Do Balkan start-ups, lack the ambition to grow beyond their comfort zone?

Venture Capital funds are somewhat active in the Balkans, with investments news here and there. To shed more light into the scene itself, we talked with Tatjana Zabasu, one of the Pioneers of Venture Capital in the Balkans and who serves as a Managing partner at South Central Ventures a Venture Capital Fund investing in Tech Companies in The Western Balkans with offices in Zagreb, Belgrade, and Skopje.

She has been active as VC investor for over 10 years and enjoys working with entrepreneurs, helping them grow successful businesses and learning about new technologies. Among other, she currently serves on boards of InPlayer (asset monetization) ShoutEm (mobile), Edition Digital (digital publishing) and Efos (agritech).

Tatja a Zabasu – Sarajevo Unlimited 2017

Tatjana can often be seen at start-up events as a jury member or panelist, is a contributor to some tech and business portals and mentor to start-ups. In her private life, she is a mother of a teenager, loves outdoor sports and in general tries to have fun in everything she does. We had a chance to talk with Tatjana about what the latest investments from SCVentures in the Balkans and also what founders can actually do to gain their interest.


DS: From time to time we share stories about the latest investments from SCVentures for our readers, and so far there seems to be a lot of money invested in start-ups in Serbia? Why is that? Can you elaborate a bit more on the potential of the start-ups? Is it the entrepreneurs? What makes them so special in the Balkans?

Tatjana: It may seem we are investing a lot in Serbia, but this is not exactly true. Most companies we invested in so far, come from Serbia – in total 6 out of 12 investments. However, most of the funds were invested are in Croatia, as the opportunities we found in Croatia were in general in later development stage and thus were raising more funds.

In Serbia, most deals were early stage, looking for seed investments. In general, VC investing is all about the entrepreneurs and teams. Without a cohesive and ambitious team, no idea, product or service can really make it. You need people to bring them to life, to the market and adapt them to what the market needs.

Investors want to see the growth potential, as only high growth can increase the value of our investments and bring returns to our investors. Therefore, we are looking for teams and leaders who are able to see the market potential, can identify growth opportunities and have the ability to make it all happen.

And primarily, the ones who are not setting the limits for themselves. It is really hard to pick one “special” factor… We also need to take into consideration the numbers – our target region comprises 7 countries, which are very different in terms of population, ranging from Montenegro with the population of about 600,000 to Serbia with 7 million. That is a huge difference, and it is not reasonable to expect that the deal flow from the countries will be equal.


DS: What is the latest around the investments in Macedonia? Letz being one of them…

Tatjana: As you know we invested in 3 Macedonian companies so far, Letz was our first investment and the smallest of them. As you may know, as a fund we are not too active in B2C space and are more familiar – thus can also add more value to B2B businesses.

Letz aimed at the former, but failed to achieve the traction we were expecting and consequently, it was really hard to attract followers on investors. On the other hand, the founders also refused to pivot, so I guess we were not too good of a match.

On the other hand, I’m pleased to say the other two investments, Cognism and InPlayer, are both growing, expanding their teams in Macedonia and developing their businesses with the excellent talent we have in the region.


DS: What are the terms of a start-up from Albania, Kosovo or Montenegro to close an investment round with SC Ventures? Have you seen anything interesting so far in these countries? What’s lacking to attract your attention? The founders? Lack of ideas? Lack of monetizing plans or global products?

Tatjana: The terms are the same, regardless of where you come from. We are looking for capable teams, with a domain knowledge in whatever they do, ambition to succeed in the global or at least regional market.

And in this case, regional does not mean the Balkans only… We have seen some interesting opportunities in the countries you mentioned that had our attention. In some cases, the founders decided not to go down the “VC path” during the discussions, and to run their business as previously – more of a lifestyle company, I’d say.

In a few cases, we were keen on learning more about the businesses and about their development plans, but the founders simply stopped responding. That actually surprised me a bit… In general, I’d say what is missing is the ambition to grow out of your “comfort zone” and the markets the entrepreneurs are familiar with. Getting an investment only makes sense if it helps the company grow fast and scale, which cannot be done in a small market, or with products/services that are not scalable.

You have to understand where investors are coming from just having a solid business that generates decent revenue will not increase the value of the investment sufficiently.


DS: How should a founder from these smaller Balkan countries approach you? How do others do, from Serbia or Croatia, and how can they learn?

Tatjana: Where you come from is not important, the important part is where you are headed. One of the most important things for an investor is to make sure you know why you are looking for an investment and make sure you can explain that well to the investors.

And above all, don’t approach an investor with something you do not believe in 100%. As I mentioned before, raising funds is a good decision only if it really helps you get to the next level and grow fast. And to do that, you have to have faith and you have to be ambitious.

DS: What are the terms and conditions to land an investment from SCVentures? Should it be registered somewhere or can they apply at any time from anywhere?

Our investment region comprises 7 countries in the Balkans (Macedonia, Albania, Kosovo, Montenegro, BiH, Serbia and Croatia), so the companies need to have the substance in this region. IN terms of time, you can approach us anytime. Our colleagues Ivana and Igor are regularly at events and conferences in Albania Kosovo and Macedonia so it doesn’t matter if its in person or remotely we can start the process when once a company shows interest.


DS: What is your advice for start-ups based in the Balkans? You’ve seen a dozen so far and you know how they think and act.

Tatjana: There were some recommendations in what I previously talked about. Primarily, I think the ambition and ability to “think big” are the weakest points, and many start-ups can work on these.

When you think about your company and where it is going, don’t just think in terms of what you can develop, but think about what the market could really need and want – and test your assumptions as early as possible.

Believe in what you do, but don’t fall into the trap of being in love with your idea; try to assess its potential with a certain dose of critical observation. Criticism might sometimes be far better than praise, so when you get some, don’t just shake it off and try to think whether it is justified.

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