Learn how to start IT company – Young entrepreneur needs support of accelerator, mentor, incubator…

Although one of the most developed sectors in Serbia, IT industry has not reached its full potential because it does not have support of domestic business environment. That entrepreneurial branch in Serbia comprises some 2000 companies which hire 6000 people.

Serbia invests EUR 60 per capita in the industry which is pretty much the same level as in Bulgaria and Romania but that figure is higher than the one invested in Montenegro, Macedonia and Bosnia and Herzegovina while the investments in Croatia total up to EUR 200 per capita. However, this is below the average compared to the EU countries investments (EUR 800 per capita).

- When you take into account obstacles the system sets for a young entrepreneur, it seems impossible to succeed especially if a person must commit itself firstly to development of his/her primary product/service, not only to focus on overcoming obstacles – Dejan Randjic, General Manager at DNA Communication and the ICT Hub project, says for eKapija.

The project provides support to easier set up of a start-up for individuals and newly-founded firms in order to overcome problems when setting up IT business through providing adequate business environment, high-end development and testing platforms, quality technical information support and, the most important – mentoring and education.

- We are planning to include 35, 40 newly-founded companies in the first cycle which will grow in ICT Hub but through this platform, we will comprise and support many other similar entrepreneurs who will not be located in our premises, they will have an opportunity to use methodology, knowledge and ICT Hub benefits. The objective is to redirect business from grey economy towards legal flows with the support of overcoming problems the system places. Another objective is to create additional options for export of IT products and services through support in development as well as connecting of our young IT entrepreneurs with potential investors and buyers of their products and services – a collocutor of our portal explains.

(Dejan Randjic)

DNA Communications and Orion Telekom, the basic project partners, provided most of the funds for the implementation as well as additional resources, such as education, technical and marketing support. USAID provided USD 300.000 for the project.

The DNA Communications agency is responsible for defining and implementation of the strategy for 2014-2016 which will focus on the identification process of IT entrepreneurs in ICT Hub.

- We will start the process in May 2014 and, apart from quality of an idea, project and service/product participants submit, estimation of readiness for work in an organized system which will offer a lot but also require a systematic approach will be very important.

Then, we find very important the right way to expand the pool of Hub partners because we think there are big companies which can recognize their interest in our project. Finally, the focus is to expand the good practice example because we expect this and similar projects will provide additional incentive to pay a lot more attention to start-ups, regardless of the fact whether the support comes from the corporate sector or from the state – Randjic points out.

Mid April to see Startup Hub

As Dragana Zmijanac, the Executive Manager of the organization promoting entrepreneurship in IT industry, SEE ICT, said for our portal, during the last couple of years, the number of start-up educations and networking opportunities significantly increased. SEE ICT organizes regular monthly workshops and entrepreneurs’ meetings and the Start-up Academy as a technological entrepreneurship course lasting for a few months which we implement, has given 20 start-ups so far, 7 of which got international investments.

- The next big thing we do is the Start ii Festival in more locations in Savamala, from May 16-20, with more than 20 events related to technological entrepreneurship and a number of opportunities for start-ups to present themselves to investors – Zmijanac announces.

One of the plans of SEE ICT is the set-up of the special development center, Startup Hub which will open in mid-April, premises equipping as well we the program preparations are almost over.

- Hub is located at the ceiling of the business center of the Savski Venac borough, in Kneza Milos St. It is the center where 5 selected start-ups will work on their products development with the support of mentor and education, contacts with investors, support with respect to legal, financial and administrative questions. It is a pilot project with which we want to provide additional support to young, technological entrepreneurs and facilitate them the first start-up steps – a collocutor of eKapija points out.

Bridge to Silicon Valley

The first and so far the only accelerator in Serbia, StartLabs, started working in September 2013 and as a director, Nebojsa Lazic, says for eKapija, the approach is mostly based on already tried recipe of well-known accelerators specially tailored to specific requirements of this part of the world and stadium of eco system development.

- Apart from money investment, we offer to our start-ups a carefully comprised group of mentors, business premises as well as an access to contacts’ network and consulting in all aspects of business and company development – Lazic says and adds that StartLabs invests USD 50.000most in two stages, in Belgrade and San Francisco. A stake in a company ranges 10 - 15%, and the exact figure will depend on specific sum invested, on the stage a company and its business is.

(a StartLabs workshop)

- Basically, StartLabs is a bridge between the cultures of Silicon Valley and West Balkans entrepreneurs. We want to help entrepreneurship to develop in many young, smart and curious people through pointing them at the road we will take so that they could implement their ideas – Lazic says.

In its program, StartLabs already has three start-ups in its program - Business Exchange, CaseTrek and CarLock.

Jump through fire chains

As Dragana Zmijanac thinks, the major problem of the young in Serbia is the lack of motivating environment for entrepreneurship in terms of support and understanding of a family, school, and local community and especially of the state. Legislation framework is such that entrepreneurs must jump through fire chains in order to finish things which are usual in the world, such as payments from abroad.

- The young lack knowledge, experience, contacts with successful entrepreneurs who would be their mentors. We are trying to overcome these problems through our activities. Capital lacks as well although it is a minor problem, money follows quality teams and well-implemented ideas.

When it comes to financial support, Serbia is very far away, our collocutor thinks, domestic investments do not exist as well as institutional support to entrepreneurship. On the other hand, when it comes to a lively scene, enthusiasm and decisiveness of the young to achieve success, ideas and the number and quality of start-up events, Belgrade is slowly becoming a center of technological entrepreneurship in this part of Europe.

- When it comes to investments, start-ups in Serbia are provided with a number of investment funds, incubators and accelerators worldwide; they really do not care for geography. Namely, Bulgarian Eleven has already invested in a couple of domestic start-ups. British Seedcamp also and when it comes to domestic investors, there are the Innovation Fund of the Republic of Serbia and Startlabs accelerator. Business-technological incubator of technical faculties is a great place for development of young companies and innovative products – Zmijanac says.

(Nebojsa Lazic)

Nebojsa Lazic points out that unavailability of experience, knowledge and capital are features of all young start-ups scenes and therefore ours as well and that is a serious trouble spot for expansion of these kinds of ideas.

Lazic thinks that if it is not about accelerators, start-ups mostly rely on financial support. They can mostly include in incubators providing technical support (premises for work, meeting halls, equipment, etc.) and the second option is investments of business angels who individually provide support to start-up.

If we are speaking about systematic and organized approach, as Dejan Randjic says, there is very little of it. However, a kind of a support and help which lacks at the moment is the support of the Government of Serbia which a year or more ago, officially adopted the IT industry development strategy where IT industry is defined as one of the most perspective economy branches.

- The important segment of this strategy is the support to start-ups, set up of IT incubators as well but little has been done. I expect that ICT Hub will be recognized as one of the projects where measures the Strategy defines, can be implemented successfully but also as an example of the help the state will provide for start-ups in the future.

When were the first trouble spots overcome?

According to definition, start-up is only one stage in business which grows into a product and a realistic business, preparing itself for the next growth stage. There are many examples of world giants which continued this way, especially in IT field where start-ups, reached full expansion stage in a few years – Dejan Randjic thinks.

- Everybody knows about the example of Facebook which went through the start-up stage to one of the most valuable companies in less than 10 years. Still, it is very difficult to conclude when it comes to Serbia. There are good examples where companies successfully overcame the first trouble spots in a year but with the big efforts of entrepreneurs and the placement most often oriented towards foreign markets. Along with all obstacles mentioned the fact that it is very difficult to foresee business, now even on a period of only 6 o 12 months, additionally slows down development of start-ups in our country.

(Dragana Zmijanac)

Start-ups operate in incredibly fast, stressful environment which is constantly changing requiring adaptation, Dragana Zmijanac says. There are a number of problems. They mostly refer to too long product development and launch delay until it is completed, exaggerated focus on irrelevant details, many assumptions and very little testing among users…

- It can be said that start-up went through the beginning stage the moment it acquires confirmed market position, clear and stabile business model which ensures funding, clear organizational structure and well-distributed roles.

According to Nebojsa Lazic, there are many parameters which can tell about a start-up maturity. Different investors, organizations and individuals have different objectives and therefore see start-ups through different glasses. What ones find to be potential, others find it a too early engagement stage.

Irina Milosevic