The New Business Models Emerging from Central Eastern Europe


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In the last few years, the world has been experiencing tectonic shifts in terms of migrations, climate change, pandemia, wars, and technology applications, for example, in AI, that are requiring profound transformation of socio-economic and leadership models, which are not serving us well anymore. Central Eastern Europe, especially the Western Balkans region, is attracting the attention of big economies since its (small) market size and greater homogeneity make it an interesting testing ground for new emerging models that still need to acquire proof of concept and validation. The Western Balkans, with a population of 17.5M, have the potential to become an incubator of change that can validate innovative business models at a very early stage so they can be replicated and adapted at scale to achieve widespread impact.

The Basis for a Systemic Infrastructure Supporting Innovation

Joining the East and the West, the Western Balkans is known for its engineering/tech talent, whose demand is worldwide. In the last ten years, since the opening of the Impact Hub Belgrade, the region has been developing an entrepreneurial ecosystem that today benefits from a digital innovation-focused approach endorsed by the government, industry, and academia stakeholders. Thanks to Serbia, the Western Balkans ranks amongst world leaders in gaming and blockchain, according to the Startup Genome. In June 2022, the EU and the World Bank jointly pledged €84.5 million to finance Serbian research and startups, while the USAID mission to Serbia allocated €10 million to support the development of the innovation ecosystem in Serbia alone. 

The early work of organizations like the Impact Hub Belgrade, present in the region since 2014, yielded achievements that validated the benefit of investing in seed-stage entrepreneurs, paving the way for the newly established innovation infrastructure that accelerates these early achievements. Experts believe that connectivity to international and diverse talents and resources is one of the most powerful tools for the development of more innovative entrepreneurial, impact-driven endeavors. This is what the Impact Hub has been focusing on from the very beginning, facilitating the transfer of know-how, exchanges, and co-creation along with business development assistance with peers, experts, mentors, and investors from Europe and the US. 

In the past nine years, the Impact Hub Belgrade has been creating a funnel of women and diverse entrepreneurs addressing meaningful challenges ranging from sustainable waste to clean energy. It fundraised €4M through partnerships such as with the USAID Mission to Serbia, the European Institute for Technology (EIT KIC), the European Bank for Reconstruction and Development (EBRD), the Italian Chamber of Commerce, GIZ German Development Agency to support 500+ entrepreneurs especially women and gender diverse ones to develop their ideas into businesses and raise capital. Startup companies we assisted raised €6.5M+, women-led ones €3M+, and a handful are operating and expanding in the US, Europe, and the Middle East, democratizing work, offering digital events as a service for enhanced education, providing AI in water treatment and clean energy fields.  

While there is a first pipeline in place and the basic multi-stakeholder infrastructure to deliver seed innovations, the regional ecosystem needs to overcome more traditional leadership models—still the mainstream in the world—to generate transformative models with the potential to make international economies more sustainable. Several prominent figures have been at the forefront of this transformation, building practices in and advocating for more inclusive, diverse, and equitable approaches to leadership. There's been an emergence of new business models that are redefining the economic future of the Western Balkans and wider geographies.

Overcoming Mainstream Traditional Leadership

More diverse entrepreneurs are needed, along with inclusive and equitable environments, so that such entrepreneurs can truly build the solutions for more sustainable economies. Outdated ideals of leadership delay progress. Leadership qualities are not confined to gender; they are defined by vision, determination, and the ability to inspire.

Traditionally, the Western Balkans, CEE, and, in general, the world so far, with few exceptions, have been dominated by patriarchal leadership norms. In this traditional model, business leadership was often synonymous with male leadership, characterized by autocracy, competitiveness, and exclusivity of decision-making and control of resources. These standards have not only limited opportunities for women in business but have also stymied creativity innovation and exacerbated the loss of opportunities at scale.

It is becoming increasingly clear that to grow the emerging solutions with the highest potential for scalable impact, there is a strong need to overcome the more traditional models of leadership that do not recognize these new opportunities. In fact, even after the first validation on the Western Balkan markets, women still have a much harder time accessing funds and resources when expanding internationally. This glass ceiling often either discourages them from keeping up with their business efforts or leads them to search for "protectorates" from more recognized, authoritative individuals from their industries who are mostly practicing more traditional leadership styles. Either way, such women do not reach the full potential of their businesses. 

Women and diverse entrepreneurs need to become leaders, decision-makers, investors, and individuals of influence to sustain the virtuous circle that enables growth. At the same time, though, these diverse leaders need to reshape the standards of leadership by staying true to their values and purpose and keeping their commitment to the genuine relationships they build.

Authentic leadership is not to be confused with affirmative measures. The world needs authenticity, as demonstrated by the sharp rise of cynicism worldwide as people progressively trust less and less information and channels delivering data, be they leaders themselves or social media, for example. The pandemia has exacerbated this trend to the extent that the more informed individuals/groups are, the more disenfranchised they become. The Western Balkans are like lenses magnifying these tendencies and making them visible and understood. Instead of emulating traditional male leadership styles associated with authoritarianism,  there is the opportunity to support emerging and pioneering women and diverse leaders who are building transparent, genuine relationships based on the honest purpose they want to achieve.  

By embracing a holistic approach to leadership with values that go beyond binary definitions, the Western Balkans and CEE can prototype a new era of business innovation with the potential to solve today's pressing challenges in a more sustainable way. It is not a battle of genders but a celebration of diversity that is driving economic growth and progress.

The Investment Opportunity

According to the organization European Women in VC, over the last five years, women have received 2.2% out of the total EUR 2.47B invested into CEE Startups. Even when including the amounts raised by mixed-gender teams, this accounts for 9%, and progress is flat. 

Yet, over the last five years, these women founders have built revenue-positive businesses that are expanding in big markets. For example, Kagera optimizes safety processes in the energy sector through AI, has become a leader in the industry in the Middle East, and is scaling in Europe. The founder, Manja, is a recognized authority to apply her proprietary technology to the more traditional energy sector and is invited as a keynote speaker to the most renowned conferences in the US. Beyond42 accelerates online community engagement through "meta-like" virtual events that have become a standard in the education sector in Europe and the US. The founder, Dusanka, is a celebrity when it comes to online community building, and she is called to hold masterclasses and workshops on user and customer acquisition throughout the Balkans and Europe. 

These businesses have a demonstrated business case with scaling potential and run on their revenue, which shows the reliability of their model. But why have they not raised capital to fuel growth? From the beginning, there has been a reluctance to trust they would make it as women founders. On the other hand, this triggered doubts about the viability of investments in these women founders who question whether the VC road is a fit for them. The bottom line goes back to the lack of trust as a result of the gendered bias embedded into the relationships, expectations, and assumptions from both the male-dominated investment side and the women founders one.

At the same time, the example above also indicates an increased need to diversify the sources of capital and engineer different, customizable hybrid mechanisms to fund the new, gender-diverse, and impact-driven businesses the world needs. Venture capital is becoming even less of an option than before COVID. Democratizing the VC industry by increasing diversity in decision-making will also modernize the way in which capital can be deployed to be more in line with what the markets need. The discovery phase has started, and Europe with CEE and the Western Balkans is providing a wealth of learning in terms of diverse public-private partnerships, frameworks, and blended and hybrid methods that can revolutionize the field if new authentic leaders are supported.

Initiatives Like Impact Hub Belgrade

The shift towards more inclusive leadership, more sustainable business models, and more democratic capital in the Western Balkans has been accelerated by Impact Hub Belgrade, which is committed to empowering women entrepreneurs and promoting diversity in leadership.

Through mentoring programs, networking events, and access to funding opportunities, Impact Hub Belgrade has been instrumental in providing women-led startups with the support they need to thrive. Such initiatives are crucial in catalyzing the transformation of the business landscape in the region. Such initiatives need to be further supported in order to develop in full the new opportunities they are creating, incubating, and launching to regenerate the economies at scale.

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