical in practice.

There is no active secondary market infrastructure or legal framework specifically supporting structured liquidity prior to listing. Informal secondaries do occur, typically negotiated privately and with consent under SHA restrictions (see 3.5 Investor Safeguards). Company-facilitated tender offers are rare and tend to be limited to corporate governance clean-ups or founder realignments.

As the market matures, greater use of structured secondaries may develop, but for now, liquidity remains tightly linked to full trade sale events.

In Poland, VC transactions involving equity securities are primarily governed by the Polish Commercial Companies Code (Kodeks spółek handlowych) and, where relevant, the Act on Public Offering (Ustawa o ofercie publicznej). Most venture financings are structured as private placements and are therefore not subject to prospectus or registration requirements, provided that the offering does not qualify as a public offering under local law.

Instruments issued to employees or key personnel, particularly in joint-stock structures, may include subscription warrants, provided they are authorised by the company’s governing bodies and registered accordingly. These instruments are typically used in the context of incentive schemes. Please see 5.2 Securities for further details regarding the use of such instruments in employee incentive plans.

Convertible bonds and other hybrid instruments are generally not used in Polish financing practice.

Certain sectors defined as strategic – such as defence, energy, telecommunications and critical infrastructure – are covered by specific legal frameworks, including the Act on Control of Certain Investments (Ustawa o kontroli niektórych inwestycji). This legislation provides for screening mechanisms intended to prevent the acquisition of controlling stakes in companies of systemic importance by non-EEA or non-OECD investors. However, these provisions are not typically applicable to VC investments, as they relate to large-scale infrastructure and utility projects rather than early-stage companies.

Additionally, Poland has implemented sanctions in line with EU regulations, restricting investments from entities associated with certain countries, including Belarus and Russia. These measures aim to safeguard national security and public order.

From a compliance perspective, foreign investors must adhere to anti-money laundering and know-your-customer requirements. This includes registration in the Central Register of Beneficial Owners (Centralny Rejestr Beneficjentów Rzeczywistych) and, for joint-stock companies and simple joint-stock companies, maintaining a shareholder register, which may be managed by a notary or a brokerage house.