In Slovenia, the loan activity declined over the past years and it fell 20 percent in 2014 in comparison to the year before.
“Most of the Slovenian startups are considering seed investments from VCs, but wouldn’t ask for a bank loan, since they know they can’t get one,” said Matej Ramuta from SmartNinja, an educational startup for the next generation of IT professionals. He and his cofounder have just launched their business in February and since they don’t expect money from a bank in their home country, they started the business from their own pocket. “In Slovenia, most young companies are bootstrapping.”
Getting worse, before it gets better?
In Slovenia, the loan activity declined over the past years and it fell 20 percent in 2014 in comparison to the year before. Moreover, in 2014 18 per cent of the loan requests were rejected (in comparison to 14 per cent in 2013).
While there are no prospects for rapid changes and a growth in the near future, some say the worst part has already passed. Either way, for many people in Slovenia financing problems are a current issue and especially young companies and entrepreneurs are strongly affected by the steady decline of credit developments. So how do Slovenian ventures kick-start their business? And what keeps them going besides the dark prognoses on the way?
Banks not willing to lend small amounts
It seems that not only newcomers to the startup scene are pessimistic towards credits, since the problem has existed for quite a while without prospect of improvement. “Banks are not willing to give away money. Especially not the small amounts a young company would need,” said Primoz Zelensek, CEO of Chipolo whose company has been around since 2013.
But also when it comes to private or public money for startups, it’s not easy to find the right fit in Slovenia. You can try your luck with funding from partly public, partly private Slovenian Enterprise Fund, RSG Capital or some smaller Angel Investors. But that was about it.
The only way out: DIY
“That’s why many people go into crowdfunding and Kickstarter because they are great tools to test and validate your product,“ said Primoz Zelensek who knows what he is talking about: in 2013 he aimed to raise 15.000 euros with Chipolo on Kickstarter and ended up with 300.000 euros. A crowdfunding success story made in Slovenia – and many were to follow.
It seems true that necessity is the mother of invention and since there are no credits to be expected from banks and little opportunity for seed money from VCs a DIY culture of getting your business started has emerged in the CEE country. The crowdfunding phenomenon of Slovenia showed that altogether startups have raised over two million euros from online platforms. This development could become a role model for releasing funds from the community and at the same time validating your product or service at an early stage. There are 99 ways to get money – just bank ain’t one.