Wrocław – A treasure chest that loses its gems

‘With Intel’s latest giant investment in the area, Wrocław has become a “treasure chest” for international business. At the same time, however, the city is losing “Polish gems”,’ claims Michał KARBOWIAK

.Wroclaw has been described as ‘Poland’s Silicon Valley’ (by experts from the Startup Poland foundation) or ‘Europe’s champion in job creation’ (by the former city mayor, Rafał Dutkiewicz, in an evaluation of the period 2006–2016). While both claims may be somewhat exaggerated, the capital of Lower Silesia is an important economic centre that enjoys international recognition. This year alone, it came first in the category of medium-sized cities with a population between 200,000 and 750,000 in the ‘European Cities and Regions of the Future 2024’ ranking compiled by fDi Intelligence, an opinion magazine of the Financial Times Group. Wrocław surpassed Zurich and Vilnius, taking the top spot on the podium. It also achieved the highest ranking in the sub-categories of business friendliness and human capital.

Giants love Wrocław

.The city’s huge potential is further confirmed by increasing investment. In June last year, Intel announced its plan to build a Semiconductor Integration and Testing Facility in Miękinia near Wrocław. The Americans are to invest USD 4.6 billion (nearly PLN 20 billion) in the Wrocław agglomeration and create 2,000 job positions. This is the largest direct foreign investment in Poland’s history.

Why did Intel choose Wrocław for this project? One reason is the favourable geographical location, which allows for collaboration with plants in Germany and Ireland. Additionally, the city has many talented specialists, with approximately 30,000 employees in the IT sector and over 100,000 students attending universities. These and other city’s advantages (e.g. modern airport, high quality of life and the welcoming nature of its residents) have long been recognised by other investors. Korea’s LG has been investing billions in factories near Wrocław for almost two decades, and the American company 3M considers its Wrocław plant its ‘European heart.’ Google, BNY Mellon and many other Polish and foreign companies also operate in the city.

Rising star

.Wrocław fares well in the rankings of startups, i.e. young, developing companies. The capital of Lower Silesia, together with Warsaw, topped the national rankings of the Startup Poland foundation and was recognised as a ‘rising star’ of the global startup ecosystem by Dealroom.co.

On 9 July, Olga Malinkiewicz, founder of Saule Technologies associated with Wrocław, received the prestigious European Inventor Award from the European Patent Office. The scientist was honoured for developing a breakthrough technology for printing perovskite photovoltaic cells. Perovskites are thin and flexible, which makes them capable of generating energy from both sunlight and artificial light. The first factory to produce them was opened in the Wrocław Technology Park.

Who will profit from this groundbreaking technology?

.The problem is that this innovative technology, developed in a Polish city with great business potential, may soon fall into foreign hands. In an interview with Business Insider, Olga Malinkiewicz revealed that Saule Technologies is currently unable to sustain itself on the revenue it generates, let alone expand in the market. The owners want to build a new, much bigger plant that will allow the company to take orders from large customers. To do this, however, they need around EUR 150 million, and no Polish investor is willing to offer such a sum of money. Therefore, the owners can either find a foreign investor or sell the company to a partner from another country. The matter will probably be resolved by the end of the year.

In April, the owners of another well-known tech company in Wrocław, Brand24, made a similar decision. Michał Sadowski, an icon in the Polish startup community, sold his media monitoring company to the American Semrush. The selling price? PLN 55 million. Reasons? The desire for further development. Today, Brand24’s tools are used by 4,000 brands, including such prominent companies or institutions as Uber, IKEA and Stanford University. The goal, however, as Sadowski says, is to acquire not thousands but tens of thousands of customers.

Chinese Techland

.Wrocław and Poland had, in a sense, already lost one of their most precious gems. In September 2023, Techland, a globally recognised computer games developer, passed into Chinese hands. Paweł Marchewka’s company was bought by the Chinese Tencent (Puls Biznesu estimated the transaction value at a mere 6 billion zloty). In an official communiqué, Marchewka emphasised that ‘working with Tencent will allow [them] to move ahead with the realisation of [their] game vision’, while the Polish studio will retain ‘full intellectual property,’ ‘creative freedom’ and ‘will continue to operate as it sees fit.’

This year, however, the media wrote about Techland mainly to discuss its record loss (over PLN 90 million) and an almost fivefold drop in revenue. The recent change in the company’s working model – from remote to hybrid or fully onsite – has also reverberated through the IT world. In any case, only when Techland releases its anticipated new open-world RPG game set in a fantasy realm will the market truly judge the outcome of the Polish-Chinese alliance.

Let the money circulate

.Does selling local gems to foreign buyers harm Wrocław’s economy? It depends. Currently, job positions are not being lost – but decisions regarding the future of the sold companies will not be made locally. The companies in Wrocław serve as a lens through which we can observe the workings of the economy within the context of global competition. From this perspective, it is difficult to be offended by these processes or view them as exclusive to this particular region. We simply don’t stand a chance against the US or China.

How can Wrocław and its companies compete in this race? Hopefully, the city’s potential will draw in more innovators, leading to the creation of companies like Techland. Their know-how and money could then be used to support new and intriguing Polish ventures. This is a plausible scenario. It is worth noting that ElevenLabs, the first Polish ‘unicorn’ (a startup valued at over one billion dollars), has three investors from Wrocław.

Michał Karbowiak