Investments in Western Balkans have been very miscellaneous last year. All kinds of VCs led and followed rounds in Croatian and Serbian startups, which dominated over neighbouring Bosnia and Hercegovina, Montenegro, Kosovo, Albania and North Macedonia (+ Slovenia**). Undoubtedly, the number of investors interested in Western Balkans is growing. Today, from local VCs to those from CEE region and Central Europe, the area sees a good variety of UK and USA VCs, with a good sprinkle of Asian capital.
10 and more years ago this was only wishful thinking. Heck, startups from Serbia and Croatia could only dream of local funds back then, while for some parts of Western Balkans this is the case even nowadays). So, these founders turned elsewhere, where they wouldn’t spend a fortune just to meet the investors. The closest options they had were the rest of the CEE countries.
This little throwback makes us wonder what the current situation is. Are Western Balkans still a promising market for CEE venture capital funds? Or do they mainly focus on their local startups and then hop over to Western Europe rather than Western Balkans?
Over this and adjacent topics, we talked with three VCs from the CEE region investing in Western Balkans: Polish Inovo VC (invested in Splx.ai, Pythagora, Index Health), Bulgarian LauncHUB (GlycanAge) and Romanian Underline Ventures (Collabwriting, Trickest, Turneo). Besides them, its worth mentioning there was a good amount of investments for Western Balkans startups from CEE funds like ZAKA VC (SpectreXR, Spiritus, Flexkeeping), Credo Ventures (Trustpath, Collabwriting, Trickest) and Eleven Ventures (Native Teams, Smart Octo).
**For the purpose of this article we add Slovenia into the Western Balkans mix. Croatia added as well, although we are aware some geo-administrative classifications wouldn’t label it as such.
Croatia moves fastest in startup development, with Slovenia and Serbia following
First things first. Croatia and Serbia have been making waves in the startup world recently, while their neighbors are mostly watching from the sidelines. These two nations dominate the Western Balkans’ ecosystem, but treating them as a single unit doesn’t do justice to the differences in their trajectories, Underline’s Bogdan Iordache remarks.
“We should treat Serbian and Croatian startup ecosystems separately, not because of the size of their ecosystems, but also because of their different socio-political climates.” He points how Infobip and Rimac Automobili pushed Croatia to 11th place globally in terms of unicorns per GDP. Also, since joining the EU nearly ten years ago, Croatia’s infrastructure, funding access, and overall ecosystem has flourished. Stefan Krstevski from Inovo emphasizes how Croatia’s startup value shot up 7.4x since 2019, its unicorn conversion rate is 7.1% (doubling the CEE average), and it raised over €92Min VC funding in 2023—30% more than the year before. No fluff there. Croatia is polished and delivering.
Serbia’s path is different, but no less impressive. This is a country that thrives on grit. Its startup scene doubled its workforce to 6,000 in just two years, and IT exports brought in €3.5Bin 2023, shares Krstevski. Sure, Serbia doesn’t have EU membership to lean on, and investors are still cautious about the long-term political and economic outlook. But Ioradche believes all those obstacles engrained a special type of resilience in the Serbian people, which can only be a positive thing for early-stage startup founders.
“This is an up-and-coming ecosystem we might get surprises from. Serbia is in its best startup days now.”
And the rest of the Western Balkans? Slovenia and Macedonia are moving, though at a slower pace. Slovenian Outfit7 went up in history with almost €900M worth of exit, but since then, only GenePlanet has had that type of traction. Macedonian startups like HeyReach and Native Teams are making some decent noise as well.
Albania is just waking up, but is already charting its way forward, as Vikas Malhotra put it “its entering startup renaissance driven by returnees and young innovators”. One such example, connecting Albania and Kosovo is Gjirafa, ecommerce scaleup on its way for IPO.
Bosnia and Montenegro, on the other hand, are still waiting to write some headlines – with Bosnian Rolla being more an exception than a mark of change.
What’s hot in Croatia and Serbia – sectors to watch
Regarding Serbia and Croatia, there’s no shortage of buzzwords floating around—AI, deep tech, blockchain, gaming, fintech. But which sectors really deserve the attention of VCs looking to make a move in these markets?
AI is the clear frontrunner in both countries, but with a twist. Bogdan Iordache notes that Serbia leans toward building AI platforms, while Croatia focuses on verticalized AI solutions. There’s still plenty to explore in the AI space, he thinks, but the early signs are promising. Raya Yunakova from LAUNCHub Ventures backs this up, pointing out that the technical talent here makes both countries strong players for the complex challenges AI development demands.
For Serbia, blockchain and gaming follow up. And Serbia isn’t just dabbling in blockchain. Krstevski calls it an emerging global blockchain development hub, praising formal support structures Serbia established through initiatives like the Web3 & Blockchain Policy Lab, working to create appropriate regulations and improve business conditions. Most importantly, big names like Tenderly, with its tier 1 funding from Accel, show that Serbian startups can punch above their weight. Then there’s gaming—Serbia’s homegrown studio Nordeus sold to Take-Two Interactive for over €300M.
Croatia has a knack for producing unicorns—Infobip in cloud communications and Rimac in automotive tech, but Krstevski highlights a new wave of activity for Croatia in DevTools and cybersecurity. His fund has already backed three Croatian startups in the past year, including Splx.ai and Pythagora, with more deals in the pipeline. Yunakova from LAUNCHub sees fintech as another regional star, and though on a global level that sector had its hardships in the past year, in CEE it is still driven by a growing demand for innovative financial solutions.
Let’s not leave health tech out of the conversation. While still growing, Yunakova believes this sector has untapped potential in the Western Balkans. With the technical expertise in both Serbia and Croatia, this could easily become a bigger player in the coming years, she asserts.
Across the board, all three investors agree on one thing—Serbia and Croatia have an edge when it comes to talent. Krstevski calls out the “hustler-like” mentality of founders in both countries, a crucial ingredient for any successful startup. Overall, both countries are proving they’re more than just regional players.
North Macedonia, Slovenia, Montenegro, Albania… The untapped frontier
It’s not all about Serbia and Croatia. While these two dominate the Western Balkans startup scene, their neighbors—Slovenia, North Macedonia, Bosnia and Herzegovina, Albania and Montenegro, Kosovo—are quietly but surely stepping onto the radar of savvy investors. So, are VCs paying attention? Short answer: yes, but cautiously.
LAUNCHub Ventures isn’t holding back. They’re actively exploring opportunities across the region, convinced there’s untapped talent and innovation waiting to be discovered. “By engaging with startups in these regions, we aim to support and accelerate the growth of the broader Southeast European startup ecosystem.”
Underline Ventures takes a slightly different angle. For Bogdan Iordache, it’s less about geography and more about the problem. If there’s a smart founder building a solution to a real-world issue—be it in Sarajevo, Podgorica, or Skopje—they’re interested. “We are trying to keep close to the ecosystems there.”
Inovo VC is making a more hands-on push. With Stefan Krstevski based in Skopje, the fund is planting roots in this part of the region. While Inovo hasn’t made many investments in these countries before, he is working to change that through three main approaches: networking at regional conferences, hosting events to connect key players, and spreading the word about Inovo through PR and outreach.
“Being based in Skopje rather than our Warsaw office helps me stay close to what’s happening in the region and build real relationships with the local startup communities. This hands-on approach lets me understand the market better and helps startups see Inovo as a trusted partner in their growth journey.”
The truth is, these markets are still developing. They don’t yet have the unicorn factories of Croatia or the blockchain hubs of Serbia. But the potential is there, and these VCs know it. The approach is careful but optimistic—testing the waters, building trust, and waiting for the right opportunities to come knocking.
Risks and rewards of Western Balkans investing
Investing in startups anywhere comes with risks, but the Western Balkans bring their own set of challenges—and some serious upside if you know how to navigate the terrain.
My interviewees are aware about hurdles in this part of CEE. For some of the mentioned countries underdeveloped ecosystems, limited funding, and talent retention are ongoing struggles, with political instability and reliance on outsourcing adding to the mix. Brain drain looms as a real threat, but many Western Balkan founders proved they can rise above local risks and play on the global level.
Despite the hurdles, the region’s grit, growing entrepreneurial energy, and talent potential make it a compelling prospect for investors willing to navigate its complexities. The payoff? Resilient startups capable of surpassing any obstacle.
