As North Macedonia seeks to consolidate its economy in the wake of the pandemic, the country’s young but vibrant ecosystem could play an important role in the recovery process. For Startup Macedonia, an ecosystem umbrella organization founded in 2016, the debate over the progress and potential success of Macedonian startups is finally becoming present in society, with government structures recognizing what this could mean for the small country in terms of economic development.
Startup Macedonia co-founder Igor Madzov shares with The Recursive that with around 400 startups active in different fields, North Macedonia’s ecosystem is gaining momentum and delivering promising results so far.
“There are around 350-400 startups operating in this area of innovation, technology, value creation and increased growth potential. As an ecosystem, we are also looking for our identity, what is our specificity, because we are a small country with limited natural resources. However, people are the greatest resource, and that is why supporting and pooling these available resources was the main reason for creating our organization,” explains Madzov.
The organization recently published a research in which Macedonian startups are asked how they coped with the COVID-19 pandemic. Surprisingly, more than 70% of them said they were better off or their situation remained the same, a testament to how the ecosystem itself is evolving and adapting to new challenges.
“This illustrates that the very nature of what startups do is changing, pivoting and finding new ways of operating. The whole wave of digitalization that the traditional sector has recognized needs to happen has also created space for new solutions that can also be applied in the domestic market,” Madzov told The Recursive.
What is North Macedonia’s competitive advantage?
According to Madzov, currently most startups focus on foreign and global markets, in new and emerging sectors such as artificial intelligence (AI), agricultural technology or biotechnology.
“Most companies are applying their solutions to foreign markets, and what we now see as a development opportunity is in the area of agricultural technology, cannabis technology, artificial intelligence or plant science. data. Companies in these sectors are also looking for ways to “multiply” the number of people working on such projects and create a competitive advantage over other countries in the region,” Madzov emphasizes.
For these startups themselves, finding human capital is perhaps the biggest challenge when starting out.
Pixyl, a startup that uses AI to identify fashion clothing in images, was founded in 2018 in the small town of Shtip. According to its founder and CEO Svetlana Kordumova, when working with AI, for example, there weren’t as many options for the recruiting process.
“By building a startup from the beginning, you are also working to develop value from the beginning and there are many challenges. We were aware that because we work with AI, we might not find people with this experience and knowledge. So our strategy was to look for people who can learn quickly and it turned out to be very effective,” Kordumova said during a panel discussion at the first National Startup Summitpartially organized by Startup Macedonia.
“Although most of them are students of the Shtip faculty, we managed to work on a technology and a solution that is now used all over the world,” Kordumova added.
Companies and business angels still need to mobilize
Currently, most startups in North Macedonia obtain their seed capital through the state-sponsored Fund for Innovation and Technological Development (FITD). And while FITD helps support these startups in most aspects of their work, starting with grants and additional funding projects, it also aims to motivate larger companies to start investing in these companies.
“The pandemic may have provided an interesting opportunity to create a new and different story for the Macedonian economy. Based on what we’re seeing in our portfolio, some companies may, with a little more support, be able to position themselves globally. We believe that some of the areas where we can succeed are AI, biotechnology and health technology, and there is certainly potential for development,” Kosta Petrov, general director of FITD, told The Recursive .
According to Petrov, so far the role of corporations and business angels has been disappointing and this needs to change.
“We know this is a high-risk investment and it takes time, successful global businesses don’t happen overnight, and while we see as a state how much we can help , companies and business angels must wake up and invest. What worries me a little is that people focus on security, not so much on innovation, and that innovative startups are synonymous with insecurity for them. But when we have positive examples, real guidance and investments, we will change this perception and young people will understand that the future lies in the private sector and startups,” Petrov emphasizes.
Dime Galapchev, CEO and founder of the Robin Hood Project, ©Dime Galapchev
Dime Galapchev, CEO and founder of an AI startup called “Robin Hood Project”, echoes this sentiment. By launching the project with the help of a Swiss fintech company, he says this type of help could really help spark a boom in this industry in the country.
“Startup cultivation in advanced technologies such as AI is difficult in itself, firstly due to the complexity of technology development, and then due to reasoning with angel investors, who are the key to survival, in particularly in countries with low GDP. As a low-income country, due to the lack of tough negotiations with domestic investors, as well as the fact that those who own the majority still prefer traditional sectors, these entrepreneurs are often discouraged,” Galapchev told The Recursive. He adds: “However, with the modernization of the country and with the help of external organizations willing to help startups working with advanced technologies, this represents an opportunity for these companies to be able to contribute in their own way to the economy. and society. »
