Can Bosnia and Herzegovina turn its startup potential into real investment?

The institutional groundwork is still fragile, but visible. In 2024, Bosnia saw barely €3.6 million in venture investments, a number so small it borders on symbolic. Earlier this year though, the launch of the country's first domestic venture fund, Cloud Health EuroVentures, at Slush’D Sarajevo, is a sign that someone is willing to plant the flag, even if the soil is rocky. At the same time, a growing group of investors, some local and some diaspora-based, is cautiously testing the waters.

Why many believe and why many still hesitate

One of the most outspoken believers is Izet Zdralovic, partner at the Slovenian fund Silicon Gardens. As co-founder of successful startups (Microblink and Google-acquired Photomath) now part of global tech, he brings first-hand experience of building deep-tech products from the ground up. He argues that what holds the region back is not raw intelligence, but a deep cultural unwillingness to treat failure as a building block.

He puts it bluntly: starting a company that fails often becomes a shameful secret. On the stage during the Business Angel Summit (BAS) he shared a story about a young Swedish investor he met. The investor told him that his previous startup went bankrupt, but also that he learned from it and used that experience in his next venture. And for him, that openness simply doesn’t exist here.

He believes this silence around failure is one of the reasons the regional startup ecosystem struggles to learn and evolve.

Moreover, Silicon Gardens is deliberately positioning itself not just as a source of cash, but as an ecosystem builder. Zdralovic says the fund holds around €33 million under management, about 40 % of which has already been deployed across 17 startups. The goal, he explains, is to bring startup-founder experience to the region - not just money - and help founders think globally from day one, rather than limiting themselves to local markets.

He often raises what he calls the three gaps.

“The ambition gap - too many founders aim merely to serve local or regional markets, rather than build products for global audiences. The capital gap - while some funds do exist, they are still scarce, undercapitalized or regionally dispersed. Last but not least, the experience gap - a lack of mentors, success/failure stories, or investors with exit backgrounds who can guide new founders beyond technical execution,” he explains.

In his view, the region doesn’t lack brainpower. BiH, Croatia, Slovenia - they all have top-tier engineering and math talent. Also Zdralovic argues that one of the region’s biggest advantages is exactly what many see as its weakness: size. These countries are too small for a startup to scale locally, which creates a natural pressure for founders to go global from day one.

“We hit barriers at home, and it was the best thing that happened to us. If we can’t build something here, let’s build it globally,” he recalls about the early days of Microblink. His point is backed by an interesting comparison: the entire ex-Yugoslav market has around 22 million people - roughly the size of Scandinavia. Yet, Scandinavia produces between two and five unicorns per year. The Western Balkans produce perhaps one every decade.

Zdralovic points out:

That shows you the gap and the potential. For me as an investor, this region is full of opportunity. Every now and then you get to hear there’s an international company that employs 500 Bosnians - and I think: what are you doing? You are chopping the wood, shipping it to America, and buying expensive furniture. That’s what we’ve been doing here. A fraction of that talent should stay - not just as coders, but as founders and entrepreneurs building their own ventures.

Early-stage investors: trying to build a bottom layer

Some of the first actors at this bottom layer are B&H Business Angel Network (BHBAN) — founded in 2022 - and Banja Luka-based Vrbas Capital, launched in 2023. These networks aim to aggregate small capital pools, enable co-investment, and reduce risk for individual angels supporting early-stage startups.

Still, as the most recent comprehensive reviews show, angel investing and VC ecosystems are virtually non-existent in BiH. The levels of VC funding that BiH attracts each year stands in stark contrast to regional powerhouses like Croatia or Bulgaria, where tens of millions of euros flow annually into tech startups.

And while Bosnia still lags behind in volume and maturity, the first wave of structured investment activity has started to take shape. Vrbas Kapital’s Branko Kecman sees the same promise - but his experience reveals the harsh reality of Bosnia’s deal flow:

We have invested in five startups that operate not only in the region but globally. But the deal flow here is still limited and too small. We screened 250 startups to invest in five. Technical knowledge is there, but there is still a lack of business understanding. We also need to change legal regulations - how a startup is defined, categorized, taxed. That would help immensely.

Furthermore, while Kecman wants to invest locally, he does not want to do it at any cost.

“We would love to invest in local startups, but they must meet the bar. And many still don’t. However, when we invest globally, we can leverage that network and bring it here, have them look at startups in the region.” Kecman notes.

For Nina Dremelj, Managing Partner of Vesna VC, the first Slovenian-Croatian deep tech fund, the region’s biggest limitation is psychological - not only for being a founder, but for investing as well.

“We are always too modest. We believe we are not worth being angel investors. We believe we lack knowledge. We believe everyone can beat us. But it is quite the opposite.” she said.

Deep tech, Dremelj argues, thrives in places with strong STEM talent and stubborn resilience - two things the Balkans have in abundance. “The Balkans are strong. We are resilient. We are smart. The only problem is that we don’t know how to sell ourselves.”

Angel investing, in her view, is essential for breaking that pattern:

Angels do not need millions. They just need some extra money and the willingness to support eager entrepreneurs. Even failures are good. A founder who failed five times may be the one who creates the success story that brings everything back.

Investment readiness remains an issue

On the founders’ side, there are signs of change. As investors build networks and angel groups emerge, some teams are becoming more serious in how they present business plans, think about scaling, and build with global markets in mind.

That said, mentorship and real-world feedback are often missing. Business training, exposure to investors, and understanding of equity distribution, exits, and market-fit are still lacking — which makes many technically promising startups un-investable.

As Dremelj adds, there is the mindset shift as well, when it comes to what it takes for a company to become successful. “We need to move away from the classical paradigm where a company takes 20 years to grow and embrace a model where a company can scale in five years. That requires support and building the infrastructure to make it possible.” she explains.

Miron Lukac, Acting Director at Foundation 787 - a key ecosystem supporter in BiH - reflects on the last ten years with cautious optimism:

Bosnia’s ecosystem has been growing steadily. There are more events connecting stakeholders from founders to investors and early-stage programs giving startups a platform. For example, through BAS and similar events, early-stage teams can meet angels, ask for seed funding, and get feedback.

But Lukac also warns that being good technically is no longer enough. “A lot of our startups are very strong in the products they are developing and are experts in their technical fields, but they lack business understanding and awareness of what investors are looking for. This is what we are working on with them. In terms of their products, they are strong, but the business side needs to step up.” he explains.

The diaspora is also here as a critical piece of the puzzle. “Diaspora investors can bring governance standards, funding, global networks - and help shape angel investing into a sustainable model,” Lukac notes.

Investors still remain hopeful

On the macroeconomic side, the broader investment climate in the Federation of BiH (excluding the Republika Srpska entity) saw a strong uptick: in 2024, total realized investments across sectors exceeded €3.12 billion, a 10.2% increase year-over-year. However, most of those funds went into traditional industries - infrastructure, real estate, manufacturing - rather than tech startups. In this regard, angel and VC investing remains extremely rare, and the ecosystem is still nascent.

The startup directory and ranking site StartupBlink places BiH at 91 globally and 23 in Eastern Europe in its 2025 ranking - evidence that there is visibility, but also that BiH remains far behind regional leaders.

While there is broader investment growth in BiH, very little of it flows into early-stage startups. The money that does exist for startups remains modest, sporadic, and often dependent on foreign or diaspora-led networks. Despite the sobering numbers, though, many investors are adamant that BiH is not a lost cause - but a long game.

Zdralovic finds promise in the region’s ability to bootstrap, to work under resource constraints, and to build something out of nothing. He also argues that small seeds - even angel tickets - can matter if they are paired with mentorship and a global mindset.

“When someone sells a company, they often invest in real estate and miss the chance to give back to the ecosystem. They buy apartments on the seaside, turning it into a renting society, and over time, many end up working in service roles - hardly the point of entrepreneurship. In our case, when we exited Silicon Gardens, with its 20 or so LPs, we reinvested the capital into the ecosystem. This approach is crucial - it nurtures talent and allows the experience people gained at Microblink, working with various startups worldwide, to fuel new ventures and set a higher standard,” Zdralovic highlights.

For Lukac and other ecosystem builders, the key is consistency. More pitch events, more angel meetups, more diaspora involvement, and a regulatory environment that finally acknowledges startups as a distinct economic category - with tools such as ESOPs (employee equity), convertible notes, and fair tax treatment for early-stage companies.

But for this cycle to work, role models need to be visible. “Showing success stories and failure stories is what ignites the next generation.” Vesna VC’s Dremelj concludes.

All things considered, Bosnia and Herzegovina’s startup story is still being drafted. The country won’t leapfrog overnight, and nobody seriously building here expects it to. But the pieces are finally starting to connect: founders who’ve seen the world, angels willing to test the waters, diaspora slowly circling back, and a generation that doesn’t accept the old limits as fixed.

Story created by Bojan Stojkovski.