Why The Western Balkans Is Fertile Ground For Innovation And Entrepreneurialism?
/The early stage investment sector in the Western Balkans is still in an embryonic phase. The entrepreneurial ecosystems in each country are slowly taking shape, but a private sector catalyst is needed to make the sector viable and attract further capital.
That said there are a few fundamental aspects of the SEE market that make it fertile ground for early stage investing. A few specific examples:
Appetite for risk: A number of successful entrepreneurial ventures have helped create a culture of risk tolerance throughout the region. There has been a long held belief that Americans are better entrepreneurs, but the data out there shows that Americans simply convince a higher percentage of their population to try… So let’s try!
Regional character: A high degree of passion and energy as well as bold faced determination and a can-do attitude are key characteristics of people from the region and are also important characteristics linked to the success of early stage ventures. This is a very specific asset for local entrepreneurs.
Value for money: Strong technical skills at very good price points has been an economic driver for these economies for years. The particularly strong technical faculties in the region have helped create a burgeoning high tech startup scene in the region.
Breadth of skills: Typically in developed markets, startups require a larger team due to the narrow but deep skill set that entrepreneurs develop. In the SEE region, due to the need to cover a lot of ground with limited resources entrepreneurs tend to have shallower but broader skill sets, which is very conducive to running an early stage company.
Fertile ground for innovation: Necessity creates a ripe environment for innovation, and the SEE region is a part of Europe that has had to do ‘more with less’ for centuries.
That said, the market for early stage investments in the Western Balkans is challenging:
Entrepreneur vs. investor: lack common language & understanding
VC/entrepreneurial culture is still developing and entrepreneurs still don’t understand how the industry functions and why
The Western Balkans is not a region associated with innovation, but a number of companies are standing up and demanding to be recognized on a global scale - and we all know them:
Nordeus – 10M monthly users
Frame – Run windows apps in a browser
Bellabeat – smart jewelry for women
Seven bridges – bioinformatic cloud for the genomic scientific community
Schneider Electric DMS – over 30 PhDs are helping manage and optimize over 70 electrical distribution networks on six continents
A few of my conclusions on where things are today:
The innovation ecosystem has grown significantly in the past five years and continues to develop – there is a ‘critical mass’ of organizations and initiatives in the ecosystem to help entrepreneurs refine their ideas, develop their pitch, look for funding and take them to market. These organizations have all developed key relationships between themselves and there have been alliances struck leading to powerful collaboration between the parties. This is fundamentally important for the ecosystem to reach its potential.
Legitimate investors are now scouring the globe for genuinely good ideas backed by top notch entrepreneurs. Many of the top accelerators in the US are now giving preference to teams that come from outside of the US as they are looking for new ideas, different perspectives and teams that can tackle problems in different ways.
Serbia is fertile ground for innovation just as it is fertile ground for agriculture. Plenty of sunshine and rich land…as such, we need you entrepreneurs to keep planting seeds and we’ll keep fertilizing and watering the land…
And a bit of my advice to the future entrepreneur:
Entrepreneurialism is not a profession for a quick buck – follow both your strengths and passions
Be coachable and show a passion for learning – entrepreneurs that show the desire to learn have no weaknesses
Fail fast and keep moving
Investors are interested in the size of the opportunity and your ability to test your assumptions and gain traction. We would all rather invest in great teams with decent ideas than mediocre teams with great ideas.
Who’s David Schoch?
Fundamentally I am an entrepreneur. I am a founding shareholder of Orion Telekom, the 3rd largest provider of broadband services in Serbia as well as a founder and five term president of the Serbian Private Equity Association. I’m also a mentor and founding partner at StartLabs – a US based pre-seed VC fund investing in startups in the region.
I came to Serbia from London in 2007 with a PPT and financial model and raised €24M for the Orion project, I have also invested into real estate, and software. I’m not a fund manager, but fundamentally an entrepreneur that works with institutional investors. I’m here because I fundamentally believe in Serbia and the region, and I believe that the opportunities in the next 5-10 years will be amazing.
