• Presto Ventures’ new fund will focus on dual-use technology startups
• The VC firm will enlist the help of Czechoslovak Group for optimal expertise in the field
• In the CEE region, this spearheads the trend of increased VC interest in Defense Tech and dual-use following Russia’s war against Ukraine

This June, the renowned Czech VC firm Presto Ventures announced the launch of its new fund – Presto Tech Horizons. As Presto Fund II slowly finalizes, Presto Tech Horizons will take the place of ‘Presto Fund III’ – with several specifications. The new fund of EUR 150M will run in close cooperation with industrial and technology group Czechoslovak Group (CSG).

The New Partners and Their New Fund

To an ITKeyMedia reader, Presto Ventures needs no introduction. One of the most active investors in the Czech Republic and the whole CEE region, the firm counts 60+ portfolio companies, geographically spanning all over Europe and beyond. Most recently, Presto ventures invested, among others, in Adam – the gig economy platform for home renovation.

CSG unites over 100 companies globally, developing and manufacturing cutting-edge products in the Aerospace & Defense niche. This includes ground equipment, transportation systems and vehicles, radars, military security and recording systems, and aviation systems. Tatra is the most famous CSG company.

Presto Tech Horizons will commit to supporting an array of the most promising technological initiatives emerging from NATO member countries and allied nations. The fund will pay special attention to companies developing dual-use technologies, i.e. those that cater to both civilian and security needs. Investments will be directed towards projects that enhance privacy and safety, as well as reinforce the security of businesses, institutions, and governments. The fund’s investment portfolio will span across diverse high-impact sectors including AI, cybersecurity, automation, robotics, logistics, defense, aerospace, mobility, energy, healthcare, and advanced computing. It will also include systems for critical infrastructure management and protection, employing technologies such as radars, drones (ground and aerial), lasers, and advanced sensors.

Defense Tech Entry Barriers and Overcoming Them

According to Presto Ventures’ partner Vojta Roček, the firm has been following the broadly understood Defense Tech sector for some time now, but there is a barrier of entry for investors. This barrier is the general inaccessibility of sector-specific expertise to evaluate the quality of technology and its commercial viability.

‘Tech entrepreneurs, on the other hand, are hindered by complex regulations, time-consuming processes, and the fulfillment of numerous formal criteria,’ the firm’s founder and managing partner Přemysl Rubeš adds.

However, CSG’s investment director Stanislav Kuba tells ITKeyMedia that there’s more to it. Apparently, there has always been a certain dichotomy on public narratives towards the defense industry in Europe.

On one hand, it has been considered both by EU and member states to be a strategic asset necessary for the European security, supplier of military and police forces, important contributor of innovations, and also a big employer and tax income generator. This is embodied by the existence of the European Defence Agency (EDA), which has support of the EU defense industry among its tasks.

On the other hand, in the context of EU taxonomy, Mr Kuba is convinced that there was a document in place that served as a kind of guideline for private banks where to invest, to whom bank loans should be provided, and the defense industry wasn’t considered to be a preferred partner.

Tech to Serve a Safer World

‘There have been and still are differences between policies of individual banks, but in general, they were reluctant to finance the defense industry, and the Russian aggression against Ukraine changed that. Not overnight but gradually. Today there is no doubt that the defense industry is the key pillar in protecting the values of democracy and human rights the EU stands for,’ Mr Kuba states.

‘In terms of becoming safer and more secure, I don’t see an easy path for Europe in the next few years. Correcting the current unfortunate situation will require a lot of coordinated effort from all EU states and institutions. Deploying cutting-edge, locally developed and manufactured technologies or solutions is certainly one way to jump-start this process. It’s a clear path forward, and everybody in the broader ecosystem can see that,’ Mr Roček adds.

Naturally, the world of technological startups stands at the forefront of this change. There indeed was some reluctance based on individual beliefs of some venture capitalists to enter defense or security projects. After the Russian aggression against Ukraine, more venture capitalists see the importance and huge potential of defense and security technologies.

Teaming Up with the Right Partners

Realizing the crucial importance of this sector to the Western world, Presto Ventures focuses on the category of global challenges it wants to tackle together with its prospective portfolio companies. To make it happen, CSG brings its top-notch sector expertise and world-class experience to the table.

Mr Kuba shares that CSG has been in discussions with several potential partners, but in the end chose to partner with Presto Ventures because of the dynamic way in which its founders operate, its admirably successful track record, and the enthusiasm about entering the field of defense and security.

‘We see in them strong dedication to our joint mission to make the free world safer and more prosperous thanks to new technologies and innovative products and, of course, create viable businesses and strong return of investments along the way,’ Mr Kuba states.

Applying Joint Expertise to Seek Out the Best

In the investment process, Presto Ventures and CSG will jointly evaluate dozens of the most promising projects from segments with a strong security component, mainly in the dual-use and defense sectors.

Mr Roček lists the key factors that the partners will consider during the assessment:

• The priority verticals are Defense, Security, and Aerospace with focus on dual-use
• The geography includes NATO countries and allied nations
• The investor is primarily interested in post-revenue companies of Seed, Late Seed, or early Series A stage raising a EUR 800K-8M financing round, looking to accelerate their growth
• Presto Ventures is ready to invest EUR 500K-5M

The official Presto Tech Horizons website describes the criteria for evaluation in more detail.

‘Together with Presto, we’ll identify opportunities and develop portfolio companies to deliver solutions with maximum added value and positive societal impact. We understand firsthand how challenging it is to transform research and development into industrial products able to succeed in the defense, security, and law enforcement segments, where they target not only private enterprises but also governments and their organizations. We’re prepared to share our experience with emerging innovative entrepreneurs who will become technological leaders,’ CSG’s owner and chairman of the board Michal Strnad concludes.