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Jaromír Zahrádka: Investments help science to serve people

jaromir zahardka_mensi.jpg

Jaromír Zahrádka

According to Jaromír Zahrádka, director of the i&i Biotech investment fund, investing in science is like the proverbial chicken and egg. If there is a lack of investment, no new projects are created. And without interesting projects, it is impossible to get investors interested. So how to solve this dilemma? Jaromír Zahrádka answers these and other questions in an interview for Vědavý

The fund was established last year and has so far a total of 45 million euros at its disposal. It plans to invest this money over the next five years in about 20 scientific startups, in close cooperation with the i&i Prague incubator and the Institute of Organic Chemistry and Biochemistry of the CAS.

Please try to briefly introduce the i&i Biotech Fund. What are you involved in?

We focus on investments in unique ideas in the field of drug development, diagnostics and medical technologies. We target early-stage scientific startups that often build on decades of research and have the potential for breakthrough discoveries. We invest to help them at a critical stage of their development. This is the period when they leave their laboratories or research facilities and lose their ability to access traditional sources of funding, such as research grants. At the same time, they are not yet in a position to compete for their first investors. We are trying to help them in their transition from purely scientific projects to functional companies.

How does the new fund help?

The fund gives us completely new opportunities to do so. And it's certainly not just about increasing the volume of investments we are able to make now. We have added experienced professionals to the team who have a wealth of experience with similar investments, which has significantly expanded our expertise. The fund is also built on standards that are common in Western Europe and the US. It is above all a transparent system with a precisely described investment strategy, clearly defined responsibilities of investors and managers and a precisely defined decision-making system. We want to set a certain standard and thus contribute to the cultivation of the overall environment. It is necessary to move on, because investing in the natural sciences unfortunately does not yet have much of a tradition in our region.

The fund was created in cooperation between the i&i Prague incubator and the European Investment Fund (EIF). How was the idea for its establishment born?

Let me go back in time. When we founded the i&i Prague incubator five years ago, we wanted to show that there are interesting ideas in the field of life sciences in the Czech Republic that deserve the attention of investors. We have drawn a lot from our close cooperation with the Institute of Organic Chemistry and Biochemistry of the CAS and from the experience of its technology transfer office IOCB Tech, which works well under the leadership of Professor Martin Fusek. Thanks to this, we knew the expectations that international companies and investors have when assessing scientific projects, and we knew what it takes to get them interested in a new technology.

At the same time, we had already built up quite a wide network of contacts from previous activities. Thanks to all of this, we have managed to find and support many unique startups over the years, and we have helped many of them to attract important strategic partners. Within the incubator we have built an interesting portfolio of promising startups, in which we have already invested over 70 million (Czech) crowns in addition to other support.

However, we felt from the beginning that this investment component of our business needed strengthening, if only to be able to attract more investors. That is why we decided to create a completely new entity that will specialise in investment activities. We we approached the EIF with our vision and they liked our idea. What followed was a rather difficult negotiation that resulted in the creation of the i&i Biotech Fund.

If I may make light of it, our whole business resembles the well-known saying about the chicken and the egg. If there is a lack of investment, new projects do not  emerge, but without interesting projects you will not get investor interest. I am therefore very pleased that we can now support the development of all elements of our innovatory ecosystem simultaneously. This gives the Fund the chance to access unique and well-proven investment opportunities that may not be available to other investors.

Could you describe more about how the negotiations with the EIF went?

It was a relatively long-term affair, with the first contacts and discussions taking place before the establishment of i&i Prague. The final phase of "courtship" lasted three years, with the last two being very intense. During that time we had to convince the EIF that we could invest their money well. We had to prove that we  could identify innovative scientific startups with interesting investment potential, that we  could manage the portfolio of these startups and increase  their value over time. In addition, we had to go through many formal processes. We were scrutinized on the overall setup of the fund, the transparency of its management, the functionality of its control mechanisms and the ethics of investing. Last but not least, we had to meet the general criteria of the EIF – for example, that the support must be directed to small and medium-sized enterprises (SMEs).

We are opening up to the world,  which will also help Czech projects


You have announced your first investment ventures. These are investments in the Austrian start-up Celeris Therapeutics, in the American company Dracen Pharmaceuticals and in the Czech-American technology start-up, Sampling Human. Although there is a significant Czech footprint in two of the three investments, it cannot be said that you are primarily focused on domestic startups. Is that right?

Yes, it is. When we founded i&i Prague, we decided not to focus purely on the Czech Republic, but to open up to the world, figuratively speaking. We did the same when we set up the fund. The reason is simple – by cooperating with foreign partners for a long time, we learn and gain invaluable experience. We can then use  this to select the most interesting Czech startups and help them become even better. This ultimately moves them forward and makes them competitive both in Europe and globally.

When looking for investment opportunities, we therefore focus primarily on the Central European region, which we know well and where we have many good partners. However, in the event of an interesting offer, we are also ready to support projects that originate outside this geographical area. Thanks to the fact that we are creating a portfolio composed of unique Czech and foreign startups, we increase the chances of success for the whole fund and attract the attention of other foreign investors who are not yet familiar with our region. This is not to say that we don't want Czech projects. On the contrary, we will be happy for them. Our advantage is that, in addition to investment, we can also offer them intensive support from the i&i Prague incubator.

What is your experience with the quality of Czech projects? How do they compare with foreign competitors?


We know from experience that the ever-increasing quality of science in the Czech Republic gives the opportunity for unique ideas, inventions and technologies that are no worse than similar projects from the USA or Western Europe. The difference is mainly in the mindset of the people  and the availability and quality of the supporting infrastructure, be it technology transfer centres, incubators or grant resources. I believe that, thanks to our Fund's approach, we will also gradually become fully integrated into the advanced European countries where we belong in the area of innovation and investment.

Let us move on. As you yourself have already indicated, investment in the natural sciences does not have much of a tradition in the Czech Republic. Could you explain at least some of the specifics that this sector entails?


Compared to other industries, investing in life sciences is more demanding in terms of knowledge and the amount of investment. We need to be able to assess the potential of new scientific discoveries, which entails the need to understand their nature and uniqueness. There is also a need for considerable flexibility, as the chosen technology is often developed towards an inappropriate application, so that the final use changes multiple times during development. The original business plan is constantly being significantly modified based on the results obtained. The better and more comprehensively you can understand, monitor or even direct the development of the entire project, the better your chances of success. Compared to other industries, there are also much stricter regulations.

The other side of the coin is that there is less competition in this field within the EU, which gives a relatively small and new fund like i&i Biotech the chance to get involved in top European projects. As far as valuation is concerned, if you manage to overcome the considerable initial barriers with your technology and obtain the necessary certifications, the value of the project will increase rapidly and you can find a place on a global level. But it's not just about the money. Investing in innovative science projects advances human knowledge and new technologies help people. And it's exciting to be at the start of a journey that may one day end up bringing new drugs to market or introducing new diagnostic methods.

Technology transfer? Like driving a car...


Let's now turn to technology transfer, a concept that is intrinsically linked to your work. How would you answer the question of what it is for a layman?


The whole process can be imagined, for example, like driving a car. At the beginning of the journey, i.e. during the initial research period, the scientist himself drives the car. The moment the project leaves the lab and develops into a functioning company, the driving becomes more and more challenging and the driving needs to be shared with professionals, experts and managers. The scientist then becomes much more of a navigator, showing where to turn, but the overall direction of travel must already be determined by market principles. During the journey, the crew is further expanded to include other passengers, such as economists, lawyers, patent experts and, of course, investors, who together ensure that the car does not run into a dead end, that any breakdowns are quickly repaired and that the car does not run out of petrol.

Some of the passengers will only ride for a short distance, others will become a permanent part of the crew, but it is only through the effective cooperation of everyone involved that the challenges of this challenging journey can be overcome. It is important to have working relationships in place, otherwise the journey can end at the first minor puncture. It is the establishment of fair partnerships and sufficient trust between scientists, their parent institutions, managers, investors and companies that I believe is the main task of technology transfer offices. Everything else then runs almost by itself.

What do you see as the biggest benefit that technology transfer brings?


Technology transfer, including various forms of contract research, generates billions of (Czech) crowns for Czech science and universities. It is therefore an important pillar of funding that can only be further supported. Above all, it enables the transfer of scientific discoveries from the laboratory into practice. It is a long and challenging journey, during which it is necessary to ensure sufficient funding, legal protection and the correct commercial direction of the original scientific idea.


The fact is that, without professional technology transfer, virtually no invention will achieve commercial success. This is also why many interesting results of science and research go unused and never help anyone. All major research institutions are gradually realising this, and technology transfer is becoming an increasingly important issue for the Academy of Sciences as well as for universities and other institutions.

Why should a scientific discovery be commercially successful? I am referring to the relationship between technology transfer and basic research...


Basic research pushes the boundaries of human knowledge, so the function is irreplaceable. Without it, no discoveries will be made, there will be nothing to transfer, and everything will probably only happen at the level of small innovations in companies. However, the aim of scientists should not only be to discover something new, but they should also think about whether they can help people with their discoveries. To do this, it is necessary to transfer successful ideas from scientific laboratories into practice, which is what technology transfer makes possible. Thus, technology transfer does not go against basic research, but instead constitutes a service needed to fulfil one of the primary functions of science, which is to improve the quality of human life.

Scientist as businessman?


The success of a startup depends not only on the idea itself or the willingness of investors to finance its development, but also on the skills of its managers. Where can you find such people?


Finding experienced managers with the necessary scientific background is more than difficult in the Czech Republic, but it is not easy elsewhere in Europe either. It is a question of when we will be able to change this, because science entrepreneurship has almost no roots here. This is a structural problem that will take time to solve. We can start, for example, by including subjects in the study of science that introduce students to the start-up as an interesting perspective for their life development and give them the opportunity to experience such work, for example through internships. Thanks to their creativity and imagination, science students and young scientists are very well-placed to become successful managers. If we allow them to get a good feel for the workings of a start-up during their studies, I firmly believe that many of them would actually start their own companies in the future.

Unfortunately, it still happens quite often that top Czech experts and scientists want to return after gaining further experience abroad, but we are not able to offer them  favourable conditions  to carry on further work in the Czech Republic. This problem could be partly solved by technology start-ups. By supporting them, we will not only enable the return of the investments we have made in the education of these people during their studies, but we will also start a positive spiral towards a knowledge-based economy with high added value. Fortunately, the necessary change is already gradually taking place, with the first successes appearing and more to follow. I am glad we are there.

In conclusion, what would you wish Czech science on its way to further successes?


I would wish it to finally get the necessary attention from politicians and other authorities. So that it does not have to defend its social need and its funding in such a complicated and repetitive way. Unfortunately, the current overblown bureaucracy and the eternal "presumption of guilt" often makes scientists more like bureaucrats, trying to comply with all the administrative requirements of grant and other agencies. In all this, they are left with relatively little time for scientific work itself, and it is difficult to carry out the more daring projects that can lead to groundbreaking discoveries.

Despite all these obstacles, however, Czech science is growing and producing unique results. It seems to me, therefore, that it is about time that we were able to recognise the potential that Czech science offers to our economy. However, I would like us all, first and foremost, to stop underestimating ourselves unnecessarily in the Czech Republic. At least in the area of science, technology transfer and smart investment, I see no reason to do so.

Author: Martin Kovalčík

Published on, the interview can be found in Czech here.

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