Why is 2024 already better than 2023?
2023 was supposed to be the year of subsidies. And it was. The first year after a several-year break in which money and subsidy programs actually appeared. It was the first such year. We have another 3 years ahead of us. This is the last time of the transfer of large funds and large programs changing not only Poland, but also Polish enterprises.
2023 was also a year of perturbations. For political and often non-substantive reasons, it was also a year of postponed deadlines and decisions. And this is also worth saying honestly on the forum.
2023 was also the year in which the largest subsidy program for entrepreneurs was launched, i.e. the high-profile, media-savvy SMART program as part of the FENG program. Over PLN 10 billion was to be distributed, of which PLN 4.45 billion already in the first call. In the end, PARP launched only 41% of this amount, co-financing 198 out of over 1540 submitted applications. In percentage terms, this means less than 13%. Experts expected much more and with much more exposure to digital businesses.
Meanwhile, it was factories that won, not start-ups. For example, only 4, i.e. 2% of all co-financed projects, were transferred from fintech projects, and as many as 19 projects, i.e. almost 10%, from the packaging industry. And it is not about the fact that the packaging industry cannot be innovative and worthy of subsidies, but rather about the too large and noticeable by many analysts sector disproportion in the program, which was not intended to be dedicated, nor was it intended to reward this category.
Some experts explained such results by the change of the leading institution and the lack of appropriate competences on its part. PARP, which now evaluates startup projects, has been evaluating projects of large manufacturing companies in recent years, in previous perspectives. And this factor still remains in the assessment, hence the argument of a part of the market, which thus explains the disproportion in favor of factories at the expense of startups in the first edition of SMART FENG in 2023, may seem justified. Similar conclusions were made by the leading institution itself, which changed the rules in the next edition. Its results and possible effects of the changes will be known in Q3 in 2024.
Speaking of conclusions, two from the first edition of SMART seem to be crucial. First of all, it was confirmed that you need to have a very well-developed and parameterized innovation. Which, in the case of digital/cloud projects, often means referring to global competitors available online, also from Poland. In addition, it is worth having an innovation that is easy to implement right away, hence the promotion of projects that are not necessarily digital, but quickly translated into production lines.
Secondly, SMART has shown that the SMART path in FENGU is not everything, because there are also other programs where similar projects have a better chance of successfully obtaining funds, despite much less media hype and potentially lower allocation. Such programs are, for example, Regional Operational Programs, attractive especially to those of our companies that have headquarters or at least branches outside Warsaw, Wrocław or Poznań.
The second program that was in the news in 2023 was the successor to Go to Brand, i.e. the Innovative SME Brand Promotion Program. Mapped as important for companies that already want to scale their business internationally, after the changes it turned out to be attractive, but difficult to implement. The obligatory parameter of at least 30% of export revenues in the year preceding the submission of the application, introduced in the home straight, eliminated many companies from the application, including a large part of our portfolio companies. Finally, 2 of our companies submitted applications in this program and both received funds for trips, flights, hotels, participation in fairs and trade missions on foreign markets.
The third important subsidy stream for our portfolio were energy programs. Here, the delays are significant. In 2023, programs to improve the energy efficiency of enterprises were partially launched at the level of the National Fund for Environmental Protection and Water Management and regional Provincial Fund for Environmental Protection and Water Management. On the other hand, programs for the construction of biomethane plants with very large subsidies amounting to tens of millions of zlotys were postponed several times last year, and finally, after the post-election personnel changes last autumn, they are only now starting in Q2 in 2024.
As you can see, due to various delays, most of the programs were postponed for subsequent months. Hence, the decisions in many of them are announced only in 2024. We can see this in our portfolio companies. For obvious reasons, we cannot talk about details, but since the beginning of the year, in 2 resolved programs, 3 of our companies have received funding. 3 applications submitted and 3 positive decisions. 100% effectiveness. We are only in the first quarter and it is already clear that 2024 may be even better than 2023. We are reaping the fruits of our joint work from the second half of last year. The next results will be available at the end of April. And what else will happen this year? West Pomeranian Regional Operational Programme, Małopolska Regional Operational Programme, Lublin Regional Operational Programme, Silesian Regional Operational Programme, Eastern Poland Programme and the 3rd edition of the SMART path. In addition, there are programs for digitization, automation and the development of industry 4.0. There will be a lot to do, and each such program is an opportunity for you to get the capital needed for the development of your company.
Taking into account all the events on the subsidy market, not only from 2023, it is worth noting one more important thing. Namely, we are in 2024. So we are in the middle of this subsidy perspective, extended for the years 2021-2027. Temporarily, we are at the halfway point, but we have spent only a fraction of the funds allocated for it. This is where analysts differ, because some of them take into account the funds launched on the KPO account, which, after all, has not formally started to this day. Anyway, the fact is a fact - we are halfway there, and we have not spent even half of what we were supposed to spend. What does that mean? This means one thing - a very large stream of funds that must be spent quickly, otherwise they will be lost, and the Polish economy and Polish entrepreneurs simply cannot afford it.
That is why we have 3 hot years of work ahead of us, because the money is there, and after the autumn elections there is also the belief of experts from the subsidy market that subsidies are a priority topic for the new government. Anyway, the first foreign visit of the new prime minister showed it very clearly. Now it is time to translate large national and European declarations into improving the system and accelerating subsidies. Polish enterprises and our companies are ready for this. Is it worth it? Nothing changes here - there is no cheaper and easier capital for the development of the company. In addition, without giving away shares. Welcome!