Serbia’s Venture Ecosystem in 2022
Publication date: 23.03.22
Reading time: 5 minutes
Once a disheartened splinter of the Communist bulwark, doomed to morph painfully through wars and woes, Serbia has come a long way to where it now stands: a civilized state governed by the rule of law, attractive to international investors, and one of Europe’s 20 leading technology ecosystems.

A nation of just 7 million, Serbia has a decent enough GDP per capita level and strong Internet penetration. Merging a still verdant technological legacy of the recent past with enriching cutting-edge engineering achievements of today has made it possible for Serbia to export a reported €2bn worth of information and communications technologies on an annual basis.

Start-ups that develop high-tech solutions in advanced areas such as blockchain cut a dash far beyond their home region. Teams that work on biotech for medicine and agriculture are also in the limelight. The Serbian government lends all of them a helping hand by instituting a very appealing taxation regime and safeguarding intellectual property — for both local and international developers that wish to establish their presence in the country. Now global investors map out multiple plans of action for Serbia — a predictable outcome of the nation’s systemic efforts to build a window of opportunities for the wider world.

Innotechnics, a comprehensive guide to Eurasian venture markets, and partners at Pulsar VC Capital have looked deep into the current status of Serbia’s venture ecosystem, highlighting its key players, drivers, and trends.

Venturing out into the venture wilds
Between 2019 and June 2022, Serbia’s venture market saw 55 start-up focused deals worth a total of $220m. In 2021, Serbia made headlines as the Balkans’ most investable start-up community with an astonishing 13-fold yoy increase in venture investment to $91m in 19 deals. Its regional neighbors were not half as magnetic for investors as Serbia that year. In 2022, the market was first expected to cool off — but then picked up momentum and ended up boosting investment to $115m in 17 deals, fourth place among the Balkan states.
Innotechnics and Pulsar expect the Serbian market to perform less vigorously in 2023 and pull in an estimated $60m in as many as 15–16 deals (no outlier deals considered).

The government offers start-ups ample support in business development; associations, incubators and acceleration programs emerge in plenty. Serbia’s venture market is relatively young — but productive enough to blow its own trumpet over real achievements. Its success stories include, for example, a globally recognized platform for Ethereum focused developers called Tenderly which has already raised about $60m since its birth in 2018.

Between 2019 and June 2022 Tenderly was involved in one of the four top deals the market still remembers. Tempus, a DeFi and Web3 project developer, Quantox Technology, a software maker, and Hunch with its automated media development and purchase platform joined the smash quartet with $27.9m, $21m and $7.8m in investments raised, respectively.

The seed stage lost nearly half of their 2021 deals number, leaving just eight to talk about. The early stage, however, had its number tripled to also eight deals, a positive sign of the start-up ecosystem’s slow but steady maturation.

Investors were apparently falling for video game makers, turning their products into highly publicized large deals. Nordeus, for one, was taken over by Take-Two Interactive. Innotechnics and Pulsar identified three more in the industry, Eipix, 3Lateral and Mad Head Games, which were bought by bigger companies. The video gaming segment is obviously in play and on the rise.

It’s early stage VCs that play the most prominent role in Serbia. With its four deals in the past 3.5 years South Central Ventures is currently in the lead. Katapult (pre-seed rounds), Republic of Serbia Innovation Fund, Point Nine and SeedBlink have each closed three deals over the years. There are eight international funds in Serbia, including such big guns as Accel and Coinbase Ventures, as well as seven regional ones.

Where money comes in plenty
Blockchain/crypto remains the segment investors are enamored of the most in Serbia. Deals multiply and moneys grow across the board. In 2021–2022, start-ups in this segment raised a total of $104m in 10 transactions. According to Partnership Manager Armin Konjalic, “blockchain is the most popular topic among youth and IT students; universities are adapting to this trend and creating new generations of blockchain professionals”.

Business Software and IndustrialTech are the runners-up in investment ($43m and $15m in 2021–2022, respectively), followed by PropTech that came in third place with $10m in investment. Industries that spawned the most start-ups included blockchain/crypto, AI, Gaming, SaaS, and E-commerce — Serbia’s top five most developed segments.

What helps the VC ecosystem grow up
Innotechnics and Pulsar have identified a number of factors that will likely drive the development of Serbia’s venture market over the next two or three years. Factor number one is the launch of two government VC funds under the auspices of the Serbia Innovation Project program. Factor number two is the creation of four pilot super-clusters to upgrade AgTech, MedTech, Web3 and Gaming/VR as part of the four-year Serbia Innovates project.

Serbia Innovates is aimed at bolstering Serbia’s innovation ambitions by backing its most promising segments. This effort, orchestrated by ICT Hub and supported by the USAID, is worth taking a good look at, as its pivotal element is a super-cluster, a globally corroborated business model in which SMEs and start-ups, investors, universities and government players are all incentivized to work closely together for faster innovation.

Factor number three is the development of the Belgrade-based BIO4 Campus for biotech and biomed, a venue that may evolve into a new ecosystem hub for teams that make the most of both biology and technology. Nenad Paunovic, who works as advisor for IT and entrepreneurship to Serbia’s Office of the Prime Minister, said, “We… hope that this Campus will be the centerpiece of a new start-up ecosystem that will be built around the intersection of biology and technology. This will be the next phase of our ecosystem growth.”
The government does not wait in the wings. It proactively furthers the development of the national start-up ecosystem through a long-term strategy that improves the legal and tax environment, steps up the infrastructure, lends early stage start-ups a helping hand, and expands university curricula by offering a range of training programs for entrepreneurs.

There are soft spots, though. Serbia’s venture ecosystem has yet to give impetus to the way start-ups and corporations interact, remove the legal barriers that hamper FinTech development, and address what currently weighs many teams down: an upsettingly low level of start-up founders’ business skills.

These handicaps are being cured, slowly but steadily. There are more than 20 R&D centers set up by the international majors such as Microsoft, Siemens, Bosch and others. Local companies, too, have finally found that start-ups do really exist. The most active partners for start-ups are Delta and Telekom Srbija; the latter is the Balkans’ first company to have launched a corporate VC fund. There are ten operational incubators and technoparks, and ten acceleration programs, including some of the world’s largest: Katapult and the Founder Institute.

Serbian start-ups are increasingly testing the waters in global markets; but most (93%) are still headquartered domestically. More than 60% look exclusively at the Serbian market; the rest eye both Serbia and the wider world, including the EU (50%), the U.S. (40%), and South Eastern Europe (40%). (The total is way above 100% as the surveyed typically picked more than one option for answer.) Nikolay Shkilev, the founder of Private Business Club, believes “Serbian tech projects are predominantly focused inwards; and there are a bevy of impressive ideas and products — but all that is shadowed by the snags their developers face in going global.”

In a nutshell
Age-wise, Serbia’s venture market is all but a toddler. Functionally, it’s already a birthplace of success stories — which makes it worth exploring. Local start-ups do find it tough to challenge the global competition, but they don’t grow unaided as the ecosystem helps them up and nurtures them. Corporates are increasingly setting their sights on home-grown technologies, and the government lays the groundwork for unhindered growth. The 2021 investment frenzy revealed Serbian start-ups’ ability to burgeon resolutely. Nataša Skrbic, the Program Director for the government-run Startup Ecosystem Digital Serbia Initiative, hopes there will be at least 1,000 start-ups and $300m in annual investment in Serbia by 2025. “That is what we’re aiming at as an ecosystem right now,” she said.

What we looked into
  • Time span: 2019–2022
  • VC investment statistics: Crunchbase
  • Relevance: no start-ups founded before 2000 taken into account for investment analysis
  • Finance reviewed: no grants, IPOs or ICOs taken into account for venture investment analysis; no deals with undisclosed investments considered; no deals invested by third-party buyers considered when analyzing valuations.

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About Innotechnics
Innotechnics specializes in tech market analysis, trend forecasting, and startup scouting. Leveraging a proprietary database of over 60,000 tech firms, we deliver insights tailored to your needs. Let's discuss how we can support your vision.