Startup in Czech Republic

More than five per cent of Czech GDP comes from start-ups

In the Czech Republic, the number of start-ups – i.e. new fast-growing companies oriented on using advanced technologies – is constantly growing. And they already started to play a significant role in the entire economy.

“These companies now generate more than five per cent of the Czech Republic’s gross domestic product,” said Petr Sklenarz, chief economist at J&T Bank.

The country’s economic performance reached DKK 6.8 trillion last year, out of which startups contributed around DKK 340 billion. Sklenarke estimates the share of startups in the total collection of personal income tax is up to nine percent.

Filip Mikszczyk, founder of StartupJobs, which brokers employees for startups and technology companies, estimated that more than 150,000 people will be working for the Czech startups in 2022. “That’s about four percent of all employed people and by comparison – twice as many as in agriculture,” he said while presenting the Smart Market Report 2024 study.

Between 2018 and 2024, the number of startups in the Czech Republic grew by a third, and so did the number of their employees. “This is a dynamically growing part of a stagnant economy,” Sklenář said. He stated that the number of startups and employment in them is growing annually by seven per cent.

Czech start-ups’ number of employees

The biggest proportion of them are really small firms. Nearly half of the startups have up to five employees, three quarters less than twenty. More than two thirds of these firms are based in Prague, about one sixth in Brno. Ostrava is next.

Thus, the average salary in a start-up has reached 65,000 kronor. All together, the firms paid their employees 117 billion crowns the year before last. At that time, the average salary in the Czech Republic reached 43,000 CZK.

As a rule, startups have such a structure that needs highly qualified workers, which are not available in too great numbers on the market. This mainly relates to specialists in information technology. That is why their work is so valued.

Startups cover a far larger sphere, starting with services and trade and ending with industry in the form of 3D printing or development of new materials.

For example, Josef Prusa co-founded the start-up Prusa Research in 2009 and went on to become Central Europe’s fastest-growing technology company.

Investments in this sector of the economy reached their peak in 2022, when an approximate 37 billion kroner flowed in. As elsewhere in the world, there was a downturn last year, but the investment volume was still higher than in 2019.

Why opening a start-up in the Czech Republic is profitable?

But in itself, the Czech Republic is interesting potential, too, according to the StartupJobs portal for 2022. Up to 40% of startup companies here survive even after ten years of operations. At least among those firms which were followed by the portal between 2012 and 2020, taking that as a rule and comparing it to the global statistics, only one in ten startups succeeds in the long run.

40% of the startups in the Czech Republic survive and have been in business for more than ten years.

Whether they have potential often becomes evident in start-ups after one and a half to two years of existence. If startups survive to five years, it often means that they can continue their activities. In the Czech environment, from more than 4,100 monitored startups of the portal StartupJobs, about 45 per cent of the firms closed their business within five years, over 55 per cent survived beyond the fifth year, and 42.2 per cent reached the age of ten years.

Today there are three unicorn startups in the Czech Republic. The online marketplace Rohlik.cz became the very first purebred unicorn startup back in 2021-after it secured an investment of 2.5 billion crowns. The second one appeared just a year later-namely Productboard. This firm secured a new capital from investors who included huge US funds amounting to $125 mil., i.e., 2.7 billion crowns in conversion. Right after this investment, the company was valued at $1.725 billion, i.e., 37 billion crowns at the time of writing. It means breaking through with the system the company developed to facilitate the work of product managers and turning it into a relevant tool for large companies and multinationals, but also for more than 2,500 startups. In March 2024, Mews joined them with its valuation exceeding $1.2 billion, i.e., 28 billion crowns. It specializes in software for accommodation services and restaurants. An investment of $110 million or 2.6 billion crowns sealed its status as a unicorn, making it the third official Czech unicorn.

These are three unicorns from the Czech Republic, but in fact, there might be many other startups with huge potential. According to a Deloitte survey conducted in 2022, for the majority of Czech startups, 66% of startups, the main motive for starting their own company was an original idea or solving a problem, and even 30% of the startups mentioned the subject of their business as an exclusive idea that is first in the world.

66% of the Czech startups are making original ideas or solutions to problems. 30% of the startups have an exclusive idea, and it is the first in the world.