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Are there Enough Funding Opportunities for Startups in Serbia?

The Serbian entrepreneurial ecosystem has made significant progress in the last few years, culminating with EUR 123 million in investments in 2021. Could this trend continue? And what does it take to take the entire ecosystem to the next level?

The Serbian entrepreneurial ecosystem has been developing rapidly in the past few years. One of the main engines of growth is versatile funding opportunities for startups. But will the available funding opportunities enable the entire ecosystem to take a step forward?

At the beginning of 2022, the Digital Serbia Initiative (DSI) released the Startup Scanner, a comprehensive report on startups operating from Serbia. One of the report's main conclusions is that local startups attracted EUR 123 million of investments in 2021, which represents a 600% growth from 2020. Furthermore, the local tech-news website Netokracija reports that in 2021 local startups secured a record amount of foreign investments.

Such positive reports result from an improved investment climate in the entire startup ecosystem. The local funding landscape is much richer now, and startups can choose between several options:

  • Business Angels—gathered as a group around DSI, they have already invested and are actively searching for investment-ready startups.
  • Grants and prize money from different programs—always a handy option, especially for early-stage startups. Various donor agencies usually fund such grants.
  • Innovation Fund Serbia (IFS)—as one of the leading early-stage investors, IFS offers diverse types of funding and programs supporting startups in different stages of development.
  • VC Funds with offices in Serbia—such as ICT Hub Venture, TS Ventures, and SC Ventures—actively participate in developing the local startup ecosystem and contribute to the overall quality of startups.
  • Global VC funds that have invested in Serbian startups—an excellent role model and proof that international and reputable funds value local talents and businesses.

But is this enough to push the entire entrepreneurial ecosystem to the next level?

Nataša Škrbić from DSI believes that much has changed in Serbia, but that there is still a long way to go to keep the momentum and compete with other European countries:

Our startup ecosystem has changed tremendously in the last two years, and we are thrilled to be part of this development process! When it comes to access to financing we can see a few things: (1) More grant money is available from both the private and public sectors. We believe showing support for startups this way can do wonders, but we need to be careful not to overflow the market with free money. The reason behind this fear is the fact that startups get too cozy receiving money without being encouraged to penetrate the market and test the waters, thus slowing down their growth. (2) We finally have an angel network that supports early-stage startups with the smart money, offering funds and knowledge to those who have taken the startup journey before. We hope the startups will recognize the importance of this and reach out to angels at even earlier stages than they do now. We are excited to see what it brings to the ecosystem a year from now, and we see support organizations as key stakeholders in charge of keeping the momentum!

However, despite general progress, there are still challenges ahead. One of the most significant gaps in the funding landscape of the local ecosystem is expertise in managing and running investment instruments for startups. Unfortunately, there is insufficient knowledge in this area in the Serbian startup community. Since none of the startup investment instruments existed before, there is no institutional memory or knowledge transfer that could fill the void.

Luckily, this is where the Swiss EP could help. With a vast network of experts worldwide, the Serbian team successfully met demands from local organizations asking for specialized and tailor-made assistance and guidance. For example, Digital Serbia Initiative and Natasa Skrbic worked extensively with Maria Carolina Romero, who helped establish and manage the angel network and related financial instruments. Also Marko Stutz worked with the team on valuation. At the same time, ICT Hub Venture and Milos Matić received support from Lukas Marek on exploring ways to attract capital for upcoming funding. As a result, both organizations, DSI and ICT Hub Venture, improved their expertise and services.

The startup ecosystem in Serbia is growing year after year. However, there is still much work to be done to secure continuous growth. One of the significant challenges for the future remains to secure stable funding mechanisms from both the private and public sectors. In addition, funding opportunities available at the moment should become permanent to ensure the constant flow of fresh startups into and through the ecosystem.

Hopefully, with the energy and momentum we're seeing in the ecosystem now, and with a diverse and quality offer of different financial instruments, the Serbian startup ecosystem will continue to grow and expand. Or, as Natasa put it:

The startup ecosystem feels like it's about to shoot fireworks!

And we're looking forward to that show.