What investors face in North Macedonia’s startup market

Startup rise meets resistance

Over the past decade, North Macedonia has seen a gradual rise in entrepreneurial activity, fueled by young, tech-savvy entrepreneurs and increasing interest from both local and international investors. Yet, behind the optimism there is a hard truth: this ecosystem faces persistent, structural challenges — a limited domestic market, outdated regulations, and a founder mindset often stuck on local validation rather than global ambition.

VCs, angel groups, and individual angel investors alike recognize these obstacles as real and significant challenges that can slow the pace of startup growth and make early-stage investments riskier.

Many investors also believe that as startups in North Macedonia gain more experience, build stronger teams, and refine their products, they will better adapt to the demands of a competitive, global investment landscape. However, while some are gaining traction, many still struggle to position themselves for scalable success in a fiercely competitive global market. For investors, solving this conundrum demands patience, education, and an eye for founders who dare to think bigger.

Regulation still out of reach

Based on known investments and market trends, total VC funding in North Macedonia from 2020 to 2025 is conservatively estimated at $20–30 million—significantly lower than in neighboring countries like Serbia, which raised nearly $20 million in 2024 alone.

Zephyr Angels, a non-exclusive network of business angels, is one of the few players that want to change this perception when it comes to investing in early-stage startups across North Macedonia. Founded a year and a half ago, the network has already made five investments, including participating in a €350K pre-seed round in climate intelligence startup EarthCare.ai, alongside South Central Ventures (SCV).

While VC funds like SCV target scalable, high-growth startups, angel investors—such as those at Zephyr Angels—play a vital role in nurturing early-stage and promising ventures. Igor Mishevski, an investor with Zephyr Angels, says that their approach is to invest between €20K and €60K, mainly in pre-seed and seed stage deals. The network also organizes four investment events annually, where startups pitch to its 60 angel investors, 20 of whom have already made investments. However, angel investing in North Macedonia still faces significant administrative hurdles, making such investments challenging. As Mishevski notes:

There are many small bureaucratic barriers that slow the process down. There is currently no legislation that formally recognizes angel investing as an activity. For example, there are no tax incentives or easements—if an angel investor backs 10 startups and loses money in 9 of them, they still have to pay capital gains tax on the 10th success, without any ability to offset the losses. As an angel investor, you shouldn’t have to deal with these kinds of burdens.

For instance, registering business angel participation in a startup’s ownership structure is a complex process, and banking regulations often require manual documentation for each investor. “When investing through convertible loans in startups registered abroad (such as Estonia, the US, or Bulgaria), the National Bank requires the loan to be formally registered, documenting that a Macedonian resident is lending to a foreign entity. For equity investments in domestic startups, public institutions and banks sometimes demand that founders—and even business angels—be physically present to complete certain administrative procedures,” he explains.

The importance of angel investing lies in its role as the earliest form of validation and support for young startups—often at a point when traditional financiers are unwilling to take the risk. For instance, four of their five deals that Zephyr Angles made have seen follow-ons from funds like SCV. Yet, angel investing here still remains “a tangled, manual process”, as Mishevski points out.

Hence, the main challenge is a lack of streamlined legislation for angels that creates friction and slows capital flow. Recently, North Macedonia’s economy minister Besar Durmishi outlined that a new law is being drafted to formally regulate business angel activity in North Macedonia. The legislation will define who qualifies as a business angel, the conditions under which they can operate, and the incentives they will receive—including tax benefits.

While the draft law aims to tackle these pain points by providing a clearer framework and potential tax incentives, its adoption has been slow and, as Mishevski adds, it's still not far enough along to make a real difference.

Seeking global scalability

South Central Ventures, with offices across Southeast Europe, including Skopje, has been a significant force in the region since 2015. Eli Zhabevska, a principal at SCV, notes that their first fund of €41 million made 29 investments, five of which were in North Macedonia.

Their second fund, closed in 2022 at €57 million, has already backed three Macedonian startups, including EarthCare.ai, Konceptiva, and Pixyle. Thus, SCV remains the largest active fund over the past decade, with over €7 million invested in Macedonian startups, followed by a handful of smaller angel networks and emerging funds.

On the positive side, Zhabevska notes that over the years, the Macedonian ecosystem has matured significantly and attracted investments from CEE-based VC funds as well. “There is now a much better understanding of equity financing, how to position startups to attract VC funding, and which types of products to prioritize,” she says.

The fund has seen success stories originating, or having roots in North Macedonia, such as InPlayer, a digital asset monetization platform which was acquired by global SaaS video platform JW Player in 2023.

Then there is Cognism, a sales intelligence platform with roots in North Macedonia that effectively launched its early operations there. Now headquartered between the UK and Croatia, the company is seen as a potential unicorn and stands as one of the region’s most prominent startup success stories.

Still, Zhabevska believes there’s work to be done—especially when it comes to the mindset of attracting VC investments. Too many founders are focused on survival rather than scale. She says:

Founders often focus on reaching breakeven or maintaining frugality rather than pursuing high-growth strategies. We need a mindset shift—toward high growth and better startup pitches. Also, many startups still lack breakthrough ideas that can truly change something. That’s what we need—real solutions for big problems in big markets.

Additionally, one of the core challenges facing the local startup scene is a mismatch in expectations between founders and investors. She adds: "VC isn’t about giving founders a better salary or helping them live comfortably for a few years. It’s about scaling the business—strategically thinking on how to enlarge the organization and how to build something that can grow fast and sustainably. Also, the first round is usually to get you on the radar, and then you need to keep up the momentum and aim to raise more. From that perspective there’s still some gap in understanding how the VC world works and how your startup can fit into it."

For venture capital firms like Inovo.vc—a Polish fund managing €107 million—the Macedonian startup ecosystem is still viewed primarily through the lens of challenges rather than opportunities.

Stefan Krstevski, an investor at Inovo.vc, advises startups to think beyond the Balkans: "There’s no shortage of VC money available in North Macedonia—many funds have already invested in the region. The bigger challenge lies in mindset. Too many founders are thinking locally, and their products often lack the level of innovation needed to succeed globally."

While the fund has made one recent investment in Serbia, Krstevski points out that the limited total addressable market (TAM) in the Balkans makes it difficult for startups to achieve the scale required for significant exits, such as IPOs or acquisitions. “For a fund like ours, we’re looking for outcomes like IPOs, acquisitions, or major M&A deals. That typically requires US VC participation, which means startups need to be active in the US market, have clients there, and offer a highly innovative product that can outperform global competitors,” he explains.

Unfortunately, many Macedonian startups adopt a “safe” approach, validating their products locally before attempting to enter larger markets like the US, often arriving too late to compete effectively. Krstevski says:

Many fail to answer the fundamental question: Why you, and why now? Investors need to see a bottom-up case—your TAM, your customer base, and metrics like ARR. And this data is often missing.

The case for a national VC fund

While efforts to catalyze early-stage investment in North Macedonia are gaining momentum, legislation alone won’t be enough. Cultural mindsets and limited investor awareness continue to be major obstacles.

That’s where Zephyr Angels is stepping in. Through training sessions, open events, and educational initiatives, Zephyr is also working to build a new generation of informed investors and help shift long-standing attitudes toward startup financing.

There are signs of progress. Startups like EarthCare.ai, backed by both Zephyr Angels and SCV, showcase the potential for collaboration between angel networks and VCs—a dynamic that could be key to fueling the country’s startup pipeline. But scaling these early wins requires deeper coordination and a broader investment base.

Zhabevska also highlights the importance of storytelling—not just pitching. “We need more storytelling to create FOMO around the region’s opportunities. Founders need to craft compelling narratives that attract international investors.”

Another conversation gaining traction is the creation of a standalone vehicle that will be tailored to the local context and capable of backing early-stage ventures with initial tickets that will allow them to build their MVP, get initial traction and be ready for international expansion. For Zhabevska, the need is clear.

“We definitely need more support and capital for earlier pre-seed investments. There’s enough understanding and talent; the question is whether ROI would be achieved. There needs to be a mix of state support and smart market positioning.” she adds.

The local ecosystem, she argues, is already large enough to support such mechanisms.

“What’s great is that there are now various players. That creates more opportunities for us as a fund. The capital is there—we just need the right opportunities.” And while return on investment remains a key focus, SCV also sees its role as shaping the broader regional landscape.

“Of course, we care about ROI, but we also want to make an impact in the region. Our focus remains on supporting entrepreneurship in our region, with both capital and network,” Zhabevska says.

In this sense, Zephyr Angels is also contemplating a transition of its own, and possibility of evolving into a micro VC fund, though with a deliberate and phased approach. The group is exploring mechanisms like special purpose vehicles (SPVs) and micro-funds to bridge that gap—specifically by engaging Macedonian founders and investors abroad.

“Right now, as Zephyr Angels, we have the freedom to choose when and where to invest. With institutional funding, that flexibility changes—you’re obligated to deploy capital. But we’re open to co-investing with other VC funds, and we see this collaborative model as the way forward. Ideally, it would be a blend of private and institutional capital, allowing us to stay agile while scaling our impact. So we do see ourselves becoming a VC fund with private capital, but only when the time is right,” Mishevski concludes.

With such pieces of the VC landscape slowly falling into place, the real challenge lies in aligning them into a coherent entity. The energy around early-stage investing is real, driven by players who are not just writing checks, but actively shaping the local narrative around what a startup ecosystem can look like.

However, it’s clear that capital alone won’t do the heavy lifting. What the country needs now the most is a culture shift—one that normalizes risk, celebrates entrepreneurial storytelling, and creates space for experimentation in capital deployment. Whether through micro-VCs, SPVs, or hybrid models that engage the diaspora, in order to succeed the next phase will require structure, discipline, and trust, embedded in the ecosystem’s core.