Former faculty spin-off changes ownership: Phonexia becomes part of South Korean fund's portfolio

Another company with roots in the Faculty of Information Technology has attracted the interest of a foreign investor and is changing ownership. Phonexia was founded in 2006 by six members of the BUT Speech / Speech@FIT research group. After two decades of successful operation and market penetration—today the company has dozens of major customers—Phonexia has attracted a major player from Southeast Asia. Its new owner is the South Korean investment fund Crescendo Equity Partners, which focuses on technology projects with growth potential. The fund invests in medium-sized companies often associated with hardware (and semiconductors in particular). However, as evidenced not only by the example of Phonexia, but also by the Belgian company iText, it does not shy away from the software sector either. The move can be seen as preparation for the company's further international expansion.

Phonexia has long ceased to be a small player, and we are not just measuring this by the number of employees (currently more than 50). It is an example of how successful a technology project from Central Europe can be when it is based on cutting-edge university research. Today, it can be described as a global provider of advanced voice solutions trusted by security and intelligence agencies and the military. In fact, the government sector accounts for more than 80% of Phonexia's customers. This is also due to the fact that the portfolio is designed specifically for the secure processing of sensitive data directly at the customer's premises. The company also offers one of the most accurate voice biometrics technologies in the world, which uses neural networks to identify a speaker in an instant. Its tools also enable cutting-edge voice analytics—speech transcription in more than 60 languages and the extraction of targeted information from audio recordings. Phonexia's products are also used by banks and call centers.

From bold faculty beginnings to a global player

Phonexia was founded in 2006 and is linked to the previous development of voice technologies and machine speech processing at the Faculty of Information Technology at Brno University of Technology, specifically within the aforementioned research group of "speech scientists." The faculty's budding scientists soon began to participate in selected international evaluations, such as those organized by the US government institution NIST (National Institute of Standards and Technology), and their excellent results led them to projects with government agencies such as DARPA and IARPA. The prestige gained, existing research projects with the Ministry of the Interior or the Ministry of Defense, and the publication of selected software on the faculty's website led to interest from external partners. However, the question arose of how to commercialize the research results. "At that time, we decided to give our efforts a more formal and effective form for cooperation with partners. We also needed the results of our research to be in a form that met industry standards and for the technology to be computationally executable on standard hardware," says FIT co-founder Professor Jan Černocký, summarizing the motivation for founding Phonexia in 2006. He and the other two founders, Lukáš Burget and Petr Schwarz, recall that in many ways they were pioneers in transferring technology to the private sector at the time and had to blaze new trails. The ties between the faculty and Phonexia were particularly strong in the beginning, with the company licensing and making intensive use of, for example, the phoneme recognizer developed at FIT for its early products. The staffing of key positions in the company changed over time – in addition to the three already mentioned, the co-founders included Pavel Matějka, Igor Szöke, and Tomáš Kašpárek; Černocký himself left the company's management around 2010, and the latter two took similar steps in the following years. On the contrary, Radim Kudla, who was put in charge of business development, and Michal Hrabí, who had led the company for several years, joined the team, adding new direct personnel links to FIT. Phonexia gradually expanded, and with that came the need to deal with many things beyond the technological product itself, such as sales and marketing. There were also more challenging times, such as the COVID period, when orders from the public sector were suspended. With the pandemic subsiding, the company's financial results accelerated, which can be considered fortunate timing given the current sales.

Even now, the company's cooperation with the research group of speech scientists and the Security@FIT group (in the case of the latter, for example, in the field of voice deepfakes) continues. This has resulted in more than 10 Czech and European projects, in which Phonexia acts as a commercial partner for university research, and a number of contract research projects. Phonexia is also one of the faculty's official partners.

Motivation to sell and the near future

When asked about the reasons for seeking a strategic investor, Petr Schwarz and Lukáš Burget cannot answer in a single word. "There were several reasons for the sale. We had the company for 20 years, and people's focus naturally began to change; it's a long time. We also felt the need to move the company to the next stage of development," comments Petr Schwarz, who also works as an assistant professor at the Institute of Computer Graphics and Multimedia at FIT. His colleague, associate professor Lukáš Burget, confirms these words: "With the prospect of increasing competition and large companies such as Google, we also felt that the company needed to expand, connect with a strategic partner with a portfolio of technology companies, and not rely solely on organic growth." Of course, the question arises as to whether the change in ownership structure will lead to a loosening of the company's ties to the faculty. "We emphasized continuity; we didn't want to sell the company for parts. On the contrary, we were looking for someone who would maintain ties to faculty research and possibly even strengthen them. The company has its own research group that conducts applied research, while the faculty represents the core of basic research with an overview of current global trends. We have a promise that this will be maintained," Burget summarizes the vision for the near future. After all, personnel continuity has also been maintained, symbolized, for example, by long-time team members and now executive directors Markéta Lőrinczy (CEO) and Zuzana Roznosovová (co-CEO).

When it comes to taking stock of his feelings over the past few weeks, Petr Schwarz sees it clearly. "Well, I haven't had time to catch my breath yet," he laughs. And to provide context for his entire situation, he adds: "Alongside this, I've been working for three years on a project to deploy AI technologies on emergency lines, and we're just finalizing that and preparing to continue. Lukáš Burget adds: "People ask us how it feels to start a company and now sell your 'baby'. But I don't want to talk about nostalgia; I'm looking to the future with optimism. We're staying at the faculty, working as we always have, and we believe that our cooperation with the company will continue to expand." Both are glad that the organizationally and time-consuming period of the sale has come to an end and that they will have a little more freedom for research.

This marks the end of one chapter in the life of the former faculty spin-off. We wish Phonexia every success on its future journey. And we hope that its story will be repeated by other companies that will emerge in the future from research carried out at FIT.