More than half of the employments in N.Macedonia are small or medium enterprises, which gives them a significant role in the Macedonian economy. The main source of financing for the private sector is bank loans. Other sources of funding are rare or not practiced for several reasons: lack of information about non-banking products, low activity of business angels, inadequate legal framework, etc. Startup companies face the same financing conditions, and in addition, it is more difficult to get a loan from banks without the required degree of liquidity. One of the key sources of financing for startup companies in the Republic of N.Macedonia is the Fund for Innovation and Technological Development.

EU recommendations

EU recommendations to improve the conditions for financing the private sector are based on the proper and timely information of entrepreneurs (or those who want to become entrepreneurs) about non-bank financing products. Raising awareness of other forms of financing other than bank lending implies a clear understanding of the terms and conditions with the various options for accessing finance. It is also necessary to merge companies with business angels to improve the mutual communication and activities of business angel networks.

Proposed legal changes

One of the legal regulations that may pose obstacles or create difficulties for investors is convertible loan.

Convertible loan as a tool is widely used by Business Angels. Convertible loan allows the investors to pick whether they want to become a part of the ownership structure in the future, when they can really asses the Company value. In accordance with our current regulation, convertible loan is not an option for BA investors.

You can read more about the proposals for amending the legal regulations in order to improve the conditions for financing by business angels, in the research “Business angels investments in North Macedonia: policy and financial analysis”.