CZ
BACKThe development of startups in the Czech Republic
Behind the technological boom in the Czech Republic is the development of startups. These are no longer garage projects with a yuppie life. More than half of startups make it through the first five years and 40% make it through the first decade and become established companies with a reach into foreign markets.
Startups in the Czech Republic employ over 150,000 people. At the same time, they face a high level of bureaucracy – Czech legislation throws sticks under their feet. They are therefore calling for a modernisation of laws and a technological transformation that would make the Czech Republic even more attractive.
Why are IT companies thriving in the Czech Republic?
What is behind the decision to have a foreign software company operating in the Czech Republic? It could be the promising talent and skilled workforce. The IT sector has used (and influenced) the Czech education system in an extraordinary way.
The relationship works as a special synergy. People are educated in IT because it is a well-paid field (the average IT employee earns around CZK 100,000 per month). Schools thus produce a number of educated heads in whom investors see potential for their own development.
The list of Czech IT projects is more than impressive. These are not just small startups developing customized software. Giants such as Avast, Unicorn and, last but not least, Seznam, which recently announced its entry abroad with the Mapy.cz application, are active in the Czech technology sector.
The number of IT specialists in the Czech Republic has doubled in recent years. Moreover, education does not end with a university degree. Companies are investing in training for employees, thus maintaining their value on the labour market. After all, it is not unusual for smart heads to turn over their heads in IT.
Will the biggest technology hub emerge in the Czech Republic?
In autumn 2024, news leaked that a CRA data centre will be built in Zbraslav. This would significantly open up the Czech Republic to foreign customers, to whom it would provide modern data infrastructure.
The intention of the technology hub is to serve any company, regardless of the business sector. The data centre will provide a modern infrastructure with secure data storage. The planned capacity is expected to be sufficient for giant multinational companies and is a roughly two billion dollar investment.
The investment in technology does not end there. We all remember the news about the construction of a gigafactory to produce batteries for electric cars. This will probably not go through in the end, which brings us to the opposite pole of the issue.
Are we cutting our own branch?
Although the technological importance of the Czech Republic is growing, we are not on a bed of roses. The biggest challenge for technology startups is the lack of infrastructure. Companies struggle with low levels of digitalisation, internet speeds and underperforming data servers.
This could open up opportunities for new companies. In conjunction with the onset, monster projects like the Zbraslav datacentre could emerge more frequently. Projects using artificial intelligence could be an engine for healthcare, education, manufacturing, transportation and other fields.
Yet investors are running up against the public sector. The tax system is not ready for future growth, some say, and there is no protective tax period for startups. In addition, most entrepreneurs consider the tax burden on employees to be inadequate.
Will the Czech Republic make its mark on the technology map of the world? Let us be surprised. However, at MEMOS Software, we do everything we can to ensure that our customized software enables smaller startups and established companies to penetrate global markets. With every successful project, the Czech Republic’s influence on the world of technology grows.
