Author: Petr Šedivý, published 31. 01. 2026 13:30, source WIRED.cz
We like to talk about investments as stories of growth and success, much less about the moment when everything starts to fall apart. It is precisely then that one of the biggest, yet overlooked risks of investing becomes apparent in Czechia: weak and unpredictable enforceability of the law.
Photo: Freepik
Successful investment stories are easy and frequent to talk about, but the reality of investing also has its less attractive face. Project failure, a founder’s loss of motivation, or unwillingness to fulfill agreed obligations are not exceptions; on the contrary, they are a common part of the investment environment.
In such moments, the investor moves from negotiating strategies and growth into the legal realm, where it becomes very clear how solid the contractual safeguards are and how functional the Czech enforcement system is. And it is precisely here that an environment begins that betrays the investor. Although the risks of investing are discussed openly, far less is said about how difficult it is in Czechia to enforce even clearly defined obligations.
When a problem arises, the legal route is slow
If an investor decides to proceed purely by legal means—indeed, as they always should—they face a process that may look simple on paper but in practice is lengthy and demanding. Obtaining an enforceable title, a judgment, or a notarial deed with consent to enforceability is usually relatively quick, but only then do the real complications begin.
Enforcement proceedings, or insolvency, can drag on for months or years, during which the value of the project naturally declines. After insolvency proceedings are initiated, all individual enforcement is additionally suspended and the investor becomes just one of many creditors, often with a minimal chance of satisfaction. On top of that comes a high degree of formalism. A single incorrectly worded lawsuit, a delay of a few days, or an insufficiently specific contractual provision can mean a fundamental weakening or complete loss of the claim. Such a reality is in direct conflict with the idea that the law is the investor’s last, but reliable, safety net.
Good intentions vs. the impact on real enforceability
Czech legislation in the area of enforcement and insolvency has been constantly changing in recent years, often with the aim of protecting the weaker party or correcting past practice. These steps may be legitimate; nevertheless, the reality is that frequent changes increase uncertainty and create a complex environment in which it is difficult for an investor to navigate.
Debates about bailiff territoriality, changes to debt relief procedures, or adjustments to the insolvency framework show how legal certainty for creditors is not always a priority. And even though courts declare an effort toward faster and more effective decision-making, practice—especially in more complex or financially significant disputes—is completely different. Differences between individual courts, regions, or the approach of individual judges mean that the predictability of decisions is limited. For every investor this means only one thing: the legislative system does offer a path, but it will be uncertain, slow, and often economically disadvantageous.
“Already at the time an investor enters, it is crucial to assess not only the company’s potential, but also the founder’s personal qualities.”
The founder as a factor that can improve the framework—or destroy it completely
Although laws set the boundaries, the biggest difference in practice is made by the founder themselves. Their transparency, approach to problems, and personal responsibility usually determine whether it will be possible to address a crisis situation constructively, or whether the investor will end up in a protracted, expensive, and time-consuming dispute. A founder who communicates openly with the investor, shares difficulties early, and actively seeks solutions enables restructuring, contract adjustments, or a managed exit. Conversely, a founder who obfuscates, withholds information, or tries to siphon off assets forces the investor to resort to the harshest legal tools and thus dramatically worsens the chance of an effective rescue of the project.
That is why, already at the time an investor enters, it is key to evaluate not only the company’s potential, but also the founder’s personal qualities, and at the same time to have strong legal instruments prepared—from pledges of shares through sanction mechanisms to notarial deeds with consent to enforceability. And even that may not be a guarantee of success. At the end of the day, it is a combination of people’s character and the quality of the system, which no contract can fully insure. And that is precisely why an important part of investing is also accepting the fact that some risks can be managed, but never completely eliminated.
“Obtaining funds is becoming increasingly difficult and forces companies to inflate marketing and expectations beyond reality. Otherwise they wouldn’t secure capital.”
Impacts on society and an opportunity for change
Failures of individual projects are thus not just isolated stories of investors and founders. Taken together, they shape the entire investment environment and influence the behavior of the market and the public. Established practice, bad examples, and media coverage of the worst cases have at least two major impacts. The situation in the real estate market worsens, and at the same time the cultivation of the business environment and investors’ entry into companies—which are, after all, the drivers of the economy—slows down.
Most of the active population therefore prefers to avoid investing in stocks or companies and chooses almost exclusively real estate. Higher demand for real estate as the only “safe” investment then disproportionately drives up prices, which also affects ordinary citizens dealing with their own housing situation. This pressure at the same time encourages intermediaries and developers in their efforts to raise prices further. The circle closes, especially if we add the state’s limited ability to effectively change and set up the business environment.
It also has a negative impact on investors who invest in companies. Due to weak enforceability of the law, lengthy court proceedings, and high costs of collecting receivables, they are forced to seek riskier and highly profitable investment opportunities that cover these risks. However, this creates another barrier to the development of ordinary business and again worsens people’s ability to take responsibility for their fate and start doing business. Obtaining funds is becoming increasingly difficult and forces companies to inflate marketing and expectations beyond reality. Otherwise they wouldn’t secure capital. This, of course, increases the risk of projects and companies crashing.
A change in debt-collection practice toward greater protection of investors, as well as speeding up and simplifying court proceedings, would help everyone. However, society still retains the feeling that honesty is weakness and that an entrepreneur is automatically suspect. Which politicians are willing to take up this gauntlet and change the situation? The benefit would be society-wide.Copy link
The author is an experienced entrepreneur and investor. In 2016 he founded the investment club Venture Club and in 2017 the service company Venture Club Invest. Both organizations connect investors with innovative projects and support the growth of promising businesses.