The Czech Republic is taking concrete steps to support its growing startup ecosystem with the introduction of a new startup law.

This initiative, driven by the Ministry of Industry and Trade, seeks to address several challenges faced by emerging businesses, from financing gaps to regulatory obstacles, and aims to establish a clearer framework to help startups thrive.

Drawing inspiration from Spain’s successful model, which has been in place since 2022, the Czech government hopes to bring about similar growth.

Deputy Minister of Industry and Trade, Štěpán Hofman, highlighted that one of the key goals is to define what exactly constitutes a startup.

By doing so, the state will be able to implement tailored conditions to promote faster growth, increase investments, and improve the long-term chances of success.

“We are considering allowing pension funds to enter into risky investments, such as start-ups,” Hofman explained. This would address the frequent financing gap that hinders startup growth in the country.

Addressing Employment and Bureaucratic Challenges

Another significant aspect of the law is its focus on improving employment and bureaucratic conditions. Current employment practices and invoicing regulations are often seen as inadequate for startups, sometimes even encouraging informal labor practices. The new legislation aims to offer more flexible working hours and reduce the burden of bureaucracy on these businesses.

The Spanish Model

The Czech Chamber of Deputies’ Economic Committee has also encouraged the government to use the Spanish law as a model.

In Spain, only companies that meet specific criteria — such as age, innovation level, and target market — are eligible for benefits under the law. This stringent certification process ensures that only promising startups receive state support, providing a solid foundation for long-term growth.

With the right measures in place, such as increased investment incentives, the development of regional innovation centers, and improvements to technology transfer, the Czech Republic could see the birth of hundreds of new startups every year, with dozens achieving long-term success.

Reforming Bureaucracy to Attract Investment

Petr Glogar, an attorney at Sedlakova Legal, noted that founding a company in the Czech Republic still involves excessive formalities and administrative burdens, which can deter investors. A significant reform in these areas could attract foreign businesses, particularly from neighboring countries, to establish their companies in the Czech Republic.

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