(This is a guest article written by Dejan Aleksov, co-founder of Startup Macedonia and founder of the law office Aleksov. The article was initially published on Macedonian Business Hub. With the author’s permission, we are making it available here as well!)
Macedonian startup eco system
These last several years, especially 2015 and 2016, mark an impressive revitalization of the Macedonian startup projects. To name just a few: Fueloyal, Branister, Letz, Daris Inzinering, Gordian Sistemi and many others. This is possible because the conditions for opening an innovative business are improving thanks to several key aspects:
- Access to finance: (FITR, CEED BA Club, SCV fund, as well as other financial sources for boosting the startup project). Nowadays, one can easily have an innovative idea funded without going through the hassle of mortgages, bills, guarantors and/ or enforceable clauses. All that’s necessary is to be able to convince the comity that your product has potential to eventually grow into a self-sustaining business and be able to generate revenue.
- Simplified networking with people; (Startup Macedonia), new association of an old community. Startup Macedonia can connect you with the key people, depending on what you want from them, may that be financial support, legal advice, meeting a startup founder, employing services of a designer, programmer, you name it!
- Accelerators, hubs, co-working spaces (Seavus Incubator, CEED hub Skopje, New Man’s BA, Coffice and many others) offer approachable solutions for acceleration, incubation and so on.
- Increased interest and events connected to the development of startup projects, increased number of foreign associations that offer support for Macedonian startups and an abundance of other resources that were non-existent or in extremely-limited supply before.
Legislation for startups in Macedonia
Company Law which regulates certain aspects of the company operations (not excluding innovative startups) is in effect since 2004, with several subsequent changes in the following years.
It is a law which became effective in a time that showed potential for none of the resources discussed above.
Innovative startups don’t have enough money to be established as a joint stock company, so they simply become established as a limited liability company, with strict and rigid conditions in relation to the ownership structure. Relations between partners are governed by strict criteria and this, in turn, creates rigidity that can prove to be devastating for the development of innovative startups.
If there’s one thing that innovative startups need, it is a more flexible legal framework that will regulate property relations, because the end-goal is not to remain as owners of the company forever, but to develop, to expand and, eventually, sell. This is twice as true in the case of investors. They don’t want to be forever tied to the companies and pour resources indefinitely. What they need is to be able to dispose of their share in the easiest way possible and get in and out of the ownership structure in a less rigid way, as dictated by the Company Law.
This is just one part that needs to deviate from the company law and to adapt in accordance to the needs of innovative startups.
For starters, certification and accreditation of business angels is necessary. We’re talking about the introduction and acceptance of certain criteria as to who can be a business angel and what legal incentives and benefits are at the investors disposal. In addition, it is necessary to introduce certification and accreditation of incubators, accelerators and accelerating programs.
In other words, we are in a dire need of a complete overhaul of this area.
It is impossible to make substantial changes in the Company Law, because it would go against the whole work concept of existing companies, and since the majority of them approve of the current Company Law, they are at risk of losing money if substantial changes are to take place.
What is possible (and already implemented in some countries in the EU), is having a special legislation that would apply only to this group od stakeholders and is in accordance to the needs and potentials of these particular businesses.
Republic of Italy already has a completely new regulation that made startup visas a thing, share – as a way of incentive and compensation of employees and consultants, tax incentive for innovative startups and investors, lowering the cost of liquidation and bankruptcy, and companies with limited liability may contribute through a public offering, etc.
Republic of Estonia also introduced the possibility for startup visa and came up with an internet platform for getting e-citizenship, which, you might agree, is an unprecedented and unique solution. Foreigners in the Republic of Estonia may establish a company and manage their business with a just a few clicks on the internet.
Recently, Republic of Latvia hopped on the bandwagon and implemented either new solutions or completely new regulations in this regard. The new solutions came from Latvian Startup Association, after just one year of existence (which just goes to demonstrate how huge of an impact could Startup Macedonia have in the future).
Republic of Macedonia is in a stage where more discussions on this topic, as well as an incentive to act upon is sorely needed. It is necessary to pave the road for a separate law for innovative startups. (One step towards that is the law on innovation activity, which resulted with the foundation of Fund for Innovation and Technological Development). Further regulation will encourage entrepreneurs and other stakeholders to act in the direction of development of the startup ecosystem in Macedonia, which can only bring us closer to other countries that excel in the field of innovation.
Dejan Aleksov, founder of the law office Aleksov, co-owner of Startup Macedonia