Investing in deeptech start-ups in the Czech Republic and more innovation-rich countries.
reflections by Vojtěch Nosek
Recently, the European Commission published the results of the prestigious EIC Accelerator scheme. In total, the EC supported 71 excellent deeptech projects. Unfortunately, as usual, only a fraction of them were from Central and Eastern Europe, one from Poland and one from Bulgaria, and none from the Czech Republic.
As a jury member I had the opportunity to see the qualitative difference first hand. I honestly don't know any project that would have stood a chance in this competition (at least with the success rate that was in this round). Maybe one.
On the other hand, Czech projects are relatively successful in the Pathfinder program, supporting the earliest stages of breakthrough technology development. So where is the problem? Personally, I see two main issues.
The first reason is well known. Czech excellent deeptech projects have a huge problem with combining technical excellence with business excellence. A minimum of Czech start-ups realize that as important as finishing a prototype device is knowing exactly what and to whom (and why!) I will sell. Most founders of deeptech projects I know are at best CTOs, rarely real CEOs. The professional business management and business acumen of Czech start-ups is incomparable to the successful projects from EIC Accelerator.
The second reason is the lack of venture capital. While most VC funds point to a lack of quality projects, many claim that there is plenty of money in the ecosystem. But the problem is not the absolute amount of capital, but the availability of capital for truly risky investments. Even funds that describe themselves as "early stage" investors often have a higher risk aversion than their counterparts to the west. More precisely, the degree of risk aversion may not be fundamentally different, but because there is more venture capital in Western markets overall, there is also more scope for high risk-high reward investments.
Deeptech start-ups from more innovative countries often raise funds that are difficult to obtain in the Czech environment, even in a second investment round. It is no exception that a deeptech start-up receives EUR 2 million in pre-seed investment. These funds go not only for technical development but also for building a professional business team.
Many investors also fail to estimate the level of risk well because they have no experience with deeptech projects. The complexity of the projects is high, the intellectual property is complex, often accompanied by complicated relationships with the university. At UNICO, we try to demystify these complex projects and offer a clear assessment in the form of technical and IP due diligence. Yet investors continue to prefer lower-risk projects with a simpler business case.
There are also many useful initiatives emerging that are thickening this whole ecosystem.
A great opportunity for Czech deeptech start-ups is the EIC Pre-Accelerator, a pilot program planned for the second half of 2025, which aims to help start-ups from less successful countries in Europe (so-called widening countries) to bridge the gap between technical excellence and business/investment readiness. Therefore, activities such as business validation, detailed market analysis, go-to-market strategies, etc. are supported. Such activities will better prepare these projects for investment, even for more risk-sensitive investors.
I believe that Czech start-ups may soon catch up with more innovative countries, they certainly have the potential to do so. Let's just please put technical excellence and business excellence on the same level.
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