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The start-up sector in Albania is relatively young, yet it has big innovation potential, especially in the ICT industry. An interview with Arjan Ymer, director of the business incubator Oficina
What does Oficina do? What kind of services does it provide?
Oficina is a business incubator established in 2016 thanks to a small grant from a U.S. investor. At that time, we wanted to establish a hub where young people could go and generate some good ideas that could potentially become start-ups. For about two and a half years we focused on ideation and culture creation. Then, in 2018, we became a fully functioning business incubator. Today we work with start-ups that are in different phases of development: from ideation and pre-registration to the growth phase. We are also a digital innovation hub where companies or start-ups develop their early-stage prototypes.
Our services focus on five areas. One is technology development, so we provide assistance or expertise in a specific sector – for example, blockchain technology – for four or five months, depending on the programme design. Other services involve go-to-market strategies and business modelling. In the last couple of years, we also added the intellectual property right component. Finally, for companies at the growth stage, we focus on funding and fundraising.
For now, all our services are free of charge. We have in-house expertise and capacities, but we also work with external experts, be they individuals or companies, local or foreign.
What kind of start-up do you work with?
We are industry agnostic, so start-ups could be from any sector. The number of start-ups here is not very large, so we cannot be too picky or we will not have enough start-ups to run our activities. However, we do have one condition, and that is that they have to have a strong technological component. For example, we work with start-ups in agro-tech, tourism technology, education technology, blockchain, and fin-tech.
Is there one sector that is more innovative than others?
There is a focus on fin-tech, and probably this has to do with the deregulation of the sector that has happened in recent years. There are some promising start-ups in fin-tech, like very niche e-commerce platforms. Blockchain is another rising sector; there are start-ups using blockchain technology in property management or to provide services to state institutions, for example.
What are the strengths and weaknesses of the start-up ecosystem?
The start-up sector in Albania started to develop only since 2015-2016, so it is relatively young. In terms of legislation, there are norms that regulate the start-up system and that provide some early-stage funding to develop prototypes.
When it comes to the general business environment, there are opportunities to be caught. Regarding the workforce, if we look at the ICT sector, for example, there is a large number of people entering the labour market every year, such as data scientists or blockchain technology experts. I think we should have a long-term strategy for the development of the ICT ecosystem, maybe focusing on specific sub-sectors, such as blockchain, cyber-tech, or education technology. I would suggest identifying one or two areas and developing our niche in those sectors because a narrow focus would guarantee a more valuable return in five or ten years, rather than a horizontal focus on the entire ICT industry. The energy sector is also very interesting, we have around 300 days of sun in a year, so that would be an opportunity to develop green technologies and so on.
The main problem is that we are lacking finances. If you want to finance your business, your only option is to go to a bank or a financial institution. But neither of them is a good solution because they only provide small amounts and charge very high interest rates. So we need more funding instruments. We should provide corporations with more incentives to invest in start-ups or incubators and also create a more attractive environment for international organisations, venture capitalists, and business angels. There are different financing arrangements that these actors could offer to the start-ups, and of course, the more financing instruments we have, the more start-ups of high quality there will be in the future. Without these, most start-ups will exit the market, because they will not be able to develop by themselves.
Talking about brain drain, do you think that this problem affects the start-up sector?
Our country is undoubtedly affected by brain drain. Richer countries keep attracting young and professionally-focused people because they can offer better opportunities. Of course, people do not leave only to get a higher salary, maybe they want to explore new cultures and working environments.
Hopefully, we will see a return of this large mass of people that have left in the last ten years. However, I do not think that our country has a clear strategy to cope with brain drain. In my opinion, it is necessary to create an environment where people have the right tools to start their business and run it from here. In other countries the context is much more favourable, there is fiscal stimulus and taxes for start-ups are lower. Here we should focus more on designing the correct framework for young entrepreneurs.
Do you know about the EU-sponsored smart specialisation strategy? What do you think about that?
Yes, as a digital innovation hub we participated in some roundtables and gave our contribution to the smart specialisation process. I think it is a good instrument for regional development, as it focuses on those sectors that can be better developed in a specific region.
Energy, education technology, tourism, and agriculture are some of the sectors that have been identified in the S3 for our country, and these are also the sectors in which some of the start-ups that we accelerate operate.
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