Declining Interest in Czech Start-ups: Investments Drop by Three Quarters

Investment in young technology firms in the Czech Republic, also known as start-ups, fell by 75.5 percent to 11.4 billion crowns last year. The usual investment in a start-up hovered around 24 million crowns, which is six million less than in 2022. There were also fewer investment rounds in the hundreds of millions of crowns. The reasons include cost-saving measures by foreign investors, high inflation in the Czech Republic, and rising interest rates.

In 2023, a total of 98 rapidly growing companies received financial amounts. Nine companies developed by Czechs were bought by major foreign players such as IBM and Cisco, who paid them billions of crowns. The number of invested companies is also lower. In 2022, 112 investments took place alongside seven company sales, often for higher amounts than the previous year.

Iva Brejlová, who analyzes start-up data on the CzechCrunch platform, pointed out that technology companies faced several difficulties last year. “They were affected by savings in the start-up ecosystem abroad and problems caused primarily by the collapse of the American Silicon Valley Bank, the most significant bank for start-ups. High inflation and rising interest rates also negatively affected the domestic market.

According to Czech Crunch analyst Peter Brejčák, the Czech Republic has resisted the lousy mood from abroad for some time. “Companies still laid off employees and tried to extend the time they could get by with investments from previous years as much as possible. They postponed plans, typically expansions abroad. And some start-ups sold shares far below the price of previous years. However, there was no major layoff, such as in the United States,” he added.

According to earlier CzechCrunch surveys among investors, the valuation of young companies fell by a quarter, sometimes even by 40 percent. So-called exits, or sales of entire companies, are in higher orders. The most expensive company sold last year was Manta, which shows companies their data in an understandable form. It moved under IBM for more than three billion. The start-up Smartlook, which helps understand user behavior on the internet, received a price tag exceeding two billion when Cisco bought it. Shoptet and UltimateSuite were also sold for over half a billion.