PurposeTech, a Prague-based venture capital firm supporting founders in Central and Eastern Europe, has successfully closed its first fund, which had been oversubscribed, totaling €2.3 million. While smaller than traditional VC funds, it is the only one in the region focused on investing in angel and pre-seed rounds for startups transforming the health, sustainability, and education sectors. We spoke with Zdenek Fred Fous, Founder and GP of PurposeTech, to learn more about what sets the fund apart in the CEE region and how it aims to evolve from “being the new kid on the block” to becoming “a valuable and trusted part of the CEE VC landscape driving real change.”
What inspired you to start PurposeTech? How is your vision for this venture capital firm different from other funds in the CEE region?
PurposeTech was born out of a shared mission to support purpose-driven founders in the CEE region. We’re the only fund here that focuses on investing in angel and pre-seed rounds for startups transforming health, sustainability, and education.
I have been a founder for 15+ years, and my interest in purpose-driven entrepreneurship goes back even further. I don’t believe in the notion of a tradeoff between impact and returns at the early stage. That kind of tradeoff is something more mature, already successful companies can afford to consider. For early-stage founders, the real challenge is creating an impactful and profitable business because it takes twice the effort to make both aspects work together.
The challenge I see is that many investors don’t believe this — it's often viewed as one or the other. A startup is either laser-focused on returns, or it's not worth investing in, in simplified terms. We aim to find and back the excited and ready founders to take on that extra-hard journey because they can't imagine doing anything else.
At the same time, this approach offers a great opportunity for investors. There’s a growing group of founders who have the talent, ambition, and drive to build large, global companies — but their motivation goes beyond just financial success. They’re driven by the societal impact their company can create. Traditional investors often overlook these founders, so we can collaborate with them on fair and reasonable terms, avoiding the drama of chasing overhyped, overpriced deals.
What does your partnership with Impact Hub look like, and what role do they play?
We collaborate closely with key members of the Impact Hub Network, primarily the co-founders or managing directors of Impact Hubs in the CEE region. This partnership brings several key advantages.
First, we benefit from the long-standing credibility of the Impact Hubs, many of which have been around for over 15 years. Second, Impact Hubs are natural hubs (pun intended) for people passionate about areas like health, climate, and education — topics closely aligned with our focus. Finally, each Impact Hub is surrounded by a large and diverse community: experts, corporate leaders, angel investors, and more. By tapping into these networks, we enhance our investment efforts and create opportunities to support our portfolio startups through mentorship, partnerships, and additional resources.
I learned that your first fund ended up being oversubscribed. Can you share more about the fund size, who the investors were, and the usual investment amounts?
That’s correct — our initial plan was to raise a very small investment vehicle of 15 million Czech Crowns (around €600,000). After a few months of fundraising, we exceeded our expectations, raising a little over €1 million. At that point, we realized we had the opportunity to build a more substantial fund.
We decided to make a few initial investments while setting our sights on doubling the fund size to €2 million. After resuming fundraising in early 2024, we hit our stride, and by the summer, we reached our goal and oversubscribed the fund (again) at €2.3 million from 20+ investors.
By traditional VC standards, this is still a very small fund. However, we see it as a strong endorsement of our investment thesis. Now, we focus on working hard to deliver outstanding returns for our investors and thus validate our investment thesis.
Since you focus on health, sustainability, and education, what specific criteria do you look for when evaluating startups to invest in? How do you make sure they align with your mission?
Our top priority is the founding team — the most important factor probably accounts for 70% of our decision-making. Great founding teams come in many forms, and we go deep to understand their strengths, resilience, and ability to execute.
Next, we consider the size of the opportunity. Not every business has the potential to scale to a level that makes sense for venture capital, and that’s okay. But for us, investing in opportunities with true venture scale potential is important.
Finally, we look at founder-market fit. We ask ourselves: what makes this team uniquely and ideally positioned to succeed in this particular space? Whether it’s deep expertise, personal experience, or a unique perspective, we want to see a compelling connection between the founders and the problem they’re solving.
When it comes to mission alignment, it’s less about us imposing our values and more about evaluating the founders’ mission. They come to us with their vision, and we decide if we’re the right partners to help them achieve it. Our role isn’t to steer them in a new direction — it’s to support outstanding, purpose-driven founders in pursuing their mission. Sometimes, the best way we can help is by giving them the space and resources to thrive without getting in their way.
Having reviewed over a thousand startups, what trends or challenges have you noticed in the CEE pre-seed scene, especially in your focus sectors?
Funding in our focus areas — healthtech, greentech / climatetech, and edtech — has grown significantly in the CEE region, increasing from €590 million in 2018 to €1.7 billion in 2023. In 2023 alone, there were over 350 deals, with more than 150 at the pre-seed stage. While overall VC funding in the region dropped by more than 40% in 2023, our verticals proved unusually resilient, with only a 14% decline.
The main challenge is that many founders underestimate what it takes to build a successful, purpose-driven startup. They often come to us with a deep passion for solving societal problems but lack the skills, ambition, or strategic mindset to scale their ideas into high-growth businesses.
There’s a common misconception that startups in these sectors must choose between impact and financial success, but we reject that notion. Founders must excel on both fronts and the ones we back are ready to take on that challenge. Building a purpose-driven startup isn’t just about passion — it’s about having the grit, talent, and determination to create meaningful change at scale.
How do you help your portfolio companies beyond just giving them money? What kind of resources or networks do you provide to help them succeed?
Our primary goal is to help our startups secure their next round of funding so they can continue to scale. To do this, we work closely with founders to identify the key factors driving their ability to raise, mainly focusing on achieving meaningful traction. This primarily comes down to focused hypothesis testing, efficient user discovery, smart product sprints, and marketing experiments. When the time comes, we also help them connect with the right seed investors. Our close relationship with the Impact Hub Network is very beneficial across all those activities.
What are your immediate plans for PurposeTech, and what’s your long-term vision?
Right now, our main focus is on building a strong deal flow and making investments. We’re meeting founders, forging connections, and collaborating with investors and accelerators that align with our investment thesis. Being present in the ecosystem and building relationships is key to finding the right opportunities.
Our goal is to have 15 investments completed by the end of next year or sooner if possible. Once we achieve that milestone, our attention will shift to launching our second fund. Everything we’ve learned and experienced over the past two years will shape this next phase.
How do you see your fund impacting the startup landscape in the CEE over the next few years?
We’re the new kid on the block, surrounded by many outstanding, experienced investors and startup veterans. And we aim for PurposeTech to become a valuable and trusted part of the CEE VC landscape. However, to make a lasting impact on the region’s startup ecosystem, we need to think long-term.
The investors I admire most — those who’ve truly shaped their ecosystems — have been in the game for 20+ years. If we want to drive real change, we need to stay the course, grow with the ecosystem, and remain relentlessly committed to our learning and improvements.
