Cybersecurity companies from Brno reach global level: who’s next?

Lately, the local Runecast, a company who deals in the analysis of virtual environments, has drawn attention of investors, particularly the gigantic Dynatrace from the USA. And Brno played quite a role during its establishment, as its founders met when working here for a branch of IBM. Soon, though, the colleagues hailing from Bulgaria, Romania, Croatia, Kyrgyzstan, and Serbia set off in a new direction together which culminated in the sale of the company in 2023, allegedly for 37.5 million dollars.

“The partnership between Dynatrace and Runecast is a perfect harmony of vision and technology. It allows us to deliver our solution to the global audience while staying at the top of innovations in cybersecurity,” says co-founder Stan Markov, who remains the director of the company, describing the acquisition. His task will be to keep developing the service currently used by over three hundred organizations so far all over the world, including banks and healthcare as well as financial institutions.
 

From university to the rest of the world

The acquisition of Flowmon Networks by Kemp, later purchased by Progress from the USA, is among the major sales of companies from Brno. Once again, Brno and, more specifically, its university environment played quite a role there, as the company was established as a spin-off at Masaryk University.
  “We had been dealing in flow monitoring and behavioural analysis since 2010, and in 2020 these technologies broke through and drew the attention of major companies in the industry. These technologies as such are not enough, though. We need to show that the team and the company are doing well and already have some clients. We were No. 1 on the market in Japan and Central Europe, which – geographically speaking – nicely complemented the business of American bidders who were usually good in the USA and Western Europe,” says Jiří Tobola, explaining what the success was built on.

He believes that with each successfully sold company, a group of people emerges with good contacts, experience, and know-how in the industry who want to make use of it all. And this effect then multiplies the success throughout the entire region. “Brno and the Czech Republic in general have been attracting foreign investors thanks to their successful companies and the technical talent of the graduates from local universities. On the other hand, investors usually do the scouting through the size of the company, the industry it deals in, and the phase of development rather than through the region,” explains the businessman who is also a start-up consultant for the JIC innovation agency.

Brno’s first unicorn

This opinion on the important role environment plays in the success of companies is also shared by Karel Obluk, a partner in Evolution Equity Partners VC fund active in Europe, North America, and Israel that invests into growing cybersecurity companies. “Undoubtedly, there are lots of talented people in Brno and South Moravia who establish start-ups. However, our fund tries to see the bigger picture, that is to say, Central and Eastern Europe in their entirety. Numerous interesting ideas offer investment and business opportunities. At the same time, though, we still see some shortcomings in the business part. Not only in the Czech Republic,” explains the man who, as a CTO, succeeded in bringing AVG Technologies from Brno to the New York stock exchange.
  Speaking of the importance of the business model, he stressed an important lesson taken from the success of what used to be AVG, now under the wings of Gen Digital: “As good as the AVG technology was, it wasn’t really exceptional, globally speaking. The revolutionary thing about it was the business model Jan Gritzbach and Tomáš Hofer came up with back before 2000. They wanted people to use their AVG antivirus for free rather than buy it from their competitors. And thus introduced a freemium model, an absolutely innovative business model which helped AVG succeed.”

AVG is effectively Brno’s first unicorn – a company with a market cap exceeding one billion dollars. This milestone was achieved by Avast Software’s acquisition of AVG Technologies in 2016. The majority of the development centres of both companies has remained in Brno and Prague, with around 370 people currently developing end-point security products in Brno, most of them developers and coders, analysts, and online threat researchers.

Who’s next?