Built almost a century ago to host mass gymnastics events, the huge Strahov stadium overlooking Prague’s old town has been left to crumble and become a blot on the landscape of the Czech capital.
But, in September, city authorities approved a €400mn plan to convert part of the sprawling stadium into a technology centre, where students and entrepreneurs can test robots or drones, work on artificial intelligence or medical engineering, and develop new business ideas.
“For the start-up scene, it will mean that, in the middle of Europe, there will be quality facilities with an overlap into academia,” says Veronika Kramaříková, vice-rector for development and strategy at the Czech Technical University in Prague, one of the lead partners in the project.
Construction on the redevelopment should start before the year-end and run “until 2030, maybe longer”, Kramaříková adds.
With important issues unresolved, however — notably over whether the development will receive more national and EU subsidies — some local businesspeople are sceptical about the project being completed.
Still, the Strahov initiative demonstrates Prague’s wider ambitions as a hub for fast-growing companies.
This month, the national government allocated 1.3bn korunas ($57.5mn) to finance start-ups and spin-offs in order to boost Czech competitiveness in digital technology. “The aim is to support selected areas with great potential where the market needs help for various reasons — for example, in the transfer of technology from cutting-edge research to practice,” says Jozef Síkela, the trade and industry minister.
Misha Votruba, director of Gradus/RSJ, a Czech biotech fund, already notes the progress made. “What’s really growing fast in this city and country — and where we see that we are at a cutting edge — is mathematics and artificial intelligence,” he says. “If you look, for example, at artificial intelligence, a whole bunch of enabling devices are now coming from this part of the world.”
Growth has been fuelled by a rise in investment. Many Czech start-ups are getting early-stage capital from local backers, then attracting foreign investors in later funding rounds.
“More and more foreign investors are looking at the Czech Republic and Prague to fund potential deals, but most are looking at later stages [of funding],” says Jaroslav Trojan, managing partner of venture capital firm Nation 1 VC. He cites a recent Berlin roadshow for some of the group’s start-ups: “I’m sure that some of these companies will now be able to raise capital from the Germans.”
Prague may not yet challenge Berlin, but it has a vibrant venture capital scene that was simply non-existent when American venture capital adviser Alan Chelko arrived in 2005, shortly after the Czech Republic joined the EU. At the time, “there were no success stories and really very limited capital here,” Chelko recalls. “When I look at the Czech VC sector now, it’s night and day.”
The start-up scene is also growing because “there is now a lot more money coming from beyond the traditional VCs,” says Michal Zálešák, managing partner and co-founder of venture capital firm Lighthouse Ventures. Family offices are pouring money into technology, while successful entrepreneurs are using part of their earnings to launch their own investment vehicles.
He points to “significant cross-border activity”, adding: “We are also getting many investments from Poland into our start-ups, as well as Slovakia.”
Investors from yet further afield are tapping into Czech advances in technology, and helping a few of its start-ups to reach, or come close to, unicorn status — a valuation of at least $1bn.
Czech software company Productboard became a unicorn last year after raising $125mn from investors led by San Francisco-based Dragoneer. Productboard said the deal valued its business at $1.7bn.
Older success stories are benefiting from the positive circumstances — notably in cyber security, where some start-ups are following the lead of Avast, founded in Prague in the 1980s and one of the first developers of antivirus software. Avast listed in London in 2018 and was acquired in 2021 by NortonLifeLock in a $8bn deal.
Ondrej Bartos who, in 2009, co-founded Credo Ventures, one of Prague’s first venture capital firms, cites a report showing that more than 10 per cent of Czech start-ups raised funds last year — a ratio that suggests perhaps “there is even too much money right now,” he says.
However, he adds: “There are a lot more start-ups, but I feel we still have a long way to go”.
One barrier to entry for start-ups is the Czech regulatory environment, which “leaves a lot to be desired”, says investor Philip Staehelin. In a place like the UK, “it’s way easier to start up a company.”
At the same time, though, Staehelin acknowledges the appeal of low running costs in the Czech Republic, which can give start-ups a better chance: “The burn rate here is minuscule . . . a little money goes a long way.”