The rise in Prague’s popularity as a general destination for tourist and expats is no secret. Sandwiched between Western and Eastern Europe, the city’s centralized location makes all of Europe conveniently accessible in a way that fosters collaboration and innovation. There is no wonder why Prague received so much support and interest from both sides of the continent.
Market Watch
If you google anything related to “best European city to build a startup,” Prague will most likely be highly ranked on whichever list that surfaces. There are practical reasons for this. First, there are the common characteristics that you can find across all of Eastern Europe — extremely qualified engineering talent, relatively low cost of living and labor, and finally a growing hunger for entrepreneurship.
A little less uncommon, especially for Eastern European cities, is the flow of capital into Prague’s startup scene from both local and foreign investors. A primary motivation for investment in to companies in Prague stems from legal and tax implications. The city makes for an attractive business center as the country imposes a rather low corporate tax rate (roughly 19 percent). According to a Deloitte report released for 2014, Prague received investment from funds based in Switzerland, Germany, Czech Republic, and Poland. On top of that, the country secured €3.4bn from the EU’s Horizon 2020 R&D fund, €68m in venture capital. Captured by Czech startups alone.
The money isn’t going to waste either. Popularity in industries such as cybersecurity, SaaS, gaming, social media, and mobile applications is rising. Successful companies in these spaces have already been cropping up over the past decade including Warhorse, TeskaLabs, TCP Cloud, and Neuron Software. Foreign companies are also establishing satellite offices in Prague, iFlix serving as a prime example.
Connecting Two Worlds
The strategic interest in Prague from all sides of the table establishes the city as an epicenter that connects two worlds — emerging markets with matured ones. The example of iFlix mentioned earlier illustrates this very phenomenon. iFlix was founded and based in Kuala Lumpur, Malaysia, a city whose startup ecosystem we explored earlier this year. The product itself is a video-on-demand platform that services emerging countries. By moving a core part of their team to Prague, they have opportunity to continue to grow in a much more mature startup market while maintaining a cost effective workforce. Prague not only connects markets from a economic and business sense, but also in a literal and geographical sense. Location is key as the city is positioned in both Central and Eastern Europe, leveraging absorptive markets on both sides from cities like Berlin, Vienna, Krakow, and Sofia. Foreign investments are much easier when the neighboring country is just a 2 to 4 hour train ride away.
Seasoning Mentorship
Despite everything that works well for Prague, it isn’t the perfect storm that most entrepreneurs who are based there would want it to be. One essential piece of the puzzle that lacks heavily is access to mentorship. The city doesn’t have that many legacy startup companies outside of the well known Avast, cyber security company considered to be one of central Europe’s oldest unicorns. Even with the influx of investment, most investors do not provide the typical guidance and expertise that you commonly see in more matured markets.
Some may be quick to write off mentorship as a tertiary ingredient in a boiling pot of innovation. However, I would argue that a large deficit in mentorship within any startup ecosystem is comparable to having all of the ingredients necessary but no recipe to follow. In fact, we have noticed similar situations within our microecosystem and amongst our entrepreneurs at Rokk3r Labs and 10xU. Through some of our new offerings, we have been able to offer mentorship to many of our community members and by far it is the most valuable product to them. Not only does it improve the entrepreneurial journey for a single member or company, but it helps to boost the overall caliber of the ecosystem all together. For a promising market like Prague, there is no better way to cultivate talent and innovation than to actually put a seat at the table for seasoned entrepreneurs, investors, and experts alike.
For our Global Entrepreneurship Series, Rokk3r Labs’ Jide Adebayo is on a journey across the world digging deeper into entrepreneurs’ stories, understanding the universal investor mindset, and connecting the global collective genius.
We are excited for you to follow the journey, engage with the stories and share your experiences from the region. You can also read Jide’s personal anecdotes and connect with him over at jideadebayo.com.
More from the Rokk3r Labs Global Entrepreneurship Series:
- Portugal: Lisbon Tech Punching Above Its Weight
- Serbia: From Outsourcing to Entrepreneurship
- Thailand: Carving out a Space on the Entrepreneurial Map
- Cambodia: Kingdom of Mystery
- Vietnam: Resisting and Reinventing
- Kuala Lumpur: A Melting Pot of Culture, A Recipe for Ideas
- Kuala Lumpur
Rokk3r Labs is a venture builder and the world’s first ‘cobuilding’ platform for entrepreneurs, corporations and investors to create exponential startups. In 2017, Rokk3r Labs launched Rokk3r Fuel EXO, its first global venture capital fund. As a partner, Rokk3r Labs increases value, mitigates risk and helps to remain at the edge of innovation. With a focus on leveraging exponential technologies (e.g., the blockchain, artificial intelligence, and Internet of Things) and implementing new-age methods of raising capital, Rokk3r Labs is harnessing the global collective genius to cobuild companies that change the world. Currently, the Rokk3r Labs portfolio includes over 40 ventures. Visit www.rokk3rlabs.com.
