Supporting the Start-Up Scene in North Macedonia Brings Foreign Investment and Creates Jobs

Over the past decade, the World Bank has advocated globally for governments to consider the innovation agenda as a critical element for how countries can achieve prosperity and increase productivity. In North Macedonia, we supported the establishment of the Fund for Innovation and Technological Development (FITD) and financed pilots of four start-up and small and medium enterprise (SME) support instruments through the €17.7 million Skills Development and Innovation Support (SDIS) Project implemented between 2014 and 2021. To date, FITD had supported over 800 innovative projects with a total value of over €100 million, 40% of which were coinvested by the beneficiary companies.

The results of these innovation policies take time and patience. While not all nurtured start-ups succeed in reaching their growth plans, some manage to exceed expectations and convince private investors in their ability to conquer global markets with their new products and services. One of those is a FITD grantee, Pixyle.ai, that recently received a €1 million investment from the venture capital (VC) fund South Central Ventures. This level of backing from a renowned VC fund in Southeast Europe demonstrates that start-ups from North Macedonia can produce highly innovative and technologically advanced products and services that address the specific needs of niche foreign markets.

A start-up’s winding road to success

VC interest in this North Macedonian start-up also highlights that highly educated young people, particularly young women with entrepreneurial mindsets, can prosper in North Macedonia, like Pixyle.ai’s founder Dr. Svetlana Kordumova. Svetlana, who has a PhD in artificial intelligence (AI) and computer vision from the University of Amsterdam, decided to move back to her hometown of Stip, North Macedonia to turn her knowledge into practice. She launched Pixyle.ai to create a more intuitive online shopping experience that uses AI to help customers find clothes that meet their search criteria.

Success did not always come easy to Pixyle.ai. After receiving start-up grants totaling about €80,000 from FITD in 2018-2019 to develop their initial product discovery engine for on-line clothing sales, the company had to quickly transition from product development phase to implementation and needed to find clients and generate revenues to sustain its operations. Svetlana had to overcome the disappointment of rejected grant applications, failed pitches to investors, and reluctant clients who were suspicious of new technologies and could be inflexible in their way of doing business.

Eventually Svetlana entered Pixyle.ai into the Rockstart Accelerator program in Amsterdam, where she worked on pivoting her business model to get wider traction and serve more consumers. The company grew rapidly from eight to 30 employees, mostly local STEM graduates that are excited for the opportunity to put their advanced knowledge to practice without having to go abroad, staying closer to friends and family.

Over the past three years Pixyle.ai tripled its revenues and attracted international clients including Tendam (Spain), Otrium (Netherlands) and Miinto (Denmark).  

Growing North Macedonia’s start-up scene

Pixyle’s success is another confirmation of the importance of the Government of North Macedonia’s commitment to supporting the development of the country’s innovation eco-system. Government support has mainly consisted of providing seed financing and technical assistance to start-ups in their product design, testing and initial commercialization stage through FITD, before these young firms mature enough to demonstrate their viability and attract private investors.

Pixyle.ai is the fifth start-up from North Macedonia that has raised significant investments from the regional investment fund South Central Ventures in the past eight years. The VC fund now has €7 million in investments in the country, including the very successful tech firms Cognism and InPlayer. Other international funds have also taken an interest in start-ups in North Macedonia such as Bulgarian 11 Ventures, which invested €2 million in Native Teams—a start-up that acts as a legal intermediary to enable international workers, including freelancers and the self-employed from around the world, to have local employment contracts and benefits. This increased investment activity by professionally managed VC funds demonstrates that North Macedonia’s start-up scene is harnessing local talent, has significant growth potential, and can export highly innovative products and services worldwide.