Central Europe is one of the most dynamic regions in Europe, but it remains largely unknown to companies and individuals in the rest of the world. The image of gloom associated with former communist countries has not yet been erased from memories and few actors consider an investment or commercial development towards this part of the European Union.
And yet, the figures speak for themselves. The Czech Republic has returned to growth and is in the leading pack of European countries with its 4.7% GDP growth in 2015.
With its dynamic market and strategic central geographical position, the Czech Republic constitutes an ideal entry for companies wanting to develop in the Central European region. The industrial tradition, the good level of the school system, and the existing infrastructure represent a considerable asset for Czech companies in global competition. With lower remuneration levels than in Western Europe (average gross monthly salary of €937), the expansionary monetary policy of the National Bank, and high technical and technological levels, commercial and industrial partnerships present strong potential. But what about startups?
Prague remains by far the economic center of the country and concentrates the largest number of startups and associated structures, but other large cities are showing increasing dynamism.
(1) Poland, Czech Republic, Slovakia, Hungary, Austria
(2) Czech Statistical Office ČSÚ, January 2016
The startup scene has continued to become more dynamic in recent years and has given birth to global players like Cognitive Security or Apiary, following the example of the first technological stars of the late 20th century like AVG or AVAST. Events for startups and existing coworking spaces currently exceed demand, and we will certainly witness a consolidation of the sector with a general increase in the quality of services. Venture capital funds and business angels are still rare and therefore leave room for the arrival of new players. Knowledge of acceleration possibilities for Czech startups in foreign structures remains very low and deserves to be more widely promoted.
The startup scene in the Czech Republic is rich, but it is not yet mature. Many companies are born each year, but few succeed in becoming real startups and even fewer move to the international development stage. Only 3 out of 600 investment opportunities survive, which represents only a 0.33% success rate, according to Klub Investorů (one of the main investors’ associations).
Paper Hub offices: the coworking place in Prague furnished with furniture made of paper. 3D printers are available and for a break, a 100% Bitcoin coffee.
There are not enough investors or business angels”
Universities provide good level technicians, engineers, and sales people. Charles University is among the TOP 300 according to the ARWU ranking and the Czech Technical University in Prague (CVUT) ranks 8th in the EECA ranking. But good economic health and a low unemployment rate are the cause of a relative shortage of human resources that companies must face. It is extremely difficult to attract and keep talent, especially when many go abroad for better opportunities and a higher salary. It may therefore seem that good economic health is not conducive to startup development because numerous job opportunities would not push people to launch their own entrepreneurial adventure. Yet it is exactly the opposite! The relative security of finding a job and the possibility of gathering funds to launch are at the origin of a great effervescence on the startup scene.
However, one problem remains: venture capital investors! “There are not enough investors or business angels” – Czech startups often complain. Indeed, venture capital funds can be counted on the fingers of one hand. However, thanks to the success of startups and the arrival of private investors from them, access to funds is improving year after year. Proven venture capital funds, like Credo Ventures or Rockaway Capital, are followed by new entrants often part of large groups or banks such as J&T Ventures, which has just announced its first capital entries in early 2015.
http://www.shanghairanking.com/ARWU2015.html
This new economy needs new spaces, which is why new infrastructures for entrepreneurs are born every year. Most coworking spaces, accelerators, and incubators are located in Prague or Brno (the second largest city in the Czech Republic). These are indeed cities with the largest universities, concentration of companies and capital, but also with the highest rents. The majority of these places were born from private initiatives, but one of the best performing tech accelerators is semi-public (JIC) and demonstrates how good management of public resources can favor the emergence of new Czech tech stars. Today there are many spaces that claim to be incubators or coworking spaces. From the most basic ones that rent a space in a charmless open space to emblematic places that truly support creation like Node 5 or Tech Square. In parallel, more original concepts are emerging such as coworking cafes like PaperHub in Holešovice or Pracovna in the festive Žižkov district in Prague, or the Techsquat coworking-coliving space.
We also observe a phenomenon of emerging coworking spaces offering childcare, which responds on one hand to the shortage of public kindergartens and on the other to the entrepreneurial spirit of young parents. The monthly price for a fixed resident spot in a coworking space varies between 2,900 CZK (€107) and 4,000 CZK (€148), but most spaces give the possibility to pay per hour and especially to do a trial day. The Coworking Prague Facebook page (https://www.facebook.com/groups/coworkingprague/) gives all the coworking news in English.
czechstartups.org is the first online hub launched at the initiative of private and public partners like the public investment agency CzechInvest, IBM or the venture capital fund Rockaway.
These relatively new spaces were preceded in the 1990s by technological and scientific parks, created most of the time at the initiative of municipalities and universities around the main regional cities. The company Společnost vědeckých parků ČR, z.s lists these centers (http://www.svtp.cz/katalog/). These are not always startup incubators, but rather groupings of VSEs/SMEs and clusters. Another project that gives an overview of the level of innovation in the Czech Republic is the Association of Innovative Entrepreneurship CR (http://www.aipcr.cz/eng/) which gives free access to the database of innovative companies, clusters, universities or research centers.
Thus, we can see that infrastructure and research environment are favorable to the emergence of new innovative companies. Nevertheless, the development of international partnerships with similar structures or VSEs/SMEs still presents significant potential.
To be informed of the news of this ecosystem, it is enough today to read one of the webzines or participate in one of the many events that animate the already very rich life of Czech cities.
The best-known webzines that follow and bring fresh news from the startup scene are Tyinternety and more recently Czech Crunch. However, they only publish their articles in Czech. So for English speakers interested in what is happening innovatively in the Czech Republic, there are sites like EU-Startups or Invetures.
The event programming is rich: there are local editions of international conferences like Engage, co-organized by Socialbakers, or TEDx Prague. But for several years, purely local projects have been established in the startup landscape, taking on more and more of a regional allure in Central Europe. Among the most important is Webexpo, 80% of which was bought by Michal Illich, investor, entrepreneur, and one of the organizers of the Devel conference for developers. This acquisition promises to further increase the quality and reputation of these two already essential events.
There are also several competitions where startups and innovative projects in search of notoriety and investors present themselves. Some are organized by the startup sphere, others are at the initiative of private companies or are part of public projects for innovation. One of the most important is Nápad roku, organized by the company Vodafone, which brings together several innovative projects and investors every year around this meeting. In 2014, the Central European Startup Awards were launched, aiming to establish themselves as the major event in the Central and Eastern Europe (CEE) region. For creators and those curious about the world of applications, there has been the quarterly AppParade presentation since 2010, held in the Prague art-house cinema Bio OKO. During this evening, ten people present (or “pitch”) their applications and the public votes for the best one.
In short, there is no lack of events and the quality of speakers increases every year. When will there be a Czech version of WebDays?
