MACEDONIAActionable Startup Ecosystem Report 03/2016

by Franck Nouyrigat

Entrepreneurship Program

PLANPLAN

I ECOSYSTEM

II ACTION PLAN

PLAN

I ECOSYSTEM

1. COMPARATIVE ANALYSIS

We can compare Macedonia to similar startup ecosystems. We are

using geographic, population and GDP references. The data is

gathered using angel.co.

We are defining startups here as potentially high growth ventures

who have been looking for funding.

COUNTRY MACEDONIA ESTONIA ICELAND SERBIA LATVIA SLOVENIA

POPULATION

Million2 1.3 0.3 7.1 1.9 2

GDP/Capita

k$13.3 27.8 43.3 13.3 23.7 29.9

# Startups

on angel.co52 333 65 241 235 175

Startup Index

(#Startup /

pop)26.00 256.15 216.67 33.94 123.68 87.50

DATA

STARTUP INDEX

Potential

Macedonia is far behind similar countries in terms of startup activity.

Slovenia, a country comparable in terms of geography and

population demonstrate that Macedonia should be able to

produce 3 times more startups.

The purpose of this report is to help foster a more dynamic

grassroots entrepreneurial community. Ultimately this should

lead to job creation and increase of GDP per capita.

INTERPRETATION

TALENT POOL

#Grad student per year : 9863 (source http://www.stat.gov.mk)

Qualitatively, we observed generally low motivation for

entrepreneurship among university students. It seems like most

students of computer science end up working for a local company

doing outsourcing work for abroad.

An informal survey confirmed almost 20 to 25% of the students are

looking to leave the country to work abroad as a result of the wage

gap.

SUCCESS PATTERNSConsistently, all success stories that we heard started with

very little capital - $5k - 15k! None of the current high

growth startups we met used Venture Capital (VC). Some

went to international accelerators for funding.

Overall this is coherent with what is observed in the USA

where most high growth companies (95%) did not take

Venture Capital at an early stage.

We also observed that numerous founders were inspired

by local events like Startup Weekend.

2. HIGH LEVEL MAPPING

We used the Entrepreneur’s Journey (EJ) as a base for the

Ecosystem mapping exercise.

During a workshop we asked 15 participants who lead the community to

map the current ecosystem. We asked them to add what is missing on

the left side of the graph.

RESULT

The current ecosystem is focusing on helping existing

startups, but lack the structure to foster them.

We recommend to focus primarily on inspiring students

and young professional as well as supporting pre-

acceleration and entrepreneurial educational programs.

INTERPRETATION

WHAT MAKES A GREAT ECOSYSTEM?

There is very little Angel investment in the region. Most startups we interviewed

started with less than $5k of capital. The lack of exit and M&A also limit the

development of a classic venture capital structure.

While incorporating a company is easy, closing one is more complex.

Public institutions are currently working on easing business closure

procedures.

Access to high skilled technical talent is not an issue in Macedonia.

Qualitatively what is missing is a more international business culture

There is an opportunity to celebrate current startup success stories to inspire the

youth to start more companies

Overall the startup density is low in Skopje, but seems higher in Ohrid. There is a

need to expand the start-up community in depth and geographically.

According to Brad Feld, one of the founder of TechStars,

you need to develop a 20+ years vision at a community

level.

Startups ecosystem are by nature grassroots initiatives.

It is important to help the local entrepreneurial leaders.

WHAT MAKES A GREAT

ECOSYSTEM?

3. SWOT ANALYSIS

3. SWOT ANALYSIS

HarmfulHelpful

AGILE (SMALL)

LOW COST

EUROPE

TECH TALENT

HIGH QUALITY DEV SHOPS

LOW STARTUP DENSITY

LACK OF ENTREPRENEURIAL

“LEADERS”STUDENTS ARE NOT ENGAGED

SMALL LOCAL MARKET

LACK OF M&A / CAPITAL

LOW STARTUP ACTIVITY

ATTRACTIVE / FOREIGN

TALENT

DIASPORA

QUALITY OF LIFE (FOOD /

LOW COST …)

Strenghts Weaknesses

Opportunities Threats

BRAIN DRAIN

STARTUP ACTIVITY STAGNATION

HIGH DEPENDANCE TO EXTERNAL

HELP

STRENGTHS

Macedonia’s strength rely on the quality of its tech

agencies, developing at low cost ($20-40 per hour) for

European / Israeli / US corporations.

The country being small, should allow for fast changes of

policies.

WEAKNESSES

As observed, the main weakness is the size of the local

market associated with a low Startup Index. The natural

remedy would be to increase risk capital and startup

support structures.

However, as observed, the current ecosystem needs help

prior to the startup phase. This should be addressed

through educational programs, inspiration and local

grassroots events.

THREATS

Macedonia is currently behind in terms of startup activity.

Stagnation, mixed with brain drain might lead the country to

a slow growth.

It is important to re-align the efforts of donors/government

with the needs of the local community in a bottom up /

support approach lead by entrepreneurs (leaders) versus a

top down approach lead by non-entrepreneurs (feeders).

OPPORTUNITIES

The country could be extremely attractive to digital

nomads and international entrepreneurs due to a low

cost of living associated with high quality commodities.

The Macedonian diaspora is equally important.

The opportunity relies on strategy to communicate the

country’s opportunities internationally.

PLAN

II ACTION PLAN

NEW PROGRAMS

RECOMMENDATIONSSuggested Objectives and Key Results (OKRs)

STARTUP DIGEST

There is a need to connect the ecosystem. Startup Digest is a weekly

curated newsletter shared between actors in the ecosystem. It allows

anyone who subscribe to it to get a list of upcoming startup events in the

region.

Launching a Macedonian or better even a Balkan newsletter regrouping all the startup related

events in the region, allowing for a more connected community. Grassroots and leader initiative.

objective

Key Results

Recruiting a local leader by June 2016

Growing the mailing list from 0 to 3,000 by end of 2016

Mapping existing events

STARTUP MACEDONIA

Like Estonia and Chile before, Startup Macedonia should be a brand attracting

digital nomads and external entrepreneurs.

Attracting foreign entrepreneurs to stimulate economic activity and startup cultural exchange. The

goal is to put Macedonia on the Startup Map and increase awareness of its startup friendly

environment.

Objective

Key Results

Invite two influencers (Active on social media) by 2016

Communicate in 2 international startup events about Macedonia startup ecosystem by 2017

Launch a program to attract 10+ startups to stay for 3 months by 2017

Launch a e-residency program for entrepreneurs (like Estonia) by 2018

Create a Startup Balkan brand to celebrate local success by 2017

Launch an English only website for communication by end of 2017

FIND YOUR TECH CO-FOUNDER

This program focus on bringing business talent with business ideas and/or

designers, to work as a team with local tech talents …

Brings awareness about Macedonian tech talent and startup friendly culture to Europe & USA.

Allow for Macedonian to capture foreign investment funding.

Objective

Key Results

Launch the program in 2017

Communicate in France / UK / Germany / USA and recruit 30+ biz founders by end of 2017

10 Startups launched with Macedonian founder having substantial equity (20%+) by end of 2017

PRE ACCELERATORS

Pre-accelerator allow to take potential startup teams to the next level. The outcome

of the Pre-accelerator programs should be teams accepted at international top accelerators etc..

The goal is to send Macedonian startup team to some of the best accelerator in the world.

Objective

Key Results

5 teams accepted to top Accelerators by 2017

100 Teams pre-accelerated through the ecosystem by end of 2017

The pre-acceleration programs will all be 100% in English

LEADERS QUARTERLY DINNER

Successful startup community are inclusive and grassroots driven,

led by entrepreneurs (leaders) while programs sponsored by government

agencies and donor funded organisations play the role of support and are called

feeders according to Brad Feld’s ecosystem nomenclature.

Connect the community leaders defined by success and volunteer involvement with the community

objective

Key Results

Recruit 5 founders / leaders by October 2016

Host 1 dinner by end of 2016

Invite 1 foreign successful entrepreneur’s leader to the dinner

Invite 1 Macedonian successful founder who moved abroad (Diaspora)

Document each dinner and produce a recommendation report for each

DIASPORA CONNECTION

Successful startup community are inclusive and grassroots driven,

led by entrepreneurs (leaders) while programs sponsored by government

agencies and donor funded organisations play the role of support and are called feeders

according to Brad Feld ecosystem nomenclature.

Launch a Macedonian Startup online community

objective

Key Results

Launch a Facebook / LinkedIn group by July 2016

Recruit 50+ diaspora entrepreneurs

Conduct a survey to understand how to get more Diaspora entrepreneurs involved with the

startup community

RECRUIT MORE VOLUNTEERS

To run external / international programs … might give a grant to support existing

ones (300$ / month)

There is a need for more events in the community, we need to actively identify and recruit more

volunteers to launch them.

objective

Key Results

Select 3 events that are missing in Macedonia to help inspire and educate entrepreneurs (see

ecosystem map)

Setup a global sponsorship program to give $500 to $1000 to local program leaders

Launch 3 new events by end of 2016

A $3k MATCHING GRANT

So many potential entrepreneurs we met are stuck at work, they will not take the

risk to leave their day job. And they are not looking for a 50k+ Grant.

Meanwhile so many successful startups started with less than 5k!!

Lend a small matching grant to startups or entrepreneurs, get them coached by a mentor and allow

them to work from anywhere. In case of failure the money is not asked back.

objective

Key Results

Get 50% of the entrepreneurs to give the money back within a year.

Associate each startup with a mentor.

CONCLUSION

Macedonia needs to move faster! It has the potential to have an

amazing startup community!!

By increasing the number of programs such as suggested in this action

plan we believe we can multiply by 3 the startup community in the

course of 2 years.

BOOKS TO READ

BIBLIOGRAPHY / SOURCES

http://microdata.worldbank.org/index.php/catalog/1991

http://castleventure.com/wp-content/uploads/2014/04/SW-White-Paper-Entrepreneurs-

http://www.paulgraham.com

http://www.startupschool.org

https://www.udacity.com/course/how-to-build-a-startup--ep245