Silicon Gardens Investment Fund recently conducted a survey on the state of investment in South Eastern Europe. Gregor Rebolj, Partner at Silicon Gardens, presented the results to the Podim participants.
We also spoke to Gregor Rebolj at Podim about the state of investment in the region and its challenges, as well as the new third fund launched by Silicon Gardens at Podim this year.
See what Gregor has to say in the interview.
You recently conducted a survey on the state of investment in Southeastern Europe. What are the main results of this survey?
The survey showed that investment in high-tech companies with Slovenian, Croatian, or Serbian owners has increased from around €300 million between 2016 and 2017 to €3.45 billion between 2021 and 2022. This represents an almost 12-fold investment increase, a remarkable market development in recent years. In addition, the number of exits in the region has increased fivefold since the end of 2016, and the number of companies exceeding a valuation of $1 billion (unicorns) has jumped from one to six, further demonstrating the region’s growing technological strength. At the same time, the survey also shows that the technology companies that are most successful in their operations and attracting investment have HQ based abroad. To achieve even more significant breakthroughs, more optimal taxation of employee ownership should be established, as current taxation forces business owners to move abroad before potentially selling their stake in the company.
What are the investment challenges in SEE?
SEE still lacks active angel investors who invest their capital in the next generation of entrepreneurs. In addition, our region also needs more adequate financial support. Top institutional investors, who invest in the best venture capital funds in the world, are often reluctant to work with regional development funds because their goals are not completely aligned. We must, therefore, actively seek to attract them to the region. In their view, each country in the region alone is too small and not competitive enough as a market. In addition, they believe that the region still needs to see more successful venture capital-backed exits, which they attribute to a lack of ambition by founders, who tend to exit their companies too quickly. That is why I believe it is not productive to compare one national startup ecosystem with another, but to look for what connects us and makes us stronger – united.
You also announced the arrival of a new, third SGF fund. What can we expect?
We launched the third fund at the PODIM conference. We expect it to be €30 million in size, making it a much larger fund than the first two. In addition, the third fund will focus its investments across the region.
The new fund will thus give an additional positive boost to the regional entrepreneurial ecosystem by providing more resources to finance and invest in promising companies. In addition, the new fund will provide the necessary support, mentoring, and connections essential to the success of startups.
By doing so, we aim to contribute to developing the region’s technology sector and attract additional investment and entrepreneurial talent. At the same time, the fund will enable more investors to support the early growth stages of technology companies more efficiently and successfully.
Which companies will you support with the new fund? Do you have any industry or sector priorities?
We want to support high-tech export companies with high potential and high value-added per employee. We continue to focus on early-stage companies with significant growth and expansion potential in the global markets.
What other support do you provide to companies besides capital?
In our fund, we do not limit ourselves to investing money but actively support regional entrepreneurs in their development. For example, we are helping to recruit people in areas where the team still needs to be completed or helping to find co-founders and address other challenges in the early stages of development to make them more attractive for investment. We are also a local partner to other foreign funds, highlighting exciting projects in these countries which they don’t cover directly.
Regional companies also need to help each other in a global market. As investors, we actively encourage our entrepreneurs to support each other and share experiences. Our goal is to connect people in this ecosystem so that they can benefit from the synergies it offers. For example, if someone wants to start a Kickstarter campaign, we connect them with our portfolio companies, such as Equa or Birdbuddy, who already have such experience. Community is essential to us, so we all take the time to help each other. As entrepreneurs, we know that we needed help and support in the past, so we are now giving back and with that spin a positive fly-wheel.