Using artificial intelligence to prevent faults. A Czech startup received 160 million crowns.

Czech startup Neuron Soundware received 160 million crowns of funding from the EU and the TAČR program, succeeding as the sole Czech representative among a thousand applicants.

Core team of Neuron Soundware

They listen to the sounds of energy devices, transportation systems, factory production lines, and even escalators in the Prague metro; the recordings are evaluated by artificial intelligence algorithms. If discrepancies are found, responsible personnel are alerted, allowing them to prevent more severe failures. This is precisely what the Czech startup Neuron Soundware does, and it has now received support amounting to seven million euros (approximately 163 million CZK) from the EU Horizon programs and the Technological Agency of the Czech Republic.

“Thanks to this support, we will have resources for technological development, both for our hardware unit where we anticipate computation performance up to a thousand times greater using the latest chips with AI accelerators, as well as for the development of the entire analytical platform. The investment will enable further scaling of the service worldwide,”describes Pavel Konečný, the founder and CEO of Neuron Soundware.

The company succeeded as the sole Czech project among a total of 1,092 applicants in the European Commission’s EIC program, which focuses on so-called deep-tech companies. A total of seventy-five companies were chosen to receive financial support. According to Konečný, Neuron Soundware succeeded after evaluating the potential of IoT (Internet of Things) computing units and technology for detecting mechanical faults using neural networks for end customers.
Their technology is used by clients across the United States, Malaysia, Japan, Europe, and there is now emerging demand from Latin America. The exact number of installations or devices in circulation is not disclosed by the company. Investors are also aiding its expansion; in 2019, the startup received 150 million Czech korunas (CZK) from Czech fund J&T Ventures and Hungarian Lead Ventures, backed by the MOL Group and Eximbank.

“Neuron Soundware is among projects with the potential to assist global companies and have a significant impact on preventing disruptions in critical industrial equipment. That’s why I’m pleased they managed to secure additional funding,” says Martin Kešner, partner at J&T Ventures and founder of the Idea of the Year competition, which the startup won in 2016.

In 2019, the Czech fund Inven Capital, backed by ČEZ, also invested in Neuron Soundware, but left last year.”They opened a new investment fund and strategically decided to focus on supporting companies in later stages of development. By agreement, one of our investors bought out their share. They still have an interest in our success, including business cooperation within the ČEZ Group,” explains Pavel Trojánek, Vice President of Business and Marketing.

The current support from the EIC was approved in the form of so-called blended financing, combining grants for technology and business development. In addition to this, it also offered equity financing of up to fifty percent of the upcoming investment round. “We are preparing the necessary documentation and plan to conclude it this year (2023). The total investment is planned at six million euros. We have already initiated discussions with funds,”says Trojánek.

Neuron Soundware’s goal for the previous year was to achieve revenues of around one million euros, approximately 23 million Czech crowns. According to the official report for the period from January to September 2022, the net turnover reached four million Czech korunas. The previous year’s revenues (for the period from January to December 2021) amounted to 9.5 million Czech korunas. The company operates at a loss in the market.

“Supply chain disruptions forced us to rework a portion of our hardware technology. We had to postpone several projects. We focused on improvements where we made huge strides forward, so now we are capable of competing with the world’s best AI companies,” says Trojánek.

According to him, Neuron Soundware has started building a global partnership network that reflects its ambitions to become a reputable international player in artificial intelligence, machine learning, and Internet of Things solutions. The startup is optimistic for this year. “We believe we will surpass our ambitions. For us, contracts are crucial now, some of which are worth tens to hundreds of millions of Czech crowns. They will also generate long-term stable income for our company,” adds Trojánek.