STARTUPS

IN SERBIA

STARTUPS
IN SERBIA
A glance
at the startup
ecosystem
in Serbia

A study conducted for and on behalf of the

German-Serbian Chamber of Commerce by:

Christoph Berndt, CFA

Founder and Managing Partner
A glance at the startup
ecosystem in Serbia 1
of Strategy Map Belgrade / March 2019
 STARTUPS
IN SERBIA

FOREWORD
AND
ACKNOWLEDGEMENTS
Over the course of conducting
this study, I met with various
startups, hubs and incubators,
investors, initiatives and net-
works, and one thing that all
stakeholders have in common
is the goal to promote the
local ecosystem and startups,
to help, and to share.
I had the pleasure to engage in interesting conver- Miljana Srejić and Jelena Jovanović (PKS); Milan
sations and to discuss views, projects and numbers. Dobrota (Agremo); Ivan Bjelajac (MVPWorkshop);
Not only were the discussions open, I was also let Bojan Rošić (Microsoft Development Center Serbia);
in on the good and the bad of various startup Vuk Guberinić (CarGo); Igor Bogićević (SevenBridges
journeys as well as the latest ideas and ambitions. Genomics); Miloš Milisavljević and Tijana Manitašević
Vujčić (Strawberry energy); Alex Migitko (Blinking);
In particular, I would like to thank the following Andrej Kravčuk (CUBE Team); Branimir Rakić
people for sparing their time and helping me to (OriginTrail); Vuk Nikolić (TruckTrack).
put this study together:
And a big thank you to Bjørn Sloreby, Susanne
Zoja Kukić, Nemanja Djordjević and Nebojša Đurđević Solberg and Tove Hellesylt (DRIVE Oslo) for layout
(Digital Serbia Initiative); Patricia Gannon; Jovana and design.
Vasić, Jelena Petrović and Nevena Janković (BITF),
Pavle Krivokuća (Impact Hub); Ljiljana Bjeličić All conversations and discussions are greatly
(Startup Centar); Miloš Matić, Kosta Andrić and appreciated and thank you once again.
Dušan Vukanović (ICT HUB and ICT HUB Ventures);
David Schoch and Nebojša Lazić (StartLabs); Vuk Christoph Berndt, CFA
Djukić and Jan Kobler (South Central Ventures);
Milena Kostadinović (Innovation Fund); Milan Šolaja
(Vojvodina ICT Cluster); Milovan and Milica Matijević
(sito); Miloš Lazović (Swisscontact); Željka Motika
(Motika Law Office, Serbian Blockchain Initiative);
Damjan Damjanović (HealthTechLab); Aleksandra
Tomanić, Ana Smukov and Alexander Beetz (GiZ);

Christoph Berndt, CFA

Founder and Managing
A glance at the startup
ecosystem in Serbia 2
Partner of Strategy Map Belgrade / March 2019
 STARTUPS
IN SERBIA

TABLE
OF
CONTENTS
Foreword and acknowledgements 2
1. Introduction and scope 4
2. Macroeconomic brief on the Serbian economy 6
3. A glance at the ICT sector in Serbia 8
4. Overview of the talent base 10
5. The local environment and framework for startups 12
6. The startup infrastructure 14
Cornerstones of the support system 15
A national initiative for digitalization 19
7. General overview of startups in Serbia 20
Local startups in numbers 20
About success and failure 22
8. A closer look at Serbian startups 24
Industry and sector coverage 24
Everybody is talking about blockchain 25
Development stage 26
Target customers and markets 26
Selected success stories 27
Successful startups that managed their exits 33
9. Availability of funding and the role of investors 35
Funding overview 37
Active investors 38
Crowdfunding as a source of financing 44
10. Conclusions 46
11. About the German-Serbian Chamber of
Commerce and the author 48
12. Glossary 49
13. Appendix: Deal tables 50
14. References 52

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1 INTRODUCTION
AND
SCOPE
The Serbian economy is
known to be centered on
traditional industries and
sectors and less known for its
entrepreneurs and startups.
This has been changing in
recent years in light of the
growth exhibited in this area
and the success of local
startups internationally.

Nordeus created the most downloaded and played Compared to the entrepreneurial hotspots in
football game ‘Top Eleven’, Seven Bridges Genomics developed markets such as the U.S., UK, or Germany
has become a leading biomedical data company spe- the Serbian startup ecosystem is rather small, (still)
cializing in software and data analytics, and Fishing- in an early stage and it remains fragile. But it is
Booker is the world’s largest online travel company nevertheless buzzing, growing and evolving.
for fishing trips. Attention and media coverage was
also elevated through recent transactions around Local companies have started to observe the
Frame and 3Lateral. developments in the startup ecosystem and some
have increased their engagement also as a way to
The aforementioned companies are a few examples enhance their corporate innovation. And the Serbian
of a much more vibrant ecosystem. They serve as government has lifted digitalization and startups
guide and motivation for new ventures, that it is on its priority list, but it remains to be seen which
doable to create a great startup from Serbia. There actions will be taken to foster this development.
may not yet have come a unicorn from Serbia, but
there are some very interesting and successful The study takes a closer look at the Serbian
startups reflecting the ingenuity and capability of ecosystem and is a snapshot of a changing
local entrepreneurs. environment with information and insights on the
current state. It aims to shed a fair amount of light
So while there may be lots of good ideas and on each of the main participants, i.e. the startups, the
excellent technical skills, starting up in a smaller support system provided by hubs and incubators,
market has some drawbacks. Access to funding and of course the investors. A particular focus is laid
is a dominant issue and seems to hold back the on startups and their journeys, deriving conclusions
ecosystem both in growth and development. Also on what in general is needed for startups and the
accessing international markets for selling products ecosystem to develop better and faster.
or solutions requires skills and expertise that are
not readily available in the ecosystem. In the following, a startup shall be defined and
characterized as a business in its early development
stages (usually up to 5 years), typically started by

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1 INTRODUCTION
AND SCOPE

the founder or a small team of founders (generally

a team of 3 to 4 people), with the goal to solve a
problem in an innovative way. These entrepreneurial
ventures are in search of a repeatable business
model, that can be scaled very quickly, but which
is also subject to high uncertainty.

In contrast to other sectors and industries, startups

are usually in early stages of their ‘corporate’ life-
cycle, built around an idea that may fail, and some
startups may not even be incorporated. Therefore,
traditional methods of measuring and categorizing
companies do not necessarily apply. Hence, a small
disclaimer on completeness of information seems in
place. The study is based on information provided
by companies and organizations deeply connected
and working with startups, however, it cannot claim
completeness regarding the number or classification
of startups in the market.

Overall, this study intends to provide a glance at

a very interesting, innovative and fast developing
area. The brief on the stakeholders is intended to
facilitate not only understanding, but active outreach
and ideally contribution. The ecosystem will benefit
from external input and resources, intellectually,
financially or otherwise. And with further interest
in Serbian startups, more of the local ideas and
projects can be supported.

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2 MACROECONOMIC
BRIEF ON THE
SERBIAN ECONOMY
The Serbian economy has left
the struggles of the financial 5.0
GDP and GDP forecast
(in%)

and economic crisis behind 4.0

and has entered on a growth 3.0

path in recent years that is 2.0

expected to be maintained 1.0

in the years to come. 0.0

-1.0

-2.0
2013 2014 2015 2016 2017 2018 2019 2020
Source: National Bank of Serbia, IMF World Economic Outlook

The Serbian government succeeded in consolidating The goal of sustainable growth is in reach with GDP
the public budget and to reduce the overall level growth expected to be in the region of 4% annually.
of debt (in 2017, the debt-to-GDP ratio dropped While the pre-crisis growth was mainly driven by
by 10 percentage points to 58%)¹. The outlook on consumption, it is now based on the country’s
growth is positive and comes from improvements investments, private consumption and exports.
in the fiscal system which are also reflected in
the recent budget surplus for 2018. The GDP in 2018 is set to reach a 10-year high of
4.2%, while 2019 is expected to be around 3.5%.⁴
The positive outlook has also been considered in
the recent rating update by S&P (country rating Future growth depends on addressing structural
of BB with positive outlook)². An upgrade to issues relating to a large and modestly reformed
investment grade rating (BBB), which is the public sector and gaps in the country’s
declared goal of the Finance Minister for 2020³, is infrastructure. In addition, Serbia is dealing with
in reach in the near future if growth is sustained a shrinking population and ‘brain drain’ in the
(and is not negatively affected by macroeconomic form of emigration of young and educated people.
developments in the Euro zone), public debt is fur-
ther reduced and the economy is not otherwise The positive trend in economic growth and
affected by external imbalances. activity is also reflected in the employment
statistics, with unemployment rate decreasing
Another corner stone for the economic develop- from 22.1% in 2013 to 11.3% in Q3 2018, which
ment is the latest arrangement with the Interna- translates into an employment rate of 49% or
tional Monetary Fund (IMF) signed in July 2018 just over 2.1 million jobs in a country of 7 million
which will help anchoring economic and fiscal people.⁵ While Serbia will continue to encounter
stability. This 30-month policy coordination current account deficits of ca. 5% of GDP,
instrument aims at maintaining macroeconomic these deficits are lower than those seen at the
and financial stability and progressing structural beginning of the decade (around 10% of GDP).⁶
and institutional reforms.

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2 MACROECONOMIC BRIEF
ON THE SERBIAN ECONOMY
Historic inflation and inflation Foreign direct investment
projections (EUR bn)
5.0 2,5

4.0 2

3.0 1,5

2.0 1

1.0 0,5

0.0 0
2014 2015 2016 2017 2018 2019 2020 2013 2014 2015 2016 2017
Source: National Bank of Serbia Source: National Bank of Serbia

These current account deficits are expected to be receiving half of all investments. 2018 shows a
fully financed through foreign direct investments similar distribution with an even stronger focus
(FDIs) which have seen a significant increase in on manufacturing (31%).
recent years. FDIs reached a new high in 2017
with EUR 2.5bn flowing into the country, how- FDIs have also led to a strong increase in exports
ever 2018 is set to even exceed this mark, as EUR of goods and services, which in turn makes
2.0bn were recorded after three quarters already.⁷ Serbia quite dependent on the confidence
investors have in the country.
Notably, the EU represents the most important
investor with over 70% of FDIs (both 2017 and There are also improvements in the monetary
2018). With the Netherlands leading the list of system as the National Bank of Serbia (NBS)
investing countries, Germany has moved to third has worked effectively in recent years to keep
place after matching its prior year investments inflation low and relatively stable which led to
of ca. EUR 185mn already after Q3 2018. Note an anchoring of inflation expectations.
that this represents only the origin of the funds,
not the location of ultimate decision making. Inflation clearly stayed within the band of ±1.5%⁸
around the target rate of 3.0%, and inflation is
Investments are however still directed towards expected to remain below the target midpoint
traditional industries in Serbia, with construction and in the current year.
real estate activities together with manufacturing

FDI by Region in 2017 FDI by Sector in 2017

NL 21%
2%
AT 10% 6%
13%
4% 21%
IT 8% 25%
5% 3%
DE 7%
5% 8%
EU 25% Construction & RE 25%
RU 7%
EUR Manufacturing 25%
EUR
CH 5%
7%
2.5bn 10%
2.5bn
Financial sector 14%
12%
UAE 5% Wholesale & retail 12%
8%
CN 4% ICT 8% 25%
R.0.World 6% 7% Agriculture 3% 14%
25%
R.0.Europe 2% Other 13%
Source: National Bank of Serbia Source: National Bank of Serbia

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3 A GLANCE AT
THE ICT SECTOR
IN SERBIA
The IT sector, and in particular
the software industry, is the
fastest growing sector of
the Serbian economy. Many
companies were established as
outsourcing centers providing
programming services and the
like, but a significant portion
of these have advanced and
adjusted their business models
to also develop their own
products.
Belgrade and Novi Sad stand out as the most Software exports account for 90% of ICT exports
prominent locations, both in terms of number of and represent 2% of GDP.
employees and company revenues.
A new milestone with software
The Serbian economy is still dominated by tradi- exports reaching EUR 1.2bn
tional sectors such as manufacturing, construc- was achieved in 2018.
tion, whole sale and retail as well as agriculture.
ICT has been increasing in recent years and con- On the other side, domestic IT spending and
tributes 5% to GDP, which is in line with European investment is significantly falling behind in
averages that fall in the range of 3% to 6%. ⁹ international comparisons. Companies worldwide
invest about 3.5% of their revenues in IT, while
In terms of investments, the ICT sector received in Serbia these investments account for only
close to EUR 200 million or ca. 8% of FDIs coming 0.7%. A similar picture is drawn for employment
into Serbia in 2017 (see previous chapter). of IT professionals. Companies abroad have on
average over 5% of their employees in IT, while
The increase in ICT exports over the last couple of IT employment in Serbian companies is just
years is remarkable and is driven by an ongoing shy of 2%.¹⁰
demand for software development as well as
outsourcing of services from companies abroad.
Annual growth rates are above 20% for this period.

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3 A GLANCE AT THE
ICT SECTOR IN SERBIA

GDP composition ICT exports

(EUR mn)
1,400

15% 1,300

1,200
47%
Manufacturing 15% EUR 12%
1000
Construction & RE 12% 39.2bn
Wholesale & retail 11% in 2017 800

Agriculture 6% 12% 600

ICT 5%
6% 400
Prof.services 4%
4% 5%
Other 47% 200
Source: Statistical Office of the Republic of Serbia
0
2013 2014 2015 2016 2017 2018
Source: National Bank of Serbia

The ICT sector in Serbia counted in 2017 about Overall, innovation is a key driver for the industry
2,400 companies and employment for ca. 42,500 in order to stay relevant and competitive in
people. A main part of the ICT sector is held by international markets (90% of Serbian IT
the telecommunications subsector, with almost companies conduct business activities abroad).
16,000 employees in 250 companies. In the IT However, there is little cooperation with R&D
subsector, there are about 2,150 companies and institutions in Serbia as only one third of the
200 are being newly established every year, the companies have established some kind of
majority of companies are classified as software collaboration with the R&D sector.
companies (over 60%), accounting for 18,000
employees of the 26,500 in IT. Employment The competitive advantage of the sector lies in
numbers in software development exhibit the good quality of the products and services,
also a year-on-year growth of over 20%.¹¹ high responsiveness to client needs and
specialized programming skills. On the downside,
With respect to compensation, there is of course the supply of skilled labor lacks behind the
a large range depending on job specifications and demand, there is ongoing brain drain and local
the location. However, salaries in IT are clearly IT companies can do better in terms of product
above average salary of ca. EUR 420 per month. sales and marketing skills.¹³
Average pay in the software sector is EUR 1,450,
while the outsourcing subsector pays EUR 1,700
on average.

Also the Government of Serbia has identified the

importance of the IT industry for the country’s
competitiveness. With its ‘Strategy for Development
of the IT Industry for 2017-2020’, the government
plans to invest into retraining of workforce and in
infrastructure, as well as to improve the business
environment. In addition to a delay of one year
for adoption of the strategy, the IT community
argues that important issues are addressed,
but concrete actions are missing for most items
of the strategy.¹²

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4 OVERVIEW
OF THE
TALENT BASE
There are over 260,000
students enrolled in the
universities and higher schools
in Serbia, across various fields
and levels of education. The
interest in ICT subjects is
clearly visible from the growing
number of students in related
studies. More than 16% of all
new students in 2017 enrolled
in ICT-related studies.

ICT programs are held at 51 institutions for higher Technical Science and Natural & Mathematical
education, out of which 13 are state-owned Sciences in Novi Sad form the backbone of the
universities, 19 private universities, 18 state- IT education.
owned (vocational) colleges, and 1 private college.
While established companies in the ICT industry
Students prefer higher education (academic may prefer to hire workforce with higher education
studies as compared to vocational studies) by qualifications (about three-quarters of all hiring),
a clear margin (67%) and choose state-owned formal education is less relevant for startups
schools (78%), which in turn can be explained (there is no tick-the-box HR procedure), as above
to some extent with their reputation, but also anything else skills and know-how are sought
because private education is not for free.¹⁴ after, not degrees.

A similar dominance can be seen for locations. Nevertheless, Serbia’s higher education system
While ICT studies are available in 23 cities across cannot keep up with market demand, both in
Serbia, Belgrade and Novi Sad are ahead in terms sheer numbers and qualifications needed in
of number of institutions and students alike. When the market. There is a necessity to change the
looking at graduation numbers, about 5,500 ICT curricula in higher education to cover knowledge
experts graduated in 2017. Taking other related and skills that are required from software
technical studies into account, this number engineers and the like in their future fields of
increases to ca. 12,000 or 23% of all graduates.¹⁵ work. Informal education and self-acquired
knowledge has bridged that gap so far in the
With about 1,300 IT graduates each year, the market. Widening the IT knowledge base is
faculties of Electrical Engineering, Mathematics also important and has started by introducing
and Organizational Sciences in Belgrade, the programming in elementary schools.
Electronic Faculty in Niš, and the faculties of

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4 OVERVIEW OF
THE TALENT BASE

Students in ICT studies ICT enrollment by location 2017/18

15.000

14.000
22%
13.000
46%
12.000
4%
11.000 Belgrade 46%
5%
Novi Sad 19%
10.000
2014/15 2015/16 2016/17 2017/18
Niš 5%
Čačak 4% 19%

Other 22%
Source: Sito

The majority of IT graduates will find a job in local Serbia continues to loose skilled people every
IT companies. However, international demand in year with estimates around 30,000 per year
this area has also led to an increased outflow of (2015 saw emigration spiking up to ca. 60,000).¹⁶
IT graduates and young professionals.

Brain drain is a major concern for

the local industry with respect to
its future competitiveness,
as well as for the country.

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5 THE LOCAL ENVIRONMENT

AND FRAMEWORK FOR
STARTUPS
Startups in Serbia, given they
are incorporated, are dealing
with the same issues as any
other company, i.e. bureaucracy,
widespread but not integrated
administration, a slow and in
many ways outdated legal
system, a financial market that
is shallow and not integrated
in international markets, and
lots of paperwork.

There is no particular framework Previously adopted incentives provide exemptions

for startups in Serbia no real incentive with respect to taxation of salaries. For example,
system, no concrete guidance, exemptions are granted for 2 years for employers
who hire people that have been registered as
nor some other form of encouragement for tech unemployed for more than 3 months and are
or innovative ventures to start a business here. under the age of 30. Other employment incentives
Existing incentive schemes aim at reducing unem- provide the possibility for employers to apply
ployment in general and are mostly tax-related. for a refund of salary tax and social security
contributions for newly hired employees
Truth to be told, it is in fact quite easy (even (subject to certain conditions on the employment).
though paper-based) to incorporate a company,
but this is not the typical path startups are taking. The Serbian Parliament passed amendments to tax
In most cases, these ventures formally incorporate laws, including the laws on personal and corporate
rather late, usually when they are about to receive income tax, at the end of 2017 introducing tax
funding (either from investors or in form of grants). reliefs for salaries paid to employees in newly
It is not a business driven decision to account for incorporated legal entities. In particular, salaries
costs and expenses related to turning the idea paid to the first nine employees as well as to
in a product or conducting R&D. Hence, especially the employed shareholders and entrepreneurs
startups in the early stage simply continue their are fully exempt from salary tax and social
venture as a team working on a solution, without security contributions for the first 12 months
formalization of their business. Incorporation of employment. The exemptions are applicable
implies for many that strings would be attached for entrepreneurships and legal entities
and dealing with bureaucracy and government established before December 31, 2020.
administration.

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5 THE LOCAL ENVIRONMENT AND

FRAMEWORK FOR STARTUPS

More recent amendments to the law on corporate

income tax were passed at the end of 2018,
introducing specific incentives for the IT sector, as
R&D will be tax deductible in the amount double
than the actual costs incurred. Another incentive
relates to investment in startups. Companies
that invest in the equity of newly incorporated
companies performing innovative activities may
be entitled to tax credits of 30% of the investment
(capped at RSD 100 million or ca. TEUR 840).

The issue with the aforementioned tax incentives

is that they relate mostly to employment. Early-
stage startups may not be registered, and if they
are, these companies usually do not employ many
people. Secondly, if startups grow and start hiring,
they look for highly skilled people, and software
developers are in high demand anyway and less
likely to be unemployed.

As for the incentives related to investing in

startups, it remains to be seen if this is a practical
tool to create sufficient impact and investment
volume from new investors and companies.

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6 THE
STARTUP
INFRASTRUCTURE
A community for and exchange
between entrepreneurs in
Serbia has been in place even
before the term ‘startup’
reached Serbia. But what we
refer to as ‘startup ecosystem’
has been developing and
growing over the last decade
and includes startups,
investors, and equally important
a support system which is
made up of hubs, incubators,
various organizations and
recently also the Digital Serbia
Initiative.
The aforementioned stakeholders cooperate, Most programs for startups last about 3 months
openly share and communicate with each other and cover relevant areas of finance (planning and
and external parties. They actively contribute to the budgeting), marketing and sales, legal aspects,
ecosystem and are connected through a mission product verification and go-to-market strategies,
to foster this ecosystem, to make it work and to among others. However, it seems that these
grow it. Despite the growth of the ICT sector and programs offer similar content and address
success of various startups in recent years, the startups in general, without further specialization
common notion is that the ecosystem is still in its or specific sector or domain focus. Hence, there
early development phase and very fragile, especially is competition among the incubators and
to external effects of the economy and politics. accelerators, and it does occur that a startup
goes through several programs. Events seem
There are various hubs, incubators and accelerators to duplicate topics and there is an overlap in
that provide a number of programs, seminars and mentors, experts, speakers and audience.
events for entrepreneurs to connect, learn and
develop. A common aspect is that all centers offer Nevertheless, the community is well connected
coworking space which is not exclusively for the and there is a growing network of people who
startups in the respective programs, but open to contribute. Also media coverage (in addition to
people with a wide range of ideas and interests. the social media activities around the ecosystem)
Designers and programmers sit side-by-side to has been picking up lately on news and topics
architects or businessmen. The renting of desks related to local startups.
and office space is ultimately covering costs for
the hubs and is an important aspect of their
financing.

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6 THE STARTUP
INFRASTRUCTURE

In order for the ecosystem to strive and electrical engineering) would receive more
further, a better coordination and interest as well.
some sort of consolidation among
the hubs and incubators seems Cornerstones of the support system
necessary. The following provides an overview of the main
contributors and organizations actively engaged
At the moment, there is no specialization or in developing, shaping and supporting the startup
focus on specific startup groups or topics and the ecosystem.
programs offer in principle a standard guideline
for building a startup. But each startup is different SEE ICT AND STARTIT
and so are their journeys. A critical point that is
missing is the direct exposure to potential clients SEE ICT is a Belgrade-based, grass-root and
and customers early on, which is not part of the non-profit organization established in 2010 with
startup programs currently being offered. Early the mission to provide meaningful support to the
verification of ideas, testing and failing is crucial. Serbian technology and startup scene, to foster
Also, many startups target international markets higher employment and economic growth.
(given the limited size of the market at home and
the region), but have not had any exposure to In a mutual effort together with the Ministry of
these markets. Being from Serbia does not mean Culture, Startit was founded in 2012 with the goal
that one cannot travel and explore, get inputs and to improve the capacities of the local IT community
experience that is helpful in making the product to start innovative and successful entrepreneurial
relevant and hitting consumer demand. What endeavors. The activities and programs have
stops a startup from going to the U.S. to attend a reached more than 100,000 people and a
conference or spend time in a hub or accelerator significant number of investment rounds in
and exchange with other startups in the same Serbian tech startups were raised by startups
domain? This is equally true for any B2B-oriented from these programs.
startup. A face-to-face meeting is always better
and builds more trust that is indeed needed in a Since then, Startit has developed into the most
high risk set-up. popular tech media space in Serbia, and Startit
centers were opened across the country to provide
Hubs and accelerators can provide links and physical working and meeting space for the
introductions much better and foster exchange. community, which are being visited by 25,000
It does not mean that the startup will pack bags tech professionals and enthusiasts every year.
and relocate the next day, but it is about valuable
experience that can then be shared locally. And Startit Centar
when in doubt of where to work and live, the pure The first Startit Centar was founded five years
cost aspect of building a startup here will always ago and centers can now be found in eight cities
be in favor compared to locations in Western (Belgrade, Inđija, Novi Sad, Vršac, Zrenjanin, Valjevo,
Europe or North America. Subotica, Šabac) across Serbia. They provide work-
spaces for 60 to 200 people depending on the
On the other hand, and similar to the overall location, while the Belgrade center is also home
economy, external input is needed to shift the to a VR lab. The centers run numerous community
ecosystem. A new player with international events and education programs for current and
experience and outreach would greatly contribute future IT professionals and are in partnerships
through a new approach, different methodologies, with all relevant companies from the field.
mentors and contacts to VCs for funding and
potential clients. And maybe other areas (such as The centers are supported by local partners,
medtech or robotics, which can tap into a strong including Nordeus, Telekom Srbija, Tradecore,
resource and knowledge base from mechanical Société Générale, Microsoft, among others.

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6 THE STARTUP
INFRASTRUCTURE

Startup Academy between companies and startups, as companies

The academy is an accelerator and has been may seek for inputs and ideas for their own
the first in Europe to become part of Google’s innovation, while startups can test their ideas
new development program: Google Launchpad. and products and get much needed market
The latter is a global acceleration program that feedback, expert opinions and potentially a client.
helps startups build and scale great products by Cooperation partners include local corporate
matching them with Google’s people, network, heavyweights such as Société Générale,
and technologies. Delhaize, VIP mobile, NIS and Philip Morris.

The academy, now in its seventh year, trains and ICT Hub further realized the need for additional
educates startups in the fields of product and vali- funding for startups in the early stages and
dation, marketing and sales, business development together with local businessmen set up ‘ICT
and investments, etc. The program is supported Hub Ventures’ in 2017 (see section 9, ‘Availability
by experienced mentors and well known entrepre- of funding and the role of investors’).
neurs, who share experience and advice first hand.
BUSINESS TECHNOLOGY INCUBATOR OF THE
More than 120 startups have gone through the TECHNICAL FACULTIES BELGRADE (BITF)
academy and went on to raise more than EUR 5
million in investments. 15 companies that were The BITF incubator is located in the Science and
successfully built are now generating EUR 20+ Technology Park Belgrade and has been estab-
million in revenues. Among the alumni are recog- lished as a partnership between the four technical
nized startups such as Alchemy, Fishingbooker, faculties of the University of Belgrade (Civil Engi-
Farmia, and many more. neering, Mechanical, Electrical and Technological/
Metallurgical), the Municipality of Palilula and the
ICT HUB Democratic Transition Initiative.

ICT Hub was launched as part of a public private It was the first incubator established in Serbia
partnership between DNA Communications and back in 2007 with the mandate to encourage and
Orion Telekom together with USAID in 2014 as an support young and technically educated people
incubator for technology entrepreneurs. It started in starting up their own businesses in Serbia and
out in the Science and Technology Park, and to provide further support in the early stages of
moved to the Belgrade city center in 2017. business development.

As the other hubs, ICT Hub has created programs The BITF provides startups with office and
to educate startups and to provide necessary co-working space, conference rooms and other
mentoring and support in business development, facilities, including a workshop with 3D printers,
including the outreach to partners and investors. etc. Training programs for startups are organized
The hub has been working with about 20 early to cover financial planning, intellectual property
stage startups each year since inception. rights, product sales and marketing skills, etc.
It is backed by numerous mentors and business
Under the label ICT Hub Playground, the hub counsels (for legal, accounting and administrative
provides coworking space for up to 90 people aspects of small business), as well as a network
and a place where the local startup community of companies and supporters.
can meet and connect and where trainings and
seminars are held. There is also a small lab to With only 5 startups applying for the program in
work on and test tangible prototypes. 2008, over 40 applications are now received each
year, while from the 90+ startups that went through
ICT Hub has moved on from being a sole incubator the program, over 80% are still active and employ
and increased its links and cooperation with over 500 people. Alumni include HTEC, MBrain-
companies. The overall idea is to be a connector Train, TeleSkin, 3HeroesStudios, and many more.

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6 THE STARTUP
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The Science and Technology Park is a good Over the four years with the program, the hub
example of how innovation and startups can be held over 2,000 conversations with startups
supported. This has been recognized by the Serbian that yielded 1,000+ applications out of which
Government and transformed last year in an 110 startups participated in the program. After
undertaking to create technology centers in various completing the program, 11 managed to receive
major city across Serbia. This is part of a wider external funding, either in form of grants
initiative to invest into the IT infrastructure with (7 startups), or as direct investment (4 startups).
planned investments of EUR 65 million over the
next three years. The European Investment Bank STARTUP CENTAR
is providing a loan of 60 million for this purpose.
Startup Centar is an incubator for students of all
A new Science and Technology park in Novi Sad faculties that want to learn about entrepreneur-
is about to be completed, and the foundations for ship and build their companies. It was established
the park in Niš were laid at the end of 2018. Other in 2017 and is located at the Faculty of Economics
innovation centers are planned for Čačak, Bor, in Belgrade as a result of the cooperation between
Zaječar and maybe Kraljevo. the faculty and MVP Workshop. It is one of the
rare programs that directly targets students
IMPACT HUB as entrepreneurs.

Impact Hub is already in its fifth year in Belgrade The program is run twice per year with 4 teams
and located in the very center in the former per semester and is split in a 3 months’ learning
facilities of Radio Belgrade. It is a true meeting and work phase with mentors and another 3
point for entrepreneurs and social innovators and months’ phase for developing the ideas with
offers coworking facilities, standalone offices and additional coaching. The project is set for five
meeting rooms. It is part of the global Impact HUB years and so far 25 students completed the
network with 100+ locations in 50+ countries. program, 5 startups were launched and 70
lectures and workshops were organized.
Impact Hub hosts regular events and programs
to educate and support entrepreneurs. Among NOVA ISKRA
other things, startups can apply for the bootcamp,
which is meant for companies that have already Nova Iskra is a creative hub, founded in 2012
created a prototype and that aim for the global in Belgrade, that hosts a variety of designers,
market, however, with a focus on the U.S. market. researchers, entrepreneurs, activists and
About 10-15 teams are chosen each year for the innovators. It has 2 locations in Belgrade, in Sava
program, which is in turn supported by 20+ Mala and Zemun, and is set to open another location
mentors and international experts. Among in Dorćol. All locations provide workspace for over
the supported business are urbigo, whisperr, 320 people mostly in coworking spaces, but also
woobox, to name a few. ¹⁷ offer meeting rooms and some private offices.

The price tag stands at about EUR 500 and the The company runs numerous events, lectures and
trainings address business competences in general seminars and education is endorsed through own
(market research, pricing, cash flow planning and programs, mentoring, webinars, creative camps,
budgeting, etc.), with a focus on sales skills (proof workshops, multidisciplinary working groups,
of concept, sales funnels, and product/market fit, peer-to-peer exchanges, etc.
etc.). Needless to say, it offers networking and
potentially easier access to finance, including Nova Iskra was acquired in September 2018 by
Impact Hub’s Venture Growth Accelerator (see rent24, a global coworking and coliving company,
section 9, ‘Availability of funding and the role of founded in 2015 in Berlin.
investors’).

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ICT CLUSTERS SWISSCONTACT

ICT clusters are business organizations with the Swisscontact is an independent business-oriented
mission to represent and develop the IT sector foundation for international development
in Serbia, and to provide institutional support to cooperation, represented in 36 countries. It has
local IT companies. been in Serbia for about 4 years with the focus
on supporting the support system, i.e. to build
The objective is to increase the visibility of Serbian capacity and know-how in the ecosystem.
ICT by building a strong network of international
contacts, creating new business opportunities The foundation contributes by engaging
for the members, compiling industry reports and international experts to actively work with hubs
data, lobbying for improvement of the business and incubators in their startup programs for
environment, and popularization ICT, both in several weeks. The goal is to bring the contributors
terms of generating more ICT professionals and in the ecosystem closer together and to increase
through enabling more penetration of these the quality of the various programs to ultimately
technologies in other sectors of the economy. make an impact on the success and survival of
the startups.
The first cluster was established in 2010 in Novi
Sad (Vojvodina ICT cluster), which has now over More than 70 international experts contributed
30 members and an outreach to over 4,000 directly to various programs and initiatives over
IT professionals. Other cluster include the ICT the last 3+ years.
Network Serbia Cluster, Niš Cluster of Advanced
Technologies, ICT Cluster of Central Serbia, IT OTHER NOTEWORTHY INITIATIVES
Cluster Subotica and Zrenjanin ICT Cluster.
With the exception of Startit and their centers
BIOSENSE INSTITUTE in various cities in Serbia, hubs and incubators
are located in Belgrade. The business incubator
The BioSense Institute (Research and Development (poslovni inkubator) in Novi Sad is another exception.
Institute for Information Technologies in Biosystems) Since 2010 the incubator supports startups in the
was founded in 2015 to foster multidisciplinary field of information and communication technologies
research in the fields of micro and nanoelectronics, and creative industries, organizes events,
communications, signal processing, remote trainings and workshops, and provides 20
sensing, big data, robotics and biosystems. offices or co-working spaces.

It combines two prominent sectors in Serbia, EastHub is an accelerator that helps innovative
ICT and agriculture, with the goal to support companies from Serbia to reach big markets.
the development of sustainable agriculture. The It literally takes the startups and brings them
institute brings together relevant stakeholders, over to the U.S. to educate them and to establish
including government, ICT community and access to funds. It is supported by the Serbian
agricultural producers. Chamber of Commerce. The hub conducted the
first call for startups to join the program in October
The institute coordinates or participates in a large 2018. After the pitch in December, 4 companies
number of international research projects, including were selected to take part in the training program
Horizon2020, FP7, Eureka, among others. The in the U.S. covering sales/marketing, finance,
BioSense Institute plays an important role in business development, etc. with support from
innovation acceleration with more than 50 mentors and experts in these areas. In the end,
SMEs funded through these programs and the program also provides the opportunity to
the cooperation with industry partners. pitch for financing from VCs. A new call is
planned for Q2 this year.

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Recently, large local companies have started to The objectives are to enhance education, to
set up their in-house incubators to drive inno- improve government policy and modernize
vation and get relevant input for their lines of the regulatory framework to create a better
business. Delta Holding started its ‘Delta Biznis business environment, as well as to support
Inkubator’ program in 2018 to provide a platform the ecosystem for tech startups in Serbia.
for startups in the core business areas of the
Group: logistics, distribution, agriculture and real
estate. 6 teams from over 160 applications were The initiative has been growing to 23 members,
selected to go through the 3-months training with who not only invest their resources, knowledge
mentorship, access to Delta’s network and finan- and experience, but are represented by their
cial support for the initial development of their leaders who are personally committed. It also
business. A new round for application will sees the government as one of its main partners
be opened in May 2019. in the effort to digitalize the Serbian economy
and society.
Telekom Srbija recently announced the opening
of a new center for startups. The incubator will The Digital Serbia Initiative is a
be located in their premises in New Belgrade and powerhouse that can actively
offer work space, mentorship and a platform for address shortcomings in the
exchange for startups. The company further plans Serbian economy and society
to directly support certain startups financially. towards various stakeholders,
and drive change faster and
A national initiative for digitalization more direct.
Digital transformation provides challenges for
economies to adapt and keep up with the changes In a short time since inception, the initiative
and challenges it brings with it. There is need for contributed to changes in the formal education.
significant cooperation and coordination between Computer sciences are now part of the school
stakeholders in this area, including companies, curriculum from fifth grade. Kids learn to program
government and institutions across education, in Python using the platform developed by
legislation and regulation. Petlja. Other initiatives focus on addressing
shortcomings in higher education, as current
This has also been recognized by a number of studies do not address the knowledge and
founders and influencers in the IT sector, but with know-how needed in the market. This is tackled
the view to create an opportunity for Serbia to through assessing demand (with direct input
play an active role, instead of missing out. The from IT companies) and amending the curriculum,
success of certain IT companies and startups as well as the introduction of new programs in
should not be perceived as the result of chance, universities in the near future.
but rather as the outcome of coordinated actions
and forward-looking reforms in the economy, that DSI also provides access for founders to the
enable growth and prosperity in the digital space. technical expertise of the large member
organizations, enabling proof of concept and
This led to the creation of a new initiative potentially partnerships. The improvement of
advocating the transformation of Serbia into the general business environment is also high
a digital society. Digital Serbia Initiative (DSI) on the agenda, as the initiative addresses
is a non-governmental, non-profit organization limitations in existing laws and regulations
founded in 2017 by a consortium of partners, with respect to digital transformation and
including Infostud, Microsoft Development Center provides recommendations.
Serbia, Nordeus, PricewaterhouseCoopers, Ringier
Axel Springer, Seven Bridges Genomics, Startit,
Telekom Srbija and Telenor.

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7 GENERAL OVERVIEW
OF STARTUPS
IN SERBIA
There are undeniably great
ideas and ventures in the
local startup ecosystem with
a high level of technical skill
and expertise. However, the
quantificationand classification
of startups holds a few
challenges.

To start with, many ventures are not formalized, Local startups in numbers
i.e. not registered as an entrepreneurship or limited The main conclusion is that there are over
liability company, rendering official resources 200 startups in Serbia; a number which has
such as the company register (APR) of little use. been confirmed from various other sources
In addition, no official data on startups has been over the course of this study.

200+
collected. On the other hand, many startups do
apply and take part in programs offered by hubs,
incubators or investors, but these can of course
not claim completeness and may be subject to
double counting. And lastly, many startups are
in a stage where friends sit together writing
code, and there is simply no statistic nor
estimate available on these ventures. STARTUPS IN SERBIA

All-in-all, the quantification is difficult and attempts It may seem conservative, but it depends on
to put a number or to map startups were not the definition of a startup and the time horizon
successful or not completed. The Digital Serbia considered. A startup should be innovative and
Initiative conducted a survey at the end of 2018 in have a scalable business model. It is a business
which 130 startups were invited and 106 completed in the early development stages, so usually not
the questionnaire. The Serbian startup ecosystem older than 5 years.
will be covered in much more detail through
the global Startup Genome Research, with Other sources claim over 700 startups to be
questionnaires open from January 2019 and present in the market, however, this number
results expected in June 2019. needs to be qualified as the listed startups date
back to the early 2000s (and are therefore not
a startup anymore) and hundreds of entries
have not been verified.¹⁸

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7 GENERAL OVERVIEW OF
STARTUPS IN SERBIA
Age structure Employment overview

3% 3%
7%
20% 22%

15%

1 year 22% 16% 1-10 72%

1-2 years 28% 11-25 15%

28% 26-50 7% 72%
2-3 years 14%
3-4 years 16% 14% 51-100 3%

5 years 20% >100 3%

Source: Digital Serbia Initiative Source: Digital Serbia Initiative

For the purpose of the aforementioned survey, Startups also directly contribute to economic
startups were defined as entities with at least growth and employment. The 106 startups
one employee or having obtained some financing in the survey have created over 1,700 jobs.
from a third party, hence, it is a necessity that
these ventures have actually been incorporated. While the vast majority employs up to ten
The vast majority of the companies (77%) is people, this share accounts for only 21% of
registered in Serbia, while U.S. and UK are popular total employment, while the 3% of the largest
destinations for incorporation (11% in total). startups employ about 31%.
The latter is also driven through the availability
of and access to funding, a topic that will be
later discussed in more detail.

Of the startups surveyed, 22% were founded

within the last twelve months, while over 50%
exist for two years. Interestingly, 20% of the
companies have been in business for five years
or longer.

As in other areas, also startups are dominated by

male founders. With only 3% sole female founders,
Serbia is no exception to the rule and in line with
international averages. On the upside, almost
20% have a female co-founder and the share
of women working in IT startups in the area
of software development is approaching 15%.

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7 GENERAL OVERVIEW OF
STARTUPS IN SERBIA
Survival rate of startups
(in%)
100

80

60

40

20

10

0
Seed Seed to Series A Series B Series C Series
series A to B to C to D following
Source: Towardsdatascience.com, 2017

About success and failure Applying these insights on the Serbian ecosystem
Given the limited information and tracking over provides once again a few headaches. Only few
time of local startups, it is not possible to estimate hubs and incubators properly track the develop-
the survival rate for startups in Serbia. Looking at ment of the companies that went through their
some international numbers, it is said that 90%¹⁹ programs. For example, the incubator in the
of new startups fail, and even 75%²⁰ of startups Science and Technology Park states that over 80%
backed by VCs fail, taking into account the usual of the companies that went through their programs
survivorship bias for reporting. in the past are still active, but, as with all other
programs, only very few have obtained additional
Survival is closely connected to funding. Startups external financing and managed to scale success-
in early stages are generally self-funded, fully. However, it is still an encouraging result that
bootstrapped or funded by business angels. companies have been created that continue to
Raising seed money is the first major barrier, build their business in the local market.
but given that this is successful, it seems even
more difficult to raise a Series A round, as up When it comes to failure, there are more obvious
to 80% of companies do not make it.²¹ reasons for failure, such as inexperience or per-
sonal problems of the founders. Some founders
Interestingly, with a Series A in place, it does get simply lack focus or motivation, other cannot fully
relatively easier to obtain follow-on financing. commit to this one idea. Others are unwilling to
Not all startups that do not get financing will listen or take advice from the wrong people (good
necessarily cease to exist, some will continue mentorship is really important). The reasons for
and run a good business, but will not show the failure are of course different from startup to
metrics a VC would expect to see in order to startup, but the following list shows the common
qualify for financing in the first place. issues²²:

This is important when looking at the investment 1. No market need (42%)

portfolio. For a VC, the outlook is more or less that 2. Ran out of cash (29%)
out of 10 companies in the portfolio, 5 will be losers, 3. Not the right team (23%)
3 will continue as small businesses with some 4. Got outcompeted (19%)
profit, 1 will be a medium-sized and profitable 5. Pricing/cost issue (18%)
company, and 1 will be a winner (over 10x return 6. Poor product (17%)
on investment). Hence, VCs make investments 7. Need/lack business model (17%)
across a range of companies, ideas and talent 8. Poor marketing (14%)
to diversify and to account for the skewness in 9. Ignore customers (14%)
the return distribution. 10. Product mistimed (13%)

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7 GENERAL OVERVIEW OF
STARTUPS IN SERBIA

Interestingly, most of these issues are related to given their ability to pursue a project and work
the business, the team and of course the product, independently. And local startups should be
but they boil down to leadership and the leader’s supported and encouraged that way.
ability to build a team and the right business model.
When it comes to setting up a business, startups
However, many entrepreneurs have not succeeded are facing the same difficulties like other founders,
with their first ideas or startups. Many have failed as most administration is time-consuming, paper-
a few times, pivoted on ideas or scratched them, based and authorities are not well connected.
just to start over again. Persistence and resilience Serbia is ranked number 48 for ease of doing
is an important trait of entrepreneurs and even business according to the World Bank. This
more so in markets where there is little support number may seem acceptable in terms of
for startups. regional comparison, but it is far from
competitiveness according to EU norms.
Serbian entrepreneurs are indeed resilient, which
is to a large extent the result of the market and An important aspect is the integration of the
economic conditions. With little resources available, Serbian market in the international markets.
they tend to be more imaginative and innovative. Serving customers (mostly B2C) abroad presents
So while great ideas are being developed (i.e. good difficulties for companies from Serbia as products
progress around ideation), or solutions cannot be listed on certain standard
platforms (e.g. app stores), unless a company is
local entrepreneurs experience huge registered abroad.
problems in developing a product
out of an idea Another obstacle for startups is of course
financing and the limited sources of financing
(or even a minimum viable product, MVP) and in the local market.
starting to market that product later on. This has
been recognized by all hubs and incubators and There is a limited number of
programs spend a significant amount of time on investors active in the market,
this area. Product development is equally important
as constant testing to sanitize the unique selling and startups seek for financing abroad, instead
points and sales channels alike. Also the Digital of investors providing funds directly into the local
Serbia Initiative has identified this challenge and ecosystem. Also, some forms of financing, such
stated the creation of a product-centric culture as crowdfunding (lending based or equity), are
as a priority in their manifesto.²³ simply not yet allowed and therefore present in
Serbia. An issue in this area is that certain laws
Another problem relates to dealing with failure, have not been amended or updated to account
which is probably more prevalent for startups. for alternative investments which invest in
startups are. The law on alternative investments
To stigmatize failure is is not only late to have finally reached a draft,
embedded in the local culture. but even if presented to parliament as planned
in the second quarter this year, it will take time
Instead of encouragement to pursue an idea, for implementation and the judicial system usually
an entrepreneur would encounter more often struggles in the interpretation and application of
arguments and comments as to why it cannot totally new laws.
succeed. Failing is not regarded as a valuable
experience, neither locally, nor in Western Europe.
The U.S., however, have the culture in which starting
a business and trying something new is regarded
as valuable and also failed entrepreneurs are
regarded as an asset for a company if they join

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8 A CLOSER LOOK
AT SERBIAN
STARTUPS
Having outlined the startup
ecosystem and put a measure
on the startups, the following
section provides a more detailed
analysis of the industry and
sectors, the development
stage, as well as target
markets and customers of
Serbian startups.
Industry and sector coverage respectively, top off the dominant areas in which
The diversity exhibited by the industry and sector startups are active, accounting for ca. 54%.
coverage reflects on the wide range of ideas pursued
by Serbian startups. The survey conducted by DSI Note that the overview is not exclusive, i.e. the
asked startups to select their fields of business survey allowed for multiple answer choices. For
and specialization with the following results: example, a company can be working in the field of
social media, but may also be doing data analytics.
In line with the talent and skillset, software
development (here classified as enterprise solutions) Besides the apparent programming skills in Serbia,
ranks highest among the sectors in which startups there is another reason why the software sector,
operate. This is followed by energy and environment including startups, is flourishing.
oriented ventures, including ideas for smart city,
and then by gaming, which is not surprising given There are virtually no
the success of Nordeus. AI, big data and analytics barriers to enter.
as well as blockchain ranked fourth and fifth,

Industry and sector overview

(%)
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
environment

AI & big data

Social media

Education &

Ecommerce
Automotive

advertising

electronics
Blockchain
Enterprise

Consumer
& robotics
Energy &

MedTech
AgriTech
children

Travel &
solution

Media &

tourism
Gaming

FinTech

Other

Source: Digital Serbia Initiative

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8 A CLOSER LOOK AT
SERBIAN STARTUPS

All that is required is a computer and some established companies interested in this area.
programming software. And through selfeducation
a significant base of skilled people has been Through the Serbian Blockchain Initiative an
developed. industry network for businesses interested in and
working on blockchain solutions was created in
However, the formal education system in Serbia 2018. The initiative is a non-profit, non-government
is also very strong in other areas, such as natural organization, with the goal of supporting blockchain
sciences (mathematics, physics) or electrical and adoption and proper legislation in Serbia.
mechanical engineering, with various universities
in the country producing scientists and engineers. Among the founding members is MVP Workshop,
But applying this knowledge to set up a startup a specialized blockchain product development
that is not solely software oriented is usually company established in 2016 in Belgrade. The
more difficult as is requires machines, tools and company has been around blockchain from
materials for testing and prototyping, which are the beginning and has grown to 45 people.
expensive or not easily obtainable for startups.
Needless to say, it requires significant financing According to Ivan Bjelajac (CEO of MVP Workshop)
which is not available to most startups. Serbia is currently at the forefront of the blockchain
development, as it has been an early adopter of
Hence, talent and capacity alone do not make an the blockchain technology, again due to the low
impact. There is of course too little cooperation barriers to enter. In addition, there is a great talent
and exchange between universities and the pool of developers in Serbia and the region.
private sector in these areas to foster innovation. However, it remains to be seen over the next 1-2
For startups to be successful, it requires at least years whether Serbia can maintain its position as
easy access to general tools and equipment for active contributor, or whether it will move to the
testing and prototyping, which may be available second line and become a passive follower. The
in some institutions, but which are not easily latter is not a negative development per se, it means
accessible for startups. In addition, materials or that local companies will do eventually more
components are expensive and while financing is collaboration work or outsourcing with international
problematic, a cooperation with companies might partners, instead of leading cutting edge solutions.
bridge this issue, and lead also to better idea
development and products as these companies In terms of product development, another local
can provide direct market feedback to the startups. startup stands out. Blinking, which employs now
20 people, was founded in 2017 with the goal to
There is strong overlap between engineering and develop multi-factor identity management tools
programming, for example in robotics, agritech, for secure authentication based on blockchain
medtech, environment and energy, automotive technology. It recently completed a proof of concept
industry and areas of automation, but at the moment with 2 Serbian banks (AIK and Société Générale)
there are too little initiatives and actual facilities for a digital identity management platform for
to drive innovation and growth in these areas. the exchange of data in the KYC processes.

Everybody is talking about blockchain In contrast to other startups that seek large
Blockchain has been a hot topic for some time international (consumer) markets,
and the conversations have finally shifted away
from crypto currencies only, which are of course blockchain companies can do well
one application for this technology. in small and regulated markets,

Remarkably, Serbian startups have a leading mentions Alex Migitko (CEO of Blinking). When
position in this development. There are at least 20 it comes to personal data and data protection,
local startups involved in blockchain, while a wider platforms need to adhere to local laws and
community counts about 50 members, including regulations and specific solutions have to be

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8 A CLOSER LOOK AT
SERBIAN STARTUPS
Development stage Target customers Target markets

2%
15% 11%
15%

11%
35% 41%

20%

57% 37%
26%

30%

35% Formative to MVP 41% B2C 11% Serbia

30% Product test & market entry 57% B2B 11% Ex-Yu

20% Revenues 2% Gov´t & NGOs 26% Europe

15% Growth & scaling Source: Digital Serbia Initiative 37% US

Source: Own research 15% Other/global

Source: Digital Serbia Initiative

developed. But given that it is early days in The survey conducted by Digital Serbia draws
blockchain, getting the first contracts and a slightly different picture. The results suggest
taking the revenue hurdle is difficult. that startups are in more developed stages as
over 63% are making revenues or are in a growth
Another interesting aspect of blockchain is that stage. This may not be applicable for the ecosystem
it creates access to new sources of financing. in general, but holds true for the companies
Companies can obtain funding through initial coin surveyed, and is a result of the selection criteria
offerings (ICOs). If the offering is successful, it for the survey, i.e. companies were already formed,
provides instant liquidity and does not involve the most have hired people, or are making revenues.
more conventional funding sources such as Angel
or Venture Capital funds. OriginTrail, a startup that Target customers and markets
is addressed later in this section, raised EUR 18.4 Most startups have targeted companies as their
million (USD 22.5 million) in an ICO in early 2018. customers; a result that is confirmed through the
Digital Serbia survey. Business models around
Development stage B2B are also the preferred choice of the local
Measuring the development of startups is a difficult investors.
undertaking as little data is available regarding the
startups in the first place, even less about their stage Government bodies and institutions are not seen
of life. Milestones, such as product development (or as potential customers. This can to some extent
MVP), market entry and revenue generation are be explained with the public procurement
hard to track and are not systematically observed procedures which basically exclude startups
by the hubs and incubators. from participation due to formal reasons (years
since incorporation, profitability, etc.) and because
Based on the insights gathered from meeting they usually ask for a final product or solution
various stakeholders in the local ecosystem, the (instead of accepting a prototype or MVP) in
general conclusion is that most startups are in the areas where technology is just being developed.
phase of formation up to MVP, with another major
group being in the phase of product testing and Most startups have further recognized the
bringing it to market. Companies have also reported limitations of the local markets (i.e. Serbia and
that they have first customers and are generating extending to the countries of former Yugoslavia)
some revenue, but only few have verified their in terms of the sheer number of potential
business model and are ready to scale. customers and the ability to create revenues.

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8 A CLOSER LOOK AT
SERBIAN STARTUPS

The vast majority of startups have company profitable – after 3 weeks. In 2011, the
planned from the beginning for an game was released on Android and iOS, becoming
international outreach of their product, the first true cross platform game. 2012 brought
4 million downloads, and the company grew from
i.e. beyond the borders of former Yugoslavia. 33 to 80 people, while being awarded as best
However, product testing and first customers employer in SEE. After 5 years, the game already
may still be in the home and neighboring markets. hit the 100 million user mark, which has increased
to over 170 million these days.
According to the DSI survey, the U.S. as target
market dominates all other destinations and is Nordeus did not seek external financing in order
followed by the EU market. to stay independent, knowing it was also a good
portion of luck to have had a product and business
Selected success stories model that generated revenues from the start.
No, there is not a unicorn in Serbia, not yet, but The company seems on track for its plan to
quite a few interesting and successful companies continue growing (up to 250 people) and to build
have emerged from the Serbian startup scene. a sustainable gaming company. Nordeus recently
And when there is finally a successful sale or launched another game (Golden Boot) and significant
take-over, even traditional media coverage is effort is put in the development of further games.
guaranteed. But in contrast to the general belief,
these success stories did not happen overnight. Being from Belgrade may not have been the
As the ensuing examples will show, these reason for success, but it would not have counted
companies have been built over the course of as an excuse for failure. It is a matter of the
many years, by dedicated founders who put mindset for Branko Milutinović. While Serbia may
their money on the line and may have more than not be the ideal location for starting a business,
once faced dire straits. Success comes after all
the hard work and it requires also to believe in there are some competitive advantages,
oneself and the idea, because nobody else would. such as the relatively low cost of living
and less competition for highly skilled
developers as compared to the
Silicon Valley for example.

$ Over the last years, the company has been giving

back to the community, becoming one of Serbia’s
largest philanthropists, by building 11 pediatric
2010 170+ NO EXTERNAL units at hospitals around the country, and multiple
https://nordeus.com donations for healthcare and other purposes.
Nordeus is also involved in various initiatives to
Nordeus is a gaming company from Belgrade, support the startup ecosystem and is co-founder
widely known for its ‘Top Eleven’ football manager, of the Digital Serbia Initiative.
with Jose Mourinho as the face of the game for
many years. It was founded by Branko Milutinović
together with 2 college friends, Ivan Stojisavljević $
and Milan Jovović, in 2010.

Having moved to Copenhagen to work in Micro- 2009 200+ EUR 81mn

soft as developers, the team was eager to move https://www.sevenbridges.com
back to Belgrade and do something on their own.
With savings in place to get the venture roughly Seven Bridges Genomics is a leading biomedical data
through one year, the first game Top Eleven was company, specializing in software and data analytics
launched on Facebook in May 2010 and made the to drive public and private healthcare research.

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The scalable, cloud-based platform empowers and found itself in a cash constraint that had to
rapid, collaborative analysis of millions of genomes be resolved with follow on financing. The latter
in concert with other forms of biomedical data. was not a problem since the sales channels had
Thousands of researchers in government, biotech, by then been identified, but it was costly for the
pharmaceutical and academic labs use Seven owners since it meant giving up additional equity
Bridges’ platform, including three of the largest for the new financing.
genomics projects in the world: U.S. National
Cancer Institute’s Cancer Genomics Cloud pilot, Today, Seven Bridges Genomics is a great
the Million Veteran Program, and Genomics example that it is possible to create an ambitious
England’s 100,000 Genomes Project. company out of Serbia.

It was named one of the world’s smartest

companies by MIT Technology Review in 2016, and
is a three-time Bio-IT World Best of Show winner. $

It is a Serbian-American company, co-founded

by Deniz Kural and Igor Bogićević, who joined in 2013 50+ NO EXTERNAL
early 2010. The company has offices in Belgrade, https://www.sevenbridges.com
Boston, Istanbul, and San Francisco. Until the end
of 2018, Igor worked in the company as CTO (now FishingBooker is the world’s largest online travel
moved into an advisory role for the company) and company for fishing trips. It offers over 26,000 trips
was heading a team of 130 software engineers in 1,800 cities and 99 countries. It was established
in Belgrade. The decision for Belgrade came on by Vukan Simić in 2013 based on an idea to create
the back of the accessibility to engineers and his a platform for fishing trips. This particular industry
network locally and in the region, and of course is a billion dollar heavyweight in the U.S. alone.
the lower cost base. Scaling the operations was
a challenge, admits Igor Bogićević: Vukan started out alone but quickly built a team
of a dozen people within a year. While the booking
‘Hiring the first people and building a team was site was operating and generating revenues, hiring
hard and took some time. Only with the core team people and marketing was costly and created
in place we were able to grow significantly, cash flow problems during year one. At that time,
even doubling in size for a few years in a row. he, as the owner, invested his own savings (ca.
And I had to grow with it, personally, building TEUR 60), and stayed without a paycheck in the
my managerial and leadership skills.’ first year, being supported by family. While the
company never took money from external
Seven Bridges Genomics was able to obtain investors, it scraped by bankruptcy more
financing of over EUR 81 million (USD 98 million) than once in this initial phase.
in 3 financing rounds (Seed investment in 2014
of USD 3 million, Series A of USD 45 million and Many competitors raised serious VC money,
Series B of USD 50 million in 2018). Funding was but faced high costs (for rent, team hire, etc.)
needed to elevate the company and to scale the and failed to implement the idea. Being located
business and to deliver on the various contracts in Serbia actually helped in that respect.
it obtained to build data analysis platforms in the
research areas of cancer, pediatric disease, etc. FishingBooker was part of the second generation
in Startit’s Startup Academy and, in hindsight, the
Despite the access to funding and the ability to team was attested to having had a more mature
raise substantial money, there has been also a and focused approach, which led to the success
downside. With funding secured, the company was that followed. But the academy provided also a
put on track to scale fast, very fast. In doing so, it useful network which led to several team members
did no hit the right sales channels immediately being hired from the connections made there.

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Mindset of the people played an important transportation businesses such as CarGo from the
element for the hiring, (and still is an important market. Despite the change in law, the company
element) as people need to be positive and continues to operate, while it maintains the
aspirational and not have the notion that not dialogue with the Parliament with the backing
all is lost in Serbia and that things can be of large IT organizations in Serbia. Other obstacles
moved, according to Vukan Simić. previously faced by the company related to
payments and the use of internationally accepted
The company has thrived without external invest- payment solutions such as apple pay or paypal
ments so far and the plan is to stay independent, (at the time not possible in Serbia due to laws on
while further growing the business and expand- foreign exchange operations). This was overcome
ing it based on the current platform. through other, local solutions to provide a seamless
and convenient service to the customer. Ultimately,
the customers’ vote is in favor of the startup, with
250k+ app downloads so far and ca. 50k active
$ users. As of today, CarGo has transported over
1 million passengers, counts over 5,000 rides per
day in Belgrade alone (a significant uplift from ca.
2015 15 TEUR 100 1,000 rides in 2017) and has taken a market share
https://appcargo.com/ of ca. 10%. The growth benefitted from several
major taxi strikes in Belgrade in 2018 where
CarGo can be seen as the Serbian answer to Uber. customers simply switched to CarGo for the first
It is an application through which a ride can be time and remained customers since. And as Vuk
ordered and payment is arranged via credit card Guberinić puts it with a smile:
(in-app payment) or through CarGo credits. CarGo
operates with its own drivers and is independent ‘Once a customer has experienced our service
from taxi associations. with the comfort of ordering, the ride itself and
payment, they will not go back to old-fashioned
CarGo offers transportation which is 30% cheaper taxis.’
compared to a taxi ride and the company is
preparing for green mobility by providing rides Since inception, the company was predominantly
in hybrid and electric vehicles (30 hybrid cars financed by the founders, with a small investment
were added to the fleet in Belgrade by the end of by 2 private Angel investors in 2017 in the total
2018). The service is currently available in Serbia amount of TEUR 100. All other costs related to the
(Belgrade) and Switzerland (Zurich), while further startup and early expansion were bootstrapped,
expansions into Austria (Vienna) and other while later development and expansion was
countries of the Western Balkans is immanent. covered by the revenues generated by the
business. Given the acceptance in the local market
The startup was launched by 2 Belgradians, Marko and the increasing number of rides, CarGo has
Vučić, who has previously worked for Uber, and been profitable for some time. The company is
Vuk Guberinić who is the CEO of the company. currently preparing for a larger financing round
The idea was to provide a solution to urban to support a faster growth and the regional
transportation that stands out from traditional expansion.
taxi services, which meant to disrupt this market.
‘I want to get a (VC) partner on board to back up
As it turned out, competition with the established the business and to enable our further growth
taxi companies presents a significant problem for and development. We are determined to
the young company. With the taxi association in overcome adversity, to prove that we belong
Belgrade lobbying against CarGo, a change in the here and to succeed.’,
Law on Passenger Transportation was adopted
in October 2018 with the aim to ban alternative says Vuk Guberinić.

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8 A CLOSER LOOK AT
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Delivering on the product and revenues enabled a

$
recent seed financing round led by South Central
Ventures together with Startlabs in which Agremo
secured close to TEUR 500 in December 2018. The
2014 25 TEUR 640
funds enables the company to further grow their
https://www.agremo.com/
team and expand their customer base in different
geographies worldwide.
Agremo offers a cloud-based software platform
for agribusinesses, crop growers and anyone Over 100,000 hectares of arable land in more than
interested in crop and land status and health. 100 countries have been analyzed so far. In light
Agremo performs analytics from aerial imagery, of the continued positive development and
leveraging AI, computer vision and machine increasing revenues, Agremo is planning for an
learning, to provide for better crop management. It additional financing round to scale the business.
provides a visualized, user-friendly, geo-referenced Milan is preparing the pitch to obtain Series A
map of a field, which allows clients to count plants, financing ideally by Q3 2019. The goal is to break
detect diseases, weed and pest problems, water even soon, while pushing for more sales channels
stress, etc. Ultimately, the technology is meant in the existing markets and to enter new ones.
to help achieve sustainable production, improved
yields and lower production costs. The platform is ‘It is exciting times and I am looking forward to the
compatible with any equipment type, including all investor presentations. We have been in contact
commercial drones and sensors as well as data with various VCs so they know our business and
collected by satellites. product and we can focus the discussion on
market strategies and revenue generation.’,
The idea, then named ‘AgriSens’, was developed in
2014 by Milan Dobrota and his co-founders Rastko says Milan Dobrota.
Čarapić and Nebojša Pavičić. Milan, in contrast
to many of his peers, is a rather ‘advanced’
founder, with prior experience as head of IT in
an international retail group and after setting up $
‘LOGIT’ in 2012. The latter is by now an established
software development company, operating in
Serbia, Bosnia and Romania, just shy of 30 2013 58 EUR 2.5MN
employees. It served as the springboard for Agremo https://tradecore.com
and has been the biggest source of financing.
TradeCore is a full-service fintech company at
AgriSens obtained early financing in 2015 in form of the forefront of innovation in the finance world.
an EU grant (Future Internet Enabled Agricultural TradeCore products help brokers manage their
Applications, under the funding framework of the clients, giving them a centralized system with
European Commission ‘Horizon 2020’) in the amount an intuitive and modern interface.
of TEUR 140, allowing to pursue and test the idea.
Since then, the company has successfully developed The company was founded by Stefan Pajković
the product and entered various international in 2013, having previously worked in banking as
markets, including the US market, which turns a trader in London. He co-founded GlobalTraders
out to be the fastest growing and most promising. in 2000, led the expansion across the UK,
Canada, Thailand and Russia, and managed
As the venture progressed and revenues were on the exit in 2007 (acquired by Purple Capital for
the horizon in 2017, it was spun off into Agremo. USD 50 million).
2018 saw revenues growing already by 7times
year-on-year.

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Given Stefan’s background and prior experience, used by thousands of consumers. In 2017 and
TradeCore was set up to provide the tools to lead 2018, the team started then working on an
and grow a successful brokerage. There are two open-source protocol and decentralized network.
distinct products: BrokerIQ is a broker management
software for client onboarding, ID verification, The company has recently been implementing a
payment processing and client management; pilot project for a food retailer in China (the world’s
BrokerCloud is an innovative Platform-as-a- largest market with 1.4 billion consumers) that will
Service for creating fintech solutions. Tradecore help consumers verify the origin, authenticity
can operate across FinTech, RegTech, payments and journey of their products. The solution got
and crypto verticals and adds additional value significant traction in the Chinese market, where
to the business by reducing costs and optimizing it won the Innovation Spark Award of the Walmart
workflow. Food Safety Innovation Center in 2017. Other
awards included the Belgrade Venture Forum in
In the beginning of 2018, TradeCore raised EUR 2014, the Open Data Incubator for Europe in 2016
2.5 million (USD 3 million) in a Seed round from and the People’s Choice Award at the Food+City
South Central Ventures. The funds are required Challenge in 2017.
to support international expansion, to enhance
product development velocity, and to raise brand The company was able to generate revenues
awareness. early on which helped building the company and
reduced the need for financing. However, external
financing was still needed and total funds of ca.
TEUR 500 were obtained through funds and angel
$ investments. Early in 2018, OriginTrail raised EUR
18.4 million (USD 22.5 million) in an ICO to build its
blockchain-based platform for global supply chain
2013 27 EUR 19MN tracking. The ICO was a huge success with USD 1.5
https://origintrail.io/ million raised in the first hour and the funding cap
reached within 3 days, underlining the demand
OriginTrail developed a protocol designed to tackle for a data exchange for supply chain. The funds
the prime challenges in product supply chains are intended for building out the platform and
using blockchain technology. It resolves 3 issues increasing international presence.
of supply chain data solutions: scalability and
cost issue of blockchain, fragmentation of data,
and sensitive data that underpin a stakeholder’s
competitive advantage.
$
It is a Slovenian-Serbian company with now
offices in Ljubljana, Belgrade and Hong Kong,
established in 2013 by Tomaž Levak (CEO), 2007 39 NO EXTERNAL
Žiga Drev (COO) and Branimir Rakić (CTO). The https://activecollab.com/

founders worked on an application for origin

tracking during university. Active Collab is a project management and
collaboration solution helping teams across the
OriginTrail started prior to 2013 with a tracking globe to stay aligned, get projects done faster
version for beef products, followed by dairy products, and on budget, track progress and improve,
poultry and vegetables in 2015. In 2016, the and bill their clients.
company had over 20,000 shoppers and 1,200
farmers using the system. In that year, blockchain It was founded as A51 by Goran Radulović and
was introduced given its potential to ensure the Ilija Studen in 2007 and is now based in Norfolk,
trustworthiness of data in origin tracking systems Virginia, and Novi Sad.

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The open source version of Active Collab was team to over 50 people. The company is
launched back in the summer of 2006 as a side incorporated as COING Inc. and headquartered
project of one of the founders. It showed a lot of in San Francisco, but the majority of people work
potential, but consumed a huge amount of time in the development center in Novi Sad. Clockify
without generating any income. The company itself was released in August 2017.
was then registered in the spring of 2007
with the purpose to develop and support a The original idea was to create a time tracking
commercial version. tool for company purposes to avoid charges for
existing applications that can add up to hundreds
For over a decade, the company helped more of dollars per month. Clockify intended to replicate
than 50,000 teams in companies ranging from the market leader Toggl, as everyone likes to have
small businesses to Fortune 500 companies, an equally good and free substitute for something
universities, and government institutions to solve that is an industry standard.
their project management problems by making the
best possible project management software for After one year of operation, Clockify reached over
creative professionals. Some of the prominent users 160,000 active users, all through organic growth
include NASA, Apple, Samsung, Nike, IKEA, Adobe, and without spending on marketing. There is
Cisco, BBC, Universal, but also Universities like of course constant adjustment and further
Stanford, Berkley and Princeton, and many more. development according to users’ needs and
feedback. Clockify raised the standard for free
Although not quite a startup anymore, it was time tracking applications and the promise is
one of the first software developers from Serbia to keep all core features free of charge. Revenues
to gain international traction and success. It is are generated from users who want extra
now an established company with an impressive functionality and subscribe to a different plan.
track record. This income pays for infrastructure, support,
and further development. The company is
entirely bootstrapped and has not taken
external investments until now.
$

2013 50+ NO EXTERNAL

https://origintrail.io/

Clockify is a free time tracker and timesheet app

for teams of all sizes. It is a modern web app
that works in all major browsers, on all three
mainstream desktop platforms and across mobile
devices. The app tracks productivity, attendance,
billable hours, and payroll.

Clockify is used by everyone from freelancers,

small businesses, and consulting agencies, to
government institutions, NGOs, universities, and
Fortune 500 companies like Hewlett-Packard,
American Express, Siemens, Amazon, Cisco,
PwC, and Bloomberg.

Starting in 2009 as a small software consultancy

rooted in Novi Sad, Nenad Milanović grew the

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8 A CLOSER LOOK AT
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Successful startups that managed Acquired by

their exits
Bringing a startup to the stage where it can
2018 EUR 143 million
scale, is a success in itself. But the real reward
comes with the successful exit of the business.
The following section provides examples not only Frame, also known as Mainframe2, was founded
of successful Serbian startups, but of those that in 2012 and is a Serbian-American startup with
were acquired or otherwise managed their exits. headquarters in San Mateo, California, and the
software development team in Niš, Serbia. Frame
Acquired by develops cloud-based desktop applications and
is the only global, infrastructure-independent
platform built to deliver Windows applications
2019 EUR 100 million
from the cloud.

3Lateral is a Novi Sad-based company founded Nutanix, a U.S.-based company, is one of the
in 2008 by Vladimir Mastilović. The game studio leaders in the field of cloud software and its
focuses on designing more realistic computer- products are used by numerous world
generated human characters. organizations to transfer desktop apps and
software tools to a cloud.
Epic Games, which operates the Unreal Engine
game development platform, has worked with With Frame, Nutanix customers will be able to
3Lateral in the past on projects to push the level deliver desktop-as-a-service (DaaS) from multiple
of realism and detail that are possible with human clouds, combining the simplicity and web-scale
avatars. The acquisition will further expand the design of cloud applications with the functionality
capabilities of Unreal Engine users to promote of traditional virtual desktop application. Nutanix
more detailed character design. will be able to address customer requirements
for DaaS in the mid-market, while continuing its
The 3Lateral team of 60+ people has been joining long-standing support for large-scale VDI projects
the Unreal Engine team and are continuing their delivered via enterprise datacenters.
work with existing partners across the video
games, film and television industries. 3Lateral’s Frame received early recognition in the industry
Serbian headquarters serves now as a base for leading to various financing rounds with VCs in
Unreal Engine for recruiting technical and creative the period from 2013 to 2017 with a total funding
talent in the region. 3Lateral founder Mastilović volume of USD 28.5 million (or EUR 25 million).
is now heading Epic Games’ worldwide digital The transaction closed on August 2, 2018 as a
humans efforts. share deal worth USD 165 million (EUR 143 million),
and represents a landmark as the largest startup
The transaction was announced on January buy-out from Serbia to date.
23, 2019 with a sales price of ca. EUR 100 million.

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Merged with Acquired by

2017 Terms undisclosed 2019 Terms undisclosed

Drytools started as a SaaS platform for software ManageWP is the first and most successful
developers creating high quality applications WordPress website management service
faster. It was founded in 2015 by Marko Gaćeša, enabling web designers and developers to
Duško Vesin and Nikola Milinković in Novi Sad. manage multiple WordPress sites from a
single dashboard. It was founded in Belgrade
After presenting the product for the first time and in 2010 by Vladimir Prelovac and launched its
subsequently winning at the Spark.me conference services in 2012. It was in essence a fully
in Budva in 2016, a financing round with SC bootstrapped company.
Ventures in the amount of TEUR 500 was secured.
The funding was planned for expanding the GoDaddy, founded in 1997 in the U.S., is one of
team and developing a solid marketing and the world’s biggest web hosts and domain name
sales strategy. registration companies with over 60 million
domains registered at the time.
Shortly after in 2017, drytools merged with
Alchemy, a Silicon Valley-based software company In its attempt to diversify, GoDaddy acquired
for the global specialty chemicals industry that ManageWP to offer better publishing tools.
accelerates the development of new products. 8% of ManageWP customers were already on
GoDaddy. ManageWP continues to operate as
an independent company under the GoDaddy
umbrella and the entire team of about 30 people
joined GoDaddy and remains based in Belgrade.

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9 AVAILABILITY OF
FUNDING AND THE
ROLE OF INVESTORS
Traditional forms of financ-
ing do not apply to startups.
Startups are not bankable
due to the high-risk nature of
their business: products are
usually just being developed
and revenues are in the ma-
jority of cases expected only
in the years to come.
The rate of failure is high and specific sector and Looking at local investors, it can be concluded that
technology expertise is required to identify the this asset class, i.e. alternative investments, is
right bets that will turn into highly successful probably not well understood, given the high risk
companies. Institutional investors, i.e. Venture nature and the respective funding schemes (early
Capital funds (VCs), dominate the investment stage, high risk investment for a minority share
space around startups. and no direct control/influence on the company,
no hard collateral).
The local startup ecosystem has limited access to
financing and it is fair to say that more funds and Educating local investors and to build
a more heterogeneous investor landscape would investment capacity would further
benefit the ecosystem. It is a bit of a chicken-and- contribute to the diversity of available
egg problem whether it first requires the startups funding and the development of the
and investment opportunities to attract money or ecosystem.
whether additional money can ultimately lead to
more startups and ventures being undertaken The investments could come at any stage for the
and spur a stronger growth and development startups, as very early stage angel investments, pre-
within the ecosystem. seed or seed, or as growth funding via Series A, B, C,
etc. The conversations with relevant stakeholders in
Not just since the latest exits and takeovers the ecosystem showed, that especially very early
of local startups has the ecosystem proven stage support and follow-on financing is missing.
its potential, but more international investors
have yet to set foot on the ground. Many hubs, In particular, there are no angel investors in the
incubators and the local investors confirmed that market, hence there is no funding for a wide
a lot of international VCs have been reaching out range of startups requiring small investments.
in search for investment opportunities, but actual This, however, is much needed to encourage
deals have not emerged. However, it does require and support as many startups as possible (to be
international and smart investors to impact the precise, those with promising ideas) in order to
ecosystem and to provide additional funding of increase their chances of success by getting them
course. to the next development stage and potentially

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9 AVAILABILITY OF FUNDING
AND THE ROLE OF INVESTORS

new funding. This will increase the diversity of startups is in itself very high risk, hence the lean
startups and provide a broader investment base startup methodology to fail fast. And to fail
for the investors focusing on later rounds. fast without burning a lot of money holds a
competitive advantage for startups from Serbia.
Also follow-on financing has its shortcomings.
Investment volumes for seed and Series A rounds Investing in local operations is
are smaller when compared to international significantly cheaper than in
benchmarks. While this would be beneficial for developed markets, while the
investors, there is actually only one investor in execution is probably better.
the market that can directly provide financing
(South Central Ventures). Hence, more international While this is a good argument in favor of Serbian
money is needed, and startups are required to go startups, international funds may still not consider
where the money is and pitch abroad. Pitching is establishing local operations as established VCs
also a valuable exercise and experience that too have plenty of investment opportunity lining up
few local startups have actually gone through. in front of their door. It may also mean that the
Establishing links not only to investors, but also startups will incorporate abroad (depending on
to accelerators, mentors and potential clients is investor preferences), in order to have a familiar
crucial to make this work. legal framework for the investor and to have a
presence in the market to drive sales. It is an
With respect to pitching and pursuing invest- organizational aspect, while operations, which
ments from VCs, one should not underestimate will grow due to the funding obtained, will in most
the resources it requires from startups. Mostly cases remain local (this is also the demonstrated
the CEOs, who are in many cases also the lead way of startups described in the previous section).
developers, invest an incredible amount of time in
preparing pitch decks and presenting at various Having said that, failures will happen nevertheless.
events or on a roadshow for VCs directly. This However, when it comes to financing, previous
time investment is a high opportunity cost for startups and unsuccessful attempts are actually
the company as other areas such as product regarded as a plus, as the founder has gone
development suffer. In addition there is direct through a high learning curve before, which
travel cost which can be substantial for trips to the increases the chances of success for the current
US and several weeks of presence in the Valley. venture, and for the startup to obtain financing.
This section provides an overview of past
Obtaining financing can only serve as a bridge investments in Serbian startups and will take a
to reaching milestones (mostly revenues), but closer look at funding options available as well
it comes at expectations of revenue growth set as investors active in the market. New funding
by the VCs. Relying on this financing and not schemes and platforms will also be presented.
being able to keep up with product development
or sales creates various problems as follow-on
financing dries up and revenue streams are not
sufficient to support the company.

The question why international investors do not

invest directly in Serbia is usually being addressed
with the assessment of Serbia as a high risk
market, which is mainly based on the limitations
and restrictions of the capital market as well as
the economic and political environment. While
this is true in the traditional view, it has to be
reconsidered for investing in startups. Investing in

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9 AVAILABILITY OF FUNDING
AND THE ROLE OF INVESTORS
Investment status Investments by industry/sector
(EUR mn) (%)
50 24
22
40 20
18
30 16
14
20 12
10
10 8
6
0 4
2013 2014 2015 2016 2017 2018
2
Source: Startit (instead of Digital Serbia Initiative)
0

environment
AI & big data

Social media
Education &

Ecommerce
Automotive
advertising
electronics
Blockchain
Enterprise

Consumer

& robotics
MediTech
Energy &

AgriTech
Travel &

Media &
solution

children
tourism

Gaming

Other
Sport
Source: Digital Serbia Initiative

Funding overview
Investments in startups were basically nonexistent The majority of startups have not
5 years ago. After modest increases in funding received any financing, and especially
volumes in 2014 and 2015, more significant funding in the early stages is hard
volumes were invested in 2016 and again 2018. to get by.

This oscillating funding is both due to the There are no Angel investors in the market to
availability of funding (see also the Innovation fund a wide range of early stage projects which
Fund) and the timing of investors entering the would lead to more diverse and better developed
market and providing the funds. companies ready to receive follow-on financing.

Investments in ICOs were excluded, but it is Investment by industry/sector

worthwhile mentioning that in 2017 and 2018 a Although there is a wide variety of startups, the
total of EUR 67 million was invested in this area. funding focus is clearly on software development
and B2B solutions. The five largest target groups
According to a recent survey conducted by the account for over 75% of funding received.
Digital Serbia Initiative, almost 60% of startups
that exist for two years have not obtained any
financing. The survey further suggests that the
average funding for startups that exist for up to
two years is around TEUR 350k. In that respect,
the survey is probably not representative of the
entire ecosystem due to the startup definition
criteria.

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9 AVAILABILITY OF FUNDING
AND THE ROLE OF INVESTORS
Grant application and projects Investments by sector under the grant
financed 2016 to 2018 schemes
280
264 9%
12%

8%
Constr., civil & electr. engr. 12%
175 15%
166 Mechanical engineering 15%
Energy & environment 13%
12% EUR
14mn
96 Software 11%
74
63 ICT 20% 13%
32 28 33 Food & agricult. 12% 20%
14 14
Applications Eligible Pre-selected Financed MedTech 8% 11%
Other 9%
Mini grant
Collaborative grants Source: Innovation Fund
Matching grants
Source: Innovation Fund

Active investors For startups in early stages, the fund can provide
There is a handful of investors active in the market, financing in the form of grants, i.e. without
with each investor having its own investment pursing equity participation, through the
scope and target. Investors are connected and following programs:
co-invest on many occasions. In many cases
startups do not qualify for an investment at a • Mini Grants: available for micro or small
given time, but are being followed and supported sized companies for the development of
and later on re-assessed when their development technological innovations;
proves investment readiness. However, the depth Financing up to TEUR 80 covering up to 85%
and width of the investor base does not permit of the total project budget
a wide range of startups across the various • Matching Grants: available for SMEs to translate
development stages and sectors to obtain funding. research into commercially viable products
Financing up to TEUR 300 covering up to
INNOVATION FUND 60% or 70% of the total project budget
• Collaborative Grant Scheme Program: available
Although already founded by decree on innovation to SMEs and R&D to support joint initiatives
activity in 2005, the Innovation Fund became only to develop new commercially applicable
operational in 2011. It is located in the Science and intellectual property
Technology Park Belgrade and works under the Financing up to TEUR 300 covering up to
supervision of the Government of Serbia and the 70% of the total project budget
Ministry of Education, Science and Technological
Development. The fund’s goal is to improve the Other financing tools of the Innovation Fund
linkage between research and technology aimed at supporting and linking SMEs and
development and economy, as well as to research include the ‘Innovation Vouchers’ (up
encourage and support the development of to TEUR 7 covering up to 80% of total costs) and
innovative entrepreneurship. the ‘Technology Transfer Facility’ (up to TEUR 50
for academic R&D).
The fund is supported by the European Union and
the World Bank, but cooperates also with other The Mini Grants and Matching Grants programs
organizations, donors and the private sector. were initially launched through the Innovation
Serbia Project in the period from 2011 to 2016,
Since 2011, the fund received over 1,300 applications which was administered by the World Bank and
and financed about 350 projects with budgets financed by the EU with EUR 7.1 million (out of
totaling EUR 21.6 million through direct which EUR 5.6 million were attributed to the 2
contributions of EUR 15.6 million. grant schemes). During this period, the fund re-

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ceived 341 applications for the mini grants and 119 To this date, the three major grant programs
applications for the matching grants. Under the provided funding of EUR 14.0 million for 61 projects
mini grants, 41 projects were financed with across various industries.
ca. EUR 3.1 million, while the matching grants
awarded 11 projects wit EUR 2.5 million. ICT and software development stand out with
a combined share of 31%. It is noteworthy, that
With primary funding coming from the EU after other areas such as electrical and mechanical
inception, it should be noted that the Innovation engineering, energy, environment and medtech
Fund was not in the position to award further mini receive a fair share of funding.
or matching grants until the end of the Innovation
Serbia Project in 2016 due to lack of funding from
the Republic of Serbia.

However, both programs (together with the

Collaborative Grant Scheme, Technology
Transfer Facility and Innovation Vouchers) were
then continued under the ‘Competitiveness
and Jobs Project’ receiving financing of ca.
UR 14 million for the period 2017 to 2021 directly
from the Ministry of Education, Science and
Technological Development.

The continuation of the grant programs was well

perceived as the fund received 280 mini grant
applications and 175 applications for matching
grants over the last 2 years.

33 mini grants were awarded for a total EUR 2.5

million with an average grant volume of ca. TEUR
75. The 14 matching grants obtained a total of EUR
3.0 million, averaging TEUR 215k per grant.

The Collaborative Grant Scheme awarded 14

projects with EUR 3.0 million in 2016. Note that the
second call closed in December 2018 and led to
67 applications.

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9 AVAILABILITY OF FUNDING
AND THE ROLE OF INVESTORS
Investments made Deal flow
(in EUR thousand)
7
144
134
6

81 87
77 5
69
52
4

10 10 12 14 14
3
2013 2014 2015 2016 2017 2018

Region 2
Serbia

Source: Startlabs
1

0
2013 2014 2015 2016 2017 2018
Source: Startlabs

STARTLABS StartLabs has been engaged in hundreds of

conversations with founders each year, however,
StartLabs is a U.S.-based fund, with offices in the gap between idea presentation to lead to
San Francisco and Belgrade, established in 2013 actual investment is quite big, with only a few
with a focus on early-stage seed investments in investments materializing each year.
startups from Southeast Europe.
The fund has been investing in the region,
Besides funding, startups obtain mentorship, but with a strong focus on the Serbian market. 9
office space, technical infrastructure, business local startups received investments totaling TEUR
services and networking to help startups turning 250. In addition, 4 startups from Slovenia, 2 from
ideas into sustainable businesses. Croatia, and 1 each from Montenegro and the U.S.
obtained funds from the remaining TEUR 200.
For the early stage, StartLabs offers up to TUSD
50 (TEUR 44) seed investment in return for 10-15% An overview of the investments
of equity stake in the company. Startups take part is presented in Appendix 1: Deal tables.
in a 6-month program, but obtain also additional
help subsequently as needed. The fund offers a Investments per country
wide network of mentors to shape ideas and exe-
cute them, gain traction and raise more funding.
6%
3%

Over the years, the fund has been investing close 13%
to EUR 0.5 million in 17 deals since 2013. 10 deals 56%

were co-funded with other investors and 8 deals EUR

had multiple investment rounds. 0.5mn
Serbia 56%
Ex-Yu 22% 22%
Given the early, i.e. pre-seed nature of the Europe 13%
investments, investments rarely exceed the US 3%
prescribed target of TEUR 44 (the average is just Other/global 6%
slightly above TEUR 26k), but on occasion have Source: Startlabs

also been higher.

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9 AVAILABILITY OF FUNDING
AND THE ROLE OF INVESTORS
Investments made Investment leads and deal flow Investments per country
(in EUR million)
8.2 252 362 489 0%
121
15%

5 8 9
4.9 1
4.1 33%
3.4
2.7 2015 2016 2017 2018 2019
1.8 Source: South Central Ventures EUR
2015 2016 2017 2018 2019
16,6mn
Serbia 33%
29%
Region Croatia 22%
Serbia
Macedonia 29%
Source: South Central Ventures
Slovenia 15% 23%

Montenegro 0%
Source: South Central Ventures

SOUTH CENTRAL VENTURES Since the first investment in 2016, SVC’s portfolio
has grown to 22 companies with total investments
South Central Ventures is a regional closed-end of EUR 16.6 million across various stages and
fund with offices in Belgrade, Zagreb and Skopje sectors (note, that some deal details have not
established in 2015. It manages the Enterprise been disclosed). 5 startups received a follow-on
Innovation Fund (ENIF) which was established financing. The average investment per startup
as part of the EU’s Western Balkans Enterprise amounts to ca. TEUR 870.
Development & Innovation Facility (WB EDIF)
aiming at improving access to finance for small The data provided shows that the fund has received
and medium-sized enterprises (SMEs) in the increasing interest after inception, with stead growth
Western Balkans. of potential investment opportunities each year
reaching a new high in 2018 with almost 500 leads.
Investors into ENIF are the European Commission
(EC), European Investment Fund (EIF), European Actual investments made, however, represent
Bank for Reconstruction and Development (EBRD), only a fraction of the conversations the fund
Kreditanstalt für Wiederaufbau (KfW) together engaged into and is rather steady around 2%
with institutional and private investors from the each year. This is in line with conversion rates
Western Balkans. ENIF also includes investments seen from international comparisons.
from the beneficiary economies of the Western
Balkans (note that the Republic of Serbia participated Due to the regional focus of the fund, investments
in the fund with a contribution of EUR 1.3 million have been made across various markets,
invested through the Innovation Fund). however, Albania, Bosnia and Hercegovina and
Kosovo have yet to see funding for a startup.
The fund is focused on tech companies in the
Balkans and has EUR 40 million available for Serbia is a significant market for South Central
investments dedicated primarily to seed stage Ventures as it received about 50% of funds invested
and growth investments. Investments in the seed (ca. EUR 8.6 million) across 10 local startups.
stage are planned with a special allocation of EUR
1.5 million for investments of up to TEUR 100 per Given that South Central Ventures is in the 4th
company. The majority of the fund is allocated year of operation and investments, with about
for growth investments of up to EUR 3 million per 50% of the funds deployed, it is more likely that
company. These investments are aimed to enable the fund will put a stronger emphasis on follow-
international expansion and further growth of the on financing and less on early stage support.
tech startups which have already gained traction
and have proven their potential. The investments An overview of the investments is presented in
usually take 10-20% in equity of the startup. Appendix 1: Deal tables.

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AND THE ROLE OF INVESTORS

NEW INVESTOR INITIATIVES

ICT Hub Ventures Impact Hub’s Venture Growth Accelerator

ICT Hub Ventures is a million-euro fund set up by Equipped with the experience of the startup
seven businessmen from Serbia in early 2017 to programs and observations in the ecosystem,
invest in tech startups in an early stage. The fund Impact Hub decided to launch some sort of Angel
has an initial lifetime until the end of 2019 and fund for early stage, i.e. pre-seed, investments
aims to fund up to 20 projects. together with the early stage investor ‘Wise
Guys’ from Estonia in 2018. Selected startups
Investments are up to TEUR 50 for 5-15% of receive up to TEUR 50 for 7% of ownership.
ownership, while the startup is also part of an
education and mentorship program aimed at Of the overall investment, TEUR 20 is direct cash,
developing and growing the business. while the remainder is an in-kind contribution for
seminars, mentoring, roadshows, etc. Over the
ICT Hub Ventures invests in pre-seed stages, in course of six months, selected startups will go
ideas with a technical solution and a clear B2B through specific sales and business trainings,
focus. If startups are not incorporated before learn from international mentors with the aim
they enter the program, it is a requirement to be to be ready for second round investments.
registered in Serbia before any funds are obtained.
The focus is on scalable solutions in the areas
Since inception, the venture had four calls for of agri-tech, education/culture, social networks,
investment that triggered around 40 applications clean energy and sustainable technology,
per call, or about 160 applications to date. blockchain, AI, etc.
Investment opportunities come also from
referrals out of the own hub, the wider network The target of 5 investments per year is rather
or from companies attending events. In 2018 conservative, while interest and demand are
alone, the team meet over 300 startups from rather high with over 100 applications after
the region, but with the majority coming from launching the fund. So far, 1 investment has
Belgrade or Novi Sad. been made.

Up until today, the fund invested in 9 companies,

out of which 7 are alive, while 2 startups closed
down due to inability to validate the idea or
problems within the team. Average investment
volume is TEUR 30 for a 10% share in equity.
This leaves room to invest in 11 targets this
year to round out the portfolio.

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9 AVAILABILITY OF FUNDING
AND THE ROLE OF INVESTORS
Investments made in Serbia Deal flow
(in EUR thousands)
300 5

250 4

200 3

150 2

100 1

50 0
2012 2013 2014 2015
0 Source: Eleven Ventures, own research
2012 2013 2014 2015
Source: Eleven Ventures, own research

OTHER FUNDS ACTIVE IN THE MARKET Looking back on the investments made in the
Eleven Ventures first round, Eleven Ventures admits, that a large
portion of the companies that were backed were
Eleven Ventures has been one of the first funds not capable of surviving, which reflects on the
from the region to invest in Serbian startups. readiness of the ecosystem, and the learning
Given that the ecosystem in Bulgaria was also curve for the fund and the startups alike.
rather small and underdeveloped at the time,
it was natural for the fund to have a regional Today, the fund is connected to 300+ mentors
focus and to invest in the neighboring markets. and 300+ startup founders from more than
20 countries. Eleven Ventures recently closed a
Initially founded in 2012 in Bulgaria, Eleven second fund, which is entirely privately funded.
Ventures is a pre-seed and seed fund with a focus The new capacity is EUR 6 million and the
on startups from South East Europe. The fund investment focus is on pre-seed and seed stage.
was set up as a closed-end fund (10 years) with This forms a portfolio of up to 30 startups with
funding from the European Investment Fund. The individual investments in the range of TEUR
mandate was to deploy EUR 12 million to startups 100-300 for 5-15% in equity, and creates the
in the acceleration phase and to target about 200 opportunity for follow-on financing of TEUR 500+
investments with individual funding in the range for selected companies. Given the investment
of TEUR 25 to 200 for an equity stake of 5-20%. history, it is very likely that some of these funds
will benefit Serbian startups as well.
Throughout the investment cycle, close to 120
projects were funded, while only 2 exits were An overview of the investments in
later successfully arranged. Serbia is presented in Appendix 1: Deal tables.

Until 2015, the fund invested just over EUR 1 million

in 14 startups from Serbia in their early development
stages (note that the investment overview
exhibits only publicly available information).
It is worthwhile noting, that half of these startups
have gone through Startit’s Startup Academy.

The average investment volume was TEUR 37.5

for an average equity stake of 8%. The deal flow
started after the initial investment was arranged
in 2012, i.e. the year of inception, and was rather
stable over the following years.

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9 AVAILABILITY OF FUNDING
AND THE ROLE OF INVESTORS

OTHER REGIONAL FUNDS of financing in the crowdfunding space, startups

turn to widely accepted platforms such as
Startups in Serbia have been benefitting from ‘indiegogo’, ‘kickstarter’, ‘crowdcube’ or
external funding sources in the past and it is ‘funderbeam’, to mention a few. And these
expected that investments will also occur in the platforms have indeed been used by local
future from other investors abroad. Besides the startups to obtain financing.
second fund established by Eleven Ventures,
who already have an established network and According to data available, mainly indiegogo and
cooperation with the local ecosystem, other kickstarter were used by companies in Serbia for
markets have recently obtained additional financing. In 2015 and 2016 only TEUR 100 were
funding to support small and medium businesses. raised, but funding significantly increased to
over TEUR 600 in 2017 (including also the then
The European Investment Fund (EIF) together established platform Katana)²⁷. These figures
with the Development and Export Bank of Croatia may not include all projects that received funding
(HBOR) are launching now a EUR 70 million from abroad, but it shows the potential and need
investment program to support fast-growing for this type of financing. Similarly, it is also a
SMEs and mid-caps in Croatia. It comes in addition good training for entrepreneurs with respect
to the Croatian Venture Capital Initiative which to sales and product marketing through these
was established in 2018 and is based on a funding campaigns, as Serbian entrepreneurs show
agreement between the EIF and the Government clear deficits in these areas.
of Croatia. The available funds of EUR 35 million
will be invested through a VC set-up, including A recent example is a financing round (equity)
an accelerator, for seed stage investments. conducted by Strawberry energy on the
investment platform crowdcube, in which the
It can be expected that these funds will be company collected over TEUR 410 (the initial
observing the wider region for potential target was TEUR 340) in September 2018 for
investments, given similar limitations of the the purpose of expanding the network smart
Croatian ecosystem and readiness of local benches in London from currently 30 to 100.
startups to receive financing.
It is the latest round in a sequence of funding for
CROWDFUNDING AS A SOURCE OF FINANCING Strawberry energy utilizing various sources to
Crowdfunding is in basic terms the funding of a obtain financing which stands now at a total of ca.
project, idea or venture raising small amounts of EUR 1.4 million. First funding came through grants,
money from a large number of people, usually while the first equity investment was conducted
through specific platforms on the internet. with Eleven Ventures in 2014. Given that revenues
then and now are not sufficient to carry the
There are in general four models for crowdfunding: company, additional funding was obtained
donations-based, reward-based, lending- from various angel investors over the years,
based and equity. However, only one of the which were mainly discovered by the company.
aforementioned forms exists in Serbia. Since Crowdfunding helped Strawberry energy not only
2013, donations can be managed through the to obtain more funds than initially targeted, but
local crowdfunding platform ‘donacija.rs’. to also increase awareness of the product and
The platform has seen an increase in use and the company.
acceptance over the years, from ca. TEUR 570
donated in the period from 2013 to 2016, to ca. Given that Strawberry energy is also registered
TEUR 610 in 2017 alone. abroad, it makes the obvious point that local
companies do not have access to these sources of
But as the name suggests, this is not a source of financing. For lending-based or equity crowdfunding
funding for startups. For any of the other 3 sources to work in Serbia, laws have to be changed.

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9 AVAILABILITY OF FUNDING
AND THE ROLE OF INVESTORS

Interestingly, the Estonian-based funderbeam,

which provide a platform for startups in which
investors trade shares as if the companies were
listed on a stock exchange, was planning a
market entry into Serbia. With the award as best
fintech company in Europe in 2017 in the back
pocket and after successfully establishing its
platform in Croatia in cooperation with the local
stock exchange in the year before, the idea was
to establish a similar model with the Belgrade
Stock Exchange. However, these plans had to be
buried in 2018 due to the existing legal boundaries
set for example by the National Bank of Serbia.
This is a set-back for Serbian startups as the
model proved to be successful in Croatia:
funderbeam allocated over EUR 2 million from
investors worldwide to four Croatian startups
and SMEs in first ten months of 2017 alone²⁸.

In order to tackle regulatory issues around

lending-based crowdfunding in Serbia and to
help SMEs access other financing options besides
the traditional sources of financing, USAID has
mandated a project (which is currently being
carried out) that analyzes the regulatory, legal
and economic framework in Serbia and that will
also make recommendations for implementing
a crowdfunding lending platform.

It remains to be seen which crowdfunding

model will be implemented in Serbia and when.
The benefits for startups and other small and
medium businesses to have direct access to
funding are apparent.

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10 CONCLUSIONS

It comes as no surprise to say

that the startup ecosystem is
still in the early stages. Still,
because it has been developing
for almost a decade, certainly
with much more traction over
the last couple of years, but
basic elements to lift the eco-
system to the next level are
still underdeveloped or missing.
The number of startups in the Serbian ecosystem investment schemes obviously differ from the
is estimated to be somewhat north of 200. common practice of investing in companies or real
Particularly the IT sector drives the development estate. Investor education and continuous efforts
as it provides an opportunity to engage in an to create platforms for investments are needed
industry with virtually no barriers to enter. to make local money available for local startups.
One can conclude that the limitations in funding
The ecosystem benefits from a large talent directly impact the diversity and depth of the
pool of highly educated and skilled software ecosystem.
developers, mechanical and technical engineers,
which together with the relatively low salaries On the other hand, startups may not be ready for
and living costs in Serbia create a competitive investment with respect to professionalism
advantage for startups here. of presenting their ideas, conducting their
businesses and market readiness of their
This should make for a great pitch with VCs, to solutions. In many cases, founders struggle early
fail fast and cheap, but financing is hard to get on to take the idea forward into a product and
by and Serbia is for most internationally active later on to market it. Many startups are lacking
VCs a white spot on the map. Some local startups sales and marketing know-how to build the right
received financing on their own initiatives abroad, approach for market segments and customers,
but it has not led to significantly increased interest in order to develop sustainable revenue streams.
in the community and inflow of funds. Access to Incubators and investors pointed to this area as
financing is an issue across all stages for local a main issue for startups, and startups generally
startups. There are no true Angel investors in the confirmed it as well.
market to broaden the base for entrepreneurial
activities. And even if startups have obtained Hubs and incubators were engaged early on to
some financing, follow-on funding is also very provide a variety of programs and seminars to
difficult to come by. educate startups on business-related topics.
However, it seems that these support systems
Local investors have not yet embraced these are overlapping and competing at times
alternative investments. Those are high risk and over resources and startups. Some sort of

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10 CONCLUSIONS

consolidation and coordination might be needed Furthermore, the administrative system is still
to better position each of the hubs and incubators slow, unconnected and paper-based. Initiatives
and to align them in their mission to support to elevate e-government should be pushed.
founders. This may be another critical element Corporate law has to be further adjusted to better
to move the ecosystem forward. address entrepreneurs together with incentives
to start a company, to make change in ownership
Lastly, the ecosystem has yet to see that founders easier and to introduce commonly used methods
successfully exit their startups and re-enter the for incentive and compensation such as employee
market either with a new venture or as investor. stock options.
This generational effect that comes with new
funds and an abundance of knowledge and Besides, government, public entities and state-
experience will transform the ecosystem and owned companies can play another vital role for
accelerate the progress. the startup ecosystem. These entities have the
potential to be the largest customer of innovations
In addition to the aforementioned impediments, and solutions produced by startups. But for this
there are also significant systemic holdbacks. to happen, public procurement needs to be
As anywhere else in the world, the ICT sector is altered dramatically to allow, for example, an
moving at an incredible pace, shifting the landscape idea or minimum viable product to be procured
for consumers and businesses alike. However, rather than a product, and to allow companies
local legislation and administration is bound by to enter the process without old-fashioned
outdated structures and systems and unable formal criteria that do not apply to startups.
to follow, let alone to support this development.
Last but not least, failure from starting up a
Existing laws provide obstacles for financing and business should not be stigmatized, it should
‘international sales for local startups. The Serbian rather be seen as a valuable experience, by
economy is not integrated in international financial family, friends and business community alike.
markets making free flow of funds cross borders This is a very common trait embedded in the
difficult. While investors are in the position to local culture and mentality. Equally, being from
construct a solution to accommodate existing this region is taken as an excuse as to why one
laws and regulations for financing purposes cannot succeed. A change in mindset is needed in
(if they are really interested to engage local), both cases, together with a positive attitude and
startups cannot count on using other sources of encouragement. The recent acquisitions of Serbian
financing or sales platforms that are generally startups provide great examples and make the
accepted worldwide. And in the end, customers argument that building a successful company
anywhere are not willing to accommodate small here can be done.
market solutions that are slow and cumbersome;
they will simply move on to another product or
solution that is easier to use.

Introduction of new laws, such as the law on

alternative investments, have to be finally
concluded as it is vital for the local market, and
startups in particular, to have access to alternative
ways of financing. Bringing existing laws in line with
EU regulation to allow, for instance, crowdfunding
(conducted locally and internationally) for lending
and equity-based financing would provide anyone
with an idea to start a business with a new source
of potential financing, without incorporating
abroad or physically moving.

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11
ABOUT THE GERMAN-
SERBIAN CHAMBER OF
COMMERCE AND THE AUTHOR
GERMAN-SERBIAN CHAMBER CHRISTOPH BERNDT, CFA
OF COMMERCE

Contact: Contact:
[email protected] [email protected]
http://serbien.ahk.de https://strategy-map.net

The German-Serbian Chamber of Commerce is Christoph is the founder and managing partner
part of a global network of 140 offices of German of Strategy MAP, a consultancy for corporate
Chambers of Commerce Abroad and delegations strategy and strategy implementation.
of the German economy in 92 countries. With
more than 350 member companies, it is the He has more than 12 years of experience in
largest and one of the most important bilateral finance and management, as CEO, CFO, CRO
economic organizations in Serbia. It is the ideal and financial advisor to international companies.
platform for contacts between German, Serbian Christoph has profound knowledge in core
and international companies. transaction work such as M&A, valuations,
purchase price allocation (PPA), post-merger
The German-Serbian Chamber of Commerce integration (PMI), but excels also in other areas
provides: of corporate finance such as business planning
and financial modeling as well as corporate
• Network of German and Serbian company restructuring and reorganization.
representatives
• Representation of interests of member Christoph enjoyed various roles and responsibilities
companies towards Serbian and German as consultant during his 9 years in KPMG and
institutions advised on project finance (conventional and
• Practical support for members and renewable energy, infrastructure), data protection
companies interested in doing business in in the telecommunication industry, NPL resolution
Serbia and banking sector reforms, as well as several
• Tailored services in the context of market cross-border acquisitions.
development
• Promotion of dual vocational education in He recently worked as regional CFO and CRO for
Serbia McCann Nordics ultimately responsible for over
230 employees.
Starting as a delegation of the German economy,
the chamber has been present in Serbia since Christoph has been engaged by the German-
2001. Serbian Chamber of Commerce in Serbia as
Senior Advisor since November 2018.

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12 GLOSSARY

APR
B2B
Agencije za privredne register
Business-to-business
B2C Business-to-customer
BITF Business Technology Incubator of the Technical Faculties Belgrade
CEO Chief Executive Officer
COO Chief Operating Officer
CTO Chief Technology Officer
DaaS Desktop-as-a-service
DSI Digital Serbia Initiative
EC European Commission
ENIF Enterprise Innovation Fund
EU European Union
EUR Euro
EBRD European Bank for Reconstruction and Development
EIF European Investment Fund
FDI Foreign Direct Investment
GDP Gross Domestic Product
ICO Initial Coin Offering
ICT Information and Communications Technology
ID Identity document
IMF International Monetary Fund
IT Information Technology
KfW Kreditanstalt für Wiederaufbau
KYC Know-your-customer
MVP Minimum Viable Product
R&D Research & Development
SaaS Software-as-a-service
SEE South East Europe
SME Small and medium enterprise
S&P Standard & Poors
TEUR Thousand Euros
TUSD Thousand U.S. Dollars
UK United Kingdom
U.S. United States
USAID United States Agency for International Development
USD U.S. Dollar
VC Venture Capital
WB EDIF Western Balkans Enterprise Development & Innovation Facility
WP WordPress

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ecosystem in Serbia 49
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 STARTUPS
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13
Startup

LegalTrek
APPENDIX:
DEAL TABLES
Overview of StartLabs’ deals

Description

Integrated legal practice management solution

Based

Serbia
Funding year

2013
Funding (€)

10,400
Equity

n/a
CarLock Advanced real-time car tracking & alert system Slovenia 2014 * 56,900 n/a
Loyalis Smart loyalty program for e-commerce Serbia 2014 * 43,350 n/a
WhoAPI Application that turns raw domain data into machine readable outputs Croatia 2015 * 45,700 n/a
Kidster Web platform for buying and selling kids' stuff Serbia 2015 * 19,200 n/a
Mango Mobile gaming platform Serbia 2015 * 13,600 n/a
MobiCon Talkbook is a solution for public speakers to generate business leads Croatia 2015 * 13,500 n/a
Swapp App to swap unwanted items with other people Montenegro 2015 * 14,000 n/a
Upress Self-charging wireless keyboard using different energy harvesting technologies Serbia 2015 4,700 n/a
WorkPuls Productivity assessment tool for managers Serbia 2016 39,300 n/a
Fragrance by Me Create your own fragrance Serbia 2016 * 35,150 n/a
BabyStork App for tracking woman’s cycle and pregnancy planning Slovenia 2016 13,400 n/a
FreshAgTech Orchard management system with personalized measures for the mobile Serbia 2018 12,300 n/a
BlubBlub App for children’s speech and language development and therapy Slovenia 2018 20,200 n/a
Melon & Lime Yoga mats connected to app Slovenia 2018 9,900 n/a
Agremo Cloud-based software platform for agribusinesses Serbia 2018 75,000 n/a
YCrib A members-only hotel for entrepreneurs and creatives USA 2018 26,400 n/a

Note: Equity participation information was not available; * denotes several funding rounds

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 STARTUPS
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13 APPENDIX: DEAL TABLES

Overview of South Central Ventures’ deals

Startup Description Based Funding year Funding (€) Equity

Drytools/ Alchemy SaaS platform for software developers creating high quality applications faster Serbia 2016 500,000 n/a
CityExpert Online real estate agency with advanced technologies Serbia 2016 1,250,000 n/a
Workpuls Productivity assessment tool for managers Serbia 2016 80,000 n/a
Agrivi Agritech, knowledge-based farm management software Croatia 2016 1,500,000 n/a
Letz / MarkO Productivity app called Letz Macedonia 2016 100,000 n/a
Bulb Software developer for service & customer experience mgmt. Croatia 2017 1,000,000 n/a
Cognism AI sales technology company Macedonia 2017 2,388,988 n/a
CUBE Business information and credit risk service Serbia 2017 1,000,000 n/a
InPlayer Video and digital asset monetization platform Macedonia 2017 1,375,527 n/a
Virtus Vita Booking system for dialysis related travel Serbia 2017 500,000 n/a
Hunch Automation of advertising on social media Serbia 2017 200,000 n/a
Croatia
Sentinel Marine Smart solution for recreational boats in the Adriatic 2017 765,000 n/a
/Slovenia
Fintech providing brokers a centralized system and tools for developing fintech
Tradecore Serbia 2017 1,000,000 n/a
products
LittleDot (app) connects parents to pediatricians and other specialists in
More Studio Croatia 2018 300,000 n/a
real-time
Habiplace A prop-tech platform that helps homeowners and tenants manage the property Croatia 2018 75,926 n/a
Content Insights Web analytics service for valorizing texts in online media Serbia 2018 1,500,000 n/a
ConveyIQ Tool for automating recruiting operations Serbia 2018 2,178,000 n/a
Agremo Cloud-based software platform for agribusinesses Serbia 2018 415,390 n/a
DaiBau Platform for tools and guides to ease renovation Croatia 2018 450,000 n/a
Company
n/a Macedonia 2018 n/a n/a
(Undisclosed)
Company
n/a Macedonia 2018 n/a n/a
(Undisclosed)
Om3ga Daktilograf is a speech-to-text converter for Slavic languages Montenegro 2019 n/a n/a

Overview of Eleven Ventures’ deals in Serbia

Startup Description Based Funding year Funding (€) Equity

VetCloud Software solution for the veterinary industry Niš 2012 25,000 8%
WoBeek Web application for beekeepers Novi Sad 2013 25,000 8%
LegalTrek Integrated legal practice management solution Niš/Novi Sad 2013 25,000 8%
DataMaid Cloud storage organizer for bloggers and journalists Belgrade 2013 25,000 8%
Yanado Task and project management tool for Gmail Novi Sad 2013 25,000 8%
Farmia Web marketplace for livestock Belgrade 2013 25,000 8%

Content Insights
Web analytics service for valorizing texts in online media Novi Sad 2014 25,000 8%
(Author Insights)

Book A Boat Mobile and web app for booking transportation via different kind of boats Belgrade 2014 25,000 8%
Coprix Media Development of content for digital and interactive classrooms Belgrade 2014 100,000 n/a
Cyber City Platform for artists, hobbyists and creators to sell their works Belgrade 2014 25,000 8%

Development of green and smart urban devices to provide people with

Strawberry energy Belgrade 2014 100,000 6-12%
charging, connectivity and local information in public spaces

MBrainTrain Development of wearables for recording and analyzing electrical brain activity Belgrade 2015 50,000 n/a
EuroPATC Development of wearables to protect children with autism Niš 2015 25,000 n/a
BinCode Role playing game based on Slavik mythology for mobiles Belgrade 2015 25,000 8%

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 STARTUPS
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14 REFERENCES

¹ S&P global, country report Serbia, December 2018

² S&P global, country report Serbia, December 2018
³ https://www.bloomberg.com/news/articles/2019-01-11/serb-finance-chief-s-next-
mission-pull-the-country-out-of-junk
⁴ S&P global, country report Serbia, December 2018, Ministry of Finance (http://www.mfin.gov.rs)
⁵ Macroeconomic Developments in Serbia, National Bank of Serbia, January 2019
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¹² ICT in Serbia, at a glance 2018, Vojvodina ICT cluster
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¹⁷ https://belgrade.impacthub.net/bootcamp/?lang=en
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about-the-10/#1a99a4ff6679
²⁰ https://www.fastcompany.com/3003827/why-most-venture-backed-companies-fail
²¹ https://towardsdatascience.com/dissecting-startup-failure-by-stage-34bb70354a36
²² https://www.entrepreneur.com/article/288769
²³ Digital Serbia Initiative, Digital Manifesto, 29 May 2017
²⁴ http://www.doingbusiness.org/en/data/exploreeconomies/serbia
²⁵ https://www.bloomberg.com/news/articles/2017-08-14/in-belgrade-yes-belgrade-an-unlikely-path-to-a-tech-hit
²⁶ https://startit.rs/vukan-simic-fishingbooker-najbolji-smo-na-svetu-jer-smo-startap-pokrenuli-u-srbiji/
²⁷ Reward based crowdfunding in Serbia, Analysis of practices and recommendations for improving the legal
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closer-crowdfunding-platform-for-startups

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