What is a startup and what are the foundations of its definition?
There is no single, universally accepted definition of a startup used worldwide. However, all the ones you can find online or in other sources are quite similar. One of the most well-known and influential authors in this field, Eric Ries, defines a startup as a new company developing innovative products or services in a completely uncertain environment.
Adhering to his definition as a foundation, it is further reinforced by adding four pillars in the form of the following important information:
- For a startup, from a risk-reduction perspective, it is crucial that it is founded by a team (at least two people) to function successfully. Past practice has shown that it is very difficult for an individual to successfully develop such a business.
- Startups are companies or teams that develop innovative products, services, or processes. Innovation is what matters in a startup, and in this context, innovation means a completely new or significantly improved solution compared to existing ones.
- Another important characteristic of a startup is creating products for the global market. This is especially the case in small markets like ours, which often lack the capacity even for initial validation of the idea and product.
- What significantly distinguishes a startup from conventional companies or small businesses is the potential for rapid growth (scaling). This growth is often represented by an exponential curve, where the marginal cost of each additional new product is almost negligible. This practically means that the potential sales growth is large, and the cost growth does not follow at the same rate.
These four characteristics particularly apply to “digital” startups, i.e., companies that exclusively develop software products based on all available technologies. They often opt for raising financial resources from so-called Venture Capital funds.
Difference Between a Startup and an Innovative Company
When talking about support programs, innovative small and medium enterprises should not be overlooked. In this context, they often develop hardware products or products that include both hardware and software components. Occasionally, companies appear whose product is software, but intended only for the local market.
What differentiates such enterprises from startups is the limited growth potential and a somewhat more complex path. The development of their products often requires additional resources and investments. To produce an additional unit of the product, supplementary human and other resources must be engaged, making product development highly capital-intensive. All of this makes the marginal cost not negligible, as is the case with startups.
The existence of such companies is important for every economy, as they represent a key factor for knowledge-based growth. Therefore, these companies should also be invested in and given support for further progress, just like startups.
Startup Community in Serbia 2024
According to publicly available data and several studies, this year there are over 700 startups in Serbia. They are at different stages of development. If we analyze the number of startups by business sectors, most are found in agriculture, medicine, gaming, and online commerce.
According to data from the Startup Scanner 2024, as many as 56% of startups were founded between 2021 and 2023. This indicates that the domestic ecosystem is growing at an average rate of about 20% annually, considering the number of newly established startups and the number of new employees in them. Just last year, over 1,350 new people were employed in startups.
And what are the main characteristics of founders?
Every third founder had previously participated in launching at least one startup. Most are men aged between 30 and 39. They are usually highly educated and have gained previous work experience in corporations. However, it is worth noting that Serbia is above the European average in the number of women in founding teams. In fact, two-thirds of all startups have at least one woman in the founding team.
To help founders during the startup formation and development process, there are support programs. In these, they can receive valuable advice that will help them go from idea to realization more easily and successfully. Each program has its methodology, duration, and way of providing support to teams.
What do these support programs have in common?
Almost all support programs, which will be listed and briefly explained below, are designed and focused on both categories – innovative companies and startups.
Before we start the analysis of the programs, categorized by startup development phases, it is important to mention the common characteristics of these programs. We will also refer again to the Startup Scanner to view statistics on the participation of startups in these phases.
In the 2024 report, we find that as many as 78.1% of startups participated in support programs that offered grants (non-refundable financial aid) in their value package. Grants are specific in that their use does not involve giving up ownership shares in the company.
The programs analyzed in the next section share certain common characteristics. These can help future and existing startup teams understand which program can bring them the most value at a given moment. The shared characteristics are:
- The program has its own structure and limited duration, not shorter than 3 weeks,
- The program is implemented at least twice in a row (in two iterations, with two different groups of startups),
- The program provides value to participants in one of the following ways: only through program activities (educational program, mentoring, domain consulting), only through grant funding, or a combination of the two.
In the past few years, a larger number of programs have emerged, proving that the ecosystem is growing rapidly. I will analyze the programs based on which startups can participate in them, i.e., in which phase they are at the time of application.
Support Programs in Serbia, Classified by Startup Development Phase
Phase: Ideation and MVP (Minimum Viable Product) in Development
According to data from the Startup Scanner, 21.9% of Serbian startups currently place themselves in this category. Compared to the previous year, this percentage was somewhat lower – 13.2%, which demonstrates the emergence of new startup ventures. This phase includes the earliest period of a startup’s realization.
This means the team is gathered around an idea, or MVP development has begun, but it is not yet ready for contact with initial users. From a program implementation perspective, this is the riskiest phase, which is why a large number of teams apply to these programs, but only a few receive support.
Programs focused on this development phase:
- Raising Starts – implemented by the Science and Technology Park Belgrade in partnership with NTP Niš and NTP Čačak. Divided into two phases: the first focuses on intensive education and preparation for demo day, after which the best teams enter the second phase and receive a grant of 20,000 CHF (hardware startups) or 15,000 CHF (software). They also receive mentoring and opportunities for ecosystem networking. The latest batch of supported startups was in 2024, and it is uncertain whether the program will continue in this format.
- Smart Start – a program of the Innovation Fund launched in 2021, intended for startups in the earliest development stages. It offers mentoring and a grant of approximately €50,000 with mandatory 10% startup co-financing. The program has been simplified procedurally and increasingly focuses on informal teams.
- StarTech – a program implemented by NALED, divided into three lots. Lot 1 is intended for the earliest stage and provides a grant of $15,000–25,000 with 10% co-financing. It is also expected that this program might not continue beyond 2024.
- D Incubator – a program by private company Delta Holding. It offers a three-month cycle of education, mentoring, and access to business contacts.
- Launcher – a new program from the NTP Niš team. It offers education, mentoring, and financial support in the total amount of €20,000. Participants rated it very positively.
Phase: MVP Developed but Not Yet on the Market
In this phase are 22.4% of startups in Serbia. Teams have a functional MVP but have not launched the product and do not yet have users. In addition to previously listed programs (which also accept teams at this stage), one program is exclusively focused on this level:
- Univerzum Startup Program – implemented by the company Mozzart in cooperation with ICT Hub. It is intended for teams with a ready software MVP preparing to go to market. The program offers targeted education, mentoring, expert talks, and awards: €20,000 for the best startup and €5,000 for two others.
Phase: MVP on the Market with First Users
This is the phase where the majority of startups in Serbia are – 35.8%. The main focus is acquiring and retaining users, measuring market reaction, and preparing for growth.
Programs:
- Star Venture Program – implemented by the European Bank for Reconstruction and Development (EBRD). Intended for startups with proven traction and potential for rapid growth. The program offers experts, mentoring, consulting, and help with entering new markets.
- X2.0 – in partnership with ICT Hub, F6S, and Zabala Innovation. Supports deep-tech startups through €30,000 vouchers across five thematic areas. The program supported 8 startups from Serbia and will end in October 2025.
- Mini Grants (Early Development Program) – one of the oldest programs of the Innovation Fund. Offers a grant of €120,000 with 30% co-financing from other sources. The amount has increased compared to last year.
- Katapult Accelerator – also a program of the Innovation Fund. Divides startups into two categories: “Ideation” (up to 2.4 million RSD) and “Scale-up” (up to 6 million RSD). A unique feature is a co-investment grant of up to 36 million RSD, added on top of investments from other sources.
Growth Phase
This phase is characterized by accelerated growth, system and structure development, and opening new global markets. In it are 18.4% of startups in Serbia.
In addition to the programs already mentioned (like Star Venture, X2.0, and Katapult), two more relevant programs appear at this stage:
- Matching Grants (Innovation Co-financing Program) – a program of the Innovation Fund intended for companies with an established market presence looking to strengthen their position. It includes significant funding with mandatory company co-financing.
- Swiss Entrepreneurship Program (Swiss EP) – less known to the general public, but very important. The program brings experienced international experts to work directly with startups. The support is tailored to each startup’s individual needs and can be crucial for growth and entering new markets.
- A1 Partner Program – a major novelty on the scene. At the end of 2023, A1 Serbia launched this program for systemic support of startups and young tech companies. The program offers:
- access to A1’s user base
- infrastructure and technical support
- mentoring and expertise
- connections with partners across the A1 Group
This initiative is an important step toward greater involvement of large companies in the domestic startup ecosystem.
What About Other Startups?
Some startups are in later stages – raising investments (Series A, Series B, and beyond). For these phases, there are no classic support programs like in the earlier stages. They mostly rely on private investments, venture capital funds, and international funding.
Programs with a Specific Focus
In addition to core programs, there are a few focused on special themes:
- support for startups solving social problems
- focus on environmental protection
- contribution to science and innovation in education
One of the newer ones:
- OTP Connect – a program by OTP Bank launched in fall 2024. The program has three zones:
- R&D Zone – research and development
- Business Zone – placement of innovative solutions
- Support Zone – education, networking
A current open call for Finsight is active until September 10.
What Has Changed Compared to Last Year?
- The total number of programs and funding amounts has increased
- New programs have appeared (Launcher, OTP Connect, A1 Partnership)
- Some programs completed their last cycles in 2024, and it’s unclear if they will continue
- Large corporations are playing an increasingly active role and becoming key players in ecosystem development
The Serbian startup ecosystem is expanding, especially in the area of early-stage development programs. While there are fewer programs in later stages, the growing role of the private sector and rising investments offer hope for the future. Startup support is becoming more organized, and compared to other countries in the region, Serbia is performing very well.
Author: Filip Ilić
Portal: ICT Hub
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