The Government of Serbia has adopted the Startup Ecosystem Development Strategy for the period from 2021 to 2025, which envisages the introduction of content on startup entrepreneurship at all levels of education, as well as improving infrastructure and program support for startups, especially in the early stages of development.
“The strategy is a good first step in improving the startup ecosystem, it includes initiatives of the state, but also some private companies, and it is very important because the law on innovation activities, which should be adopted soon, defines some concepts for the first time. It has finally been defined what a startup is, what a “unicorn” is, what business angels are,” Irena Djordjevic, manager for regulatory reform at NALED.
She notes that the criteria are now clearly defined and the startup is considered to be a newly established business entity that has the potential for rapid and large growth. The strategy also defines what needs to be done concretely in order to improve the ecosystem, and its plan is to move Serbia, which is still in the earliest phase of activation, to another phase – globalization, in which we should reach 800 to 1,200 startups. There are fewer of them for now, but that is a goal that is achievable. The potential of Serbia is great, and three years ago, as she says, the global startup Genome recognized the ecosystem of Belgrade and Novi Sad on the global map of startups.
“It is not known how many startups there are now, because it is not registered in the APR like that, and that needs to change, and that is overlooked by the draft law on innovation activity,” Djordjevic points out.
She emphasizes that there are five special focuses in the recently adopted Strategy, one on education, the other on infrastructure and support for startups, and the third on financing.
“There is a lot of room for improvement, because now no one is ready to invest in someone who is at the very beginning, because the risk is great. That is why such businesses need help, and the strategy says that there should be more state programs that would provide non-refundable funds for financing startups at an early stage,” says Djordjevic.
It is important to have more examples of good practice, those who are willing to invest their money in startups, and it is important that investors, as she says, see that they have the option to invest in such businesses, because investing in them is good because the risk is higher and the possibility of profit.
“One of the measures is to increase grants at that early stage, the other is to develop the venture capital market, these are alternative ways of financing and to create a legislative framework for group financing,” explains Irena Djordjevic.
Startups and small businesses used to have a handful of objections to procedures, but also to tax burdens. Djordjevic says that they talked about that topic with the representatives of some of the startups and that they told them that it was a problem, but that there was also their insufficient information about what all exists and can be used.
“A whole set of tax incentives has been created, but they are not used to the expected extent. If you start a startup for five years, you have a tax exemption on your salary if it is up to 1.300 euros. But it doesn’t benefit a lot of people. Since January, when the law comes into force, you have a tax exemption for salaries and contributions of up to 70 percent for employees in the company that deals with research and development,” Djordjevic points out.
The director of the Ventu.rs platform, Luka Pejović, says that the biggest problem is that we, as a country, are cut off from the largest markets, and everyone who wants to make a successful startup must go to foreign markets.
“If such a strategy is implemented, it will have positive effects, but the biggest problem is something that is beyond the control of the state, because it is very difficult for me to know what an American wants to use,” Pejovic points out.
That is why, as he says, promotion is important, in terms of fostering cooperation between domestic and foreign companies. He cites the example of Denmark, which has its so-called embassy for their IT industry, where every startup from Denmark comes and works there for several months and tries to find a partner, financier, clients.
On the example of Ventu.rs, a platform designed last year to help develop startups by connecting them with potential investors, Pejovic says that for now the main conclusion is that small companies in Serbia are often unprepared for any financing to work, Nova reports.
