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The Czech Republic is one of the most beautiful countries in Central Europe and can be interesting for launching a startup company. Not everything there is sharpened for the development of innovations as it is in Estonia, but the country has its advantages. A few examples of that would be: a favorable environment for the development of a business and its geographical location, the country is situated in the very center of Europe. Appositely, the Czech Republic is famous for its inventors and discoveries: Otto Wichterle invented contact lenses, Yan Yansky discovered the four blood types and nowadays, each of us has heard of the AVAST antivirus, even if they don’t use it; this is also a Czech invention. In this article, we will peek what the modern startup ecosystem of the Czech Republic is like.
Startup Jedi
We talk to startups and investors, you get the value.
This country is noticeably not a leader in the field of innovation, but in general, the Czech Republic has good positions. The country is ranked 27th in the Global Innovation Index and 29th in the Global Competition Index. The fact that 50% of the active population are entrepreneurs is also worth considering, it means that the conditions are favorable for the development of a business. Let’s look at how the Czech Republic is interesting in terms of business in general and more particularly for launching one’s startup.
Starting a business in the Czech Republic does not require much time and money: the authorized capital of an LLC is from 1 krone, documents are drawn up by a notary, and then an application is submitted to the Commercial Court.
There are fewer startups than average in EU countries. According to Eurostat, the percentage of innovative companies in the Czech Republic is 42%, while the average for Europe is 49.1%.
If we look at it in terms of economic spheres, the most popular directions for startups in the Czech Republic are games, entertainment and travel (18%), web services (15%) and least of all are startups in the field of agriculture, food, life science (2%), as well as the Internet of things (2%)
20% of all startups working in the Czech Republic are foreign.
The offices of several large international centers and corporations are located in the Czech Republic, including Motorola, Microsoft, Red Hat, IBM, NXP.
The country has one of the lowest unemployment rates in Europe with less than 4%. Czech Republic has no shortage of IT jobs; on the contrary, there is a shortage of IT specialists. For this reason, the wages of developers are growing steadily, even for those who are just starting their careers.
A significant advantage of the Czech Republic is its prices. It is cheaper than in other EU countries. As for wage, the average in the country is 1115 euros, in Prague the average salary is 1450 euros.
Even if you are a foreigner, you have a real chance of finding an investor for your project in the Czech Republic. Such was the case for the founder of DAVINCI startup Alexey Ilyash from Ukraine: he chose the Czech Republic for work and, after creating the MVP, he was able to find an investor in the person of the Czech Investment Fund.
There are communities of entrepreneurs from various fields, including startup entrepreneurs in the Czech Republic. By joining one of these communities, you can find the contacts you need to promote your project.
In continuation of the previous thesis, the Angel Investment Network operates in the Czech Republic, it is a network of 1,266,059 entrepreneurs and investors from around the world. By registering on the site, you can find funding for your project.
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In the Czech Republic, there are projects famous throughout the world. Most likely even you have some experience in using certain products.
AVAST Software is a Czech company that develops information security software. Avast Antivirus is one of the ten most popular antiviruses in the world.
In 2016, AVAST Software announced its intention to buy another Czech company — AVG Technologies, which also develops antivirus software. AVG Anti-Virus includes a file scanner, email, and an automatic update function.
A search engine for cheap railway, bus and plane tickets. The company creates routes that allow travellers to change from planes to buses and trains on any continent. About 30,000 seats are sold daily by the site.
A device with which you can create three-dimensional objects — thanks to a special filler. The handle can also cut, solder, burn wood.
Produces energy bars and nutritional supplements for athletes.
A hybrid of socks and boots, knitted socks with a dense but flexible sole. Suitable for training at the gym, as well as for walking, roller skating or when you need to quickly change shoes.
The project was founded in 2014 and specializes in providing frameworks and tools for creating application programming interfaces (APIs), as well as a convenient way to design modern cloud applications.
The startup has attracted $ 6.8 million in Series A investment in San Francisco in 2015.
The winner of the Women Startup Competition (a pan-European platform for the development of women’s entrepreneurship and a competition that is held first at the national level, then at the regional) in the Czech Republic. The project was launched in 2016.
It is a service that unites travellers and local drivers and provides tourists with the opportunity to visit places that are not accessible to public transport.
A mapping platform that allows users to share information about their favorite places. Using the service, you can create communities around specific locations based on specific topics.
Personal trainer and nutritionist for dogs. A device that tracks all aspects of your dog’s life: what and when it eats and drinks, how active it is. The service also helps to extend the dog’s life due to detecting the early stages of diseases.
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Czech startups are funded by private funds, venture capital, business angels and crowdfunding.
Czech venture investors are grouped into the Private and Venture Capital Association. The organization has 17 full members and 46 associates. Czech business angels are active participants in the European network of business angels. Concerning venture funds, they have a completely different amount of available funds and they carry out financing in different ways.
For example, the RSJ Investments fund invests mainly in other venture funds with strong management and a clear strategy aimed at increasing the cost of investment projects. Thus RSJ Investments invested in Credo Ventures, one of the most famous and most active venture funds in the Czech Republic. At the same time, RSJ Investments is investing in individual startups. Among them is the aforementioned Apiary startup, Photoneo. The latter develops high-quality 3D sensors that allow manufacturing equipment to accurately recognize an object.
Below is a selection of active Czech investors.
Website: https://www.rsbcgroup.com/
Amount raised: 100 million EUR
Total number of investments: 21
Invests in startups that are developing new technologies in education and healthcare. Region — Central and Eastern Europe, Great Britain.
Among the RSBC group’s projects is the mooveez startup. A mobile application for learning languages with movies. In 2016, the app received the British Council Award for “The Most Innovative Digital Language Learning Product”. The application is available for download in 20 countries.
Website: https://www.miton.cz/
Amount raised: 100 million EUR
Total number of investments: 31
An investment company that invests in innovative digital B2C companies. The fund was founded in 1998.
Among the projects is the startup ROSSUM, an artificial intelligence-based technology that allows machines to read documents the way people do.
Another interesting project is the popular Heureka price comparison service in the Czech Republic.
Website: http://www.invencapital.cz/
Amount raised: 74 million EUR
Total investments: 11
A venture capital fund that invests in projects in clean technology and new energy sectors. They invested in startups in Europe, as well as in Israel. It is important for the fund that the business model of the project is scalable, in addition to the sphere, and product sales must be confirmed.
Among the projects financed by the fund is the startup NEURON Soundware. The company is developing software that recognizes broken cars by sound. The software can recognize breakdowns in the operating of any equipment; from air conditioning systems to car gearboxes.
Website: https://www.credoventures.com/
Amount raised: 71 million EUR
Total number of investments: 22
They specialize in funding startups from Central and Eastern Europe that are in the early stages of development. They have invested in projects in the field of IT, the Internet, mobile communications and healthcare. They contribute to projects with 50 thousand to 6 million euros.
One of the projects that the investor has funded is the startup Supernova. It is a tool that combines design and development. Using this service, all design elements are translated into ready-made code for iOS, Android and React Native. Each screen drawn by the designer is fully encoded taking into account the features of the supported platforms.
Website: https://tiliaimpactventures.cz/en/
Amount raised: 2.6 million EUR
Total number of investments: 11
Social Venture Fund. It provides flexible loans, direct investments, and mezzanine financing. The fund was founded in July 2018.
They funded the Datlab project, a Czech IT company specializing in data mining and analysis with a focus on public procurement. The project aims are to promote transparency, efficiency and quality of public procurement.
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Dozens of incubators and accelerators work in the Czech Republic. Some of them are ready to work with startups from different fields, others are tailored for certain market segments. Many startups and incubators act as investors: one invests in a startup for a share in the project. An investment fund and an incubator UP 21 exist among them.
UP 21 collaborates even with startups that are still in the planning stage, the most important thing is a good idea. There are currently 13 startups are under incubation, and 17 incubated projects are in the investor’s portfolio. In total, UP21 invested CZK 122 million, or $ 5.3 million, in startups during its operations. One of the most interesting projects this investor has funded is the NutritionPro startup. This is a service that determines the composition of one’s body and, with this taken into account, creates a customized menu. Using the program, one can also order the delivery of food prepared just for oneself and containing the necessary trace elements for your body.
Another incubator that positions itself as an investor is Al Startup Incubator. Founded in 2017 in Prague, it helps in the development and promotion of business projects in the AI sphere, particularly, these are startups whose products are related to artificial intelligence: machine learning, natural language processing, robotics automation, complemented by reality. It Invests up to $ 500,000 for 10–30% of the project cost.
The accelerator ChechAccelerator collaborates with startups regardless of the scope to which they relate. The three-month program may involve projects that develop an innovative product or service and have high growth potential.
The biotechnology center i&i Prague works with projects from the field of MedTech, BioTech, medical diagnostics and drug detection. The accelerator Startupbootcamp Commerce helps startups who work in the field of commerce, StartupYard — technology projects in the fields of AR / VR, Deep Tech, AI, machine learning, blockchain, cryptography, robots, IoT, cybersecurity. Furthermore, the last accelerator mentioned does not make a difference between Czech and foreign participants, once a startup joins the program, it has access to not only expert support, but also funding.
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The startup ecosystem of the Czech Republic is actively developing. Innovative projects that are launched in this country are related to various fields: from entertainment, travel, development of web services to cybersecurity and the Internet of things.
A favorable environment has been created in the country for the development of small businesses; it is quite simple to open your own business. The Czech Republic has low unemployment and IT specialists are in great demand, so if you want to launch your startup there, it is advisable that you already have your developer in the team.
As for financing, many venture funds operate in the Czech Republic, and investments can also be obtained from business angels or by placing your project on a crowdfunding site.
You can develop your project by participating in the programs of local incubators and accelerators, of which there are quite a lot. Many incubators and accelerators, in addition to mentoring, also provide investments.
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