Why is big domestic capital still steering clear of Serbian startups?

The development and success of a country’s startup ecosystem depend to a large extent on the participation and role of large domestic companies, as, in addition to capital, they provide qualitative support in the form of distribution channels, access to a large number of users, infrastructure and industry knowledge.

While in more developed ecosystems, such as those in the United States, Israel and the Scandinavian countries, traditional companies actively invest in startups, in Serbia this relationship is largely limited to sponsoring competitions or protocol-driven conferences, rather than genuine investments and strategic partnerships.

The lack of corporate capital creates a so-called “valley of death” in the early and mid-stages of domestic startups’ development, and the entry of such capital would bring about systemic changes.

In Serbia, there is some funding available for the very early stages, such as grants from the Innovation Fund and business angels, as well as for very mature stages, such as international venture capital (VC) funds, but domestic private capital for growth in the middle stage is lacking.

One of the biggest problems for investors in Serbia is that there is rarely anyone to buy a domestic startup. If domestic companies began acquiring startups for their technology or teams, this would also attract many more foreign VC funds, which would know that there is a market in Serbia for selling their investments.

On the other hand, partnering with agile startups would give Serbia’s traditional industries, which lag behind in digitalization, greater competitiveness on international markets.

“We still don’t have a private sector here that is willing to invest in the startup ecosystem. It’s great that the state is creating an enabling environment and that there are some support programmes from the World Bank and the European Bank for Reconstruction and Development, and these are indeed intended for the initial stage. But as long as we have only the initial stage, we cannot move forward. We have 40 large corporations and not one of them is genuinely working with the startup ecosystem,” Dušan Obradović, director of the SEE UP accelerator, told Biznis.rs.

Apart from individual, almost romantic attempts, we still do not have this kind of support from the domestic private sector in the form of capacity, contacts, knowledge and resources, he points out, adding that the main reason is that companies here are still preoccupied with running their own businesses.

“Companies have their own problems. When you engage in venture capital, it means that you have the desire, the money and the willingness to do it, that you are prepared to play the game and take risks, and a great reward can come out of it. At this point, I think everyone has tightened their belts because of the various challenges in the business environment. And real estate is still the primary way of parking excess capital,” Obradović says.

The experiences of local startups show that the biggest obstacle for young companies is convincing a large corporation to try their product. The practice in developed economies is for large companies that invest in a startup’s product to become its first test customer, giving the startup enormous credibility with other potential buyers. On the other hand, the startup gains access to data, legal teams, logistics, global sales networks or production facilities that it could not afford on its own for years.

A major advantage for early-stage companies is that, with a corporation behind them, they can afford to wait longer for results than traditional VC funds, which seek a rapid return on investment within five to seven years.

Obradović is not particularly optimistic about the rapid mobilization of domestic private capital and expects Serbia’s startup ecosystem to change little over the next five to ten years. “We have individual initiatives from time to time, but strategically, things will not change quickly. It will take quite a while before we have an environment here in which there is a clear path within the ecosystem. That means that if a startup is good, there should be no way it can fail to go through all the possible forms of support from the domestic economy and foreign corporations, international organizations, financial institutions and the state itself,” he believes.

Cooperation with startups is not a one-way street and does not benefit only young companies; corporations also stand to gain numerous advantages from them. One of the most significant is the opportunity to conduct research and development outside their own organizations, as it is often difficult and too expensive for them to innovate within their sluggish internal procedures. It is much cheaper and faster for them to acquire or invest in a startup that has already developed a solution.

Paradoxically, the very advantages listed above also contain the greatest risks to the success of a corporation-startup partnership. These include, above all, corporate sluggishness and lengthy decision-making processes, which can be fatal to a startup’s operations, as well as the dominance of big capital in the relationship, at the expense of entrepreneurial spirit and freedom.

Experts familiar with the sector believe that encouraging domestic companies to enter the startup space requires additional education for owners and top management, tax incentives that the state could offer for this purpose, as well as an emphasis on learning from successful examples where such cooperation has led to successful projects.

Obradović believes that the ongoing work on a new Strategy for the Development of the Startup Ecosystem is a good opportunity to create the conditions for domestic private companies to make a greater contribution to the development of early-stage companies.

Source: Biznis.rs, 17.08.2026