Dear readers,

This week, we look at the conversation the Balkan startup ecosystem still avoids: exits. While founders and investors continue to celebrate funding rounds, the bigger question remains: what happens after the capital arrives? 

We speak with investment and M&A expert Dušica Lukac about why founders need to think about acquisitions from the first term sheet, why not every €100 million headline exit is a success, and why smaller exits can be the foundation for bigger companies in the future.

Beyond that, we look at Payhawk’s journey to $100 million ARR, Vitosha Ventures’ new fund strategy, Infobip’s latest acquisition, Vertiv’s expansion in Croatia, and hear from Djordje Dimitrijevic on AI startups, speed and what is holding regional founders back.

Enjoy the read!
Bojan Stojkovski
Editor-in-Chief, IT Logs

If you spend enough time around startup founders in the Balkans, you get to notice that almost every conversation eventually circles back to fundraising. It is the currency of credibility in the region's startup ecosystem. Founders compare term sheets, investors discuss who is preparing for a Series A, accelerators announce the latest seed rounds, while LinkedIn fills up with celebratory posts every time another regional company secures fresh capital.

Very few people, however, ask what happens after that. How does the story end? Who eventually buys the company, and what does success actually look like once venture capital enters the picture.

For Dušica Lukac, those questions should be at the centre of every startup conversation, not left until the company receives its first acquisition offer.

Sitting somewhere between London, Vienna and the startup ecosystems of Central and Eastern Europe, Lukac has spent years advising founders, venture capital funds and investors on equity transactions, mergers and acquisitions. Her work has placed her inside boardrooms where acquisitions were celebrated, abandoned, renegotiated and, in some cases, became cautionary tales.

Over time, she has come to believe that the Balkans does not have an exit problem because founders are afraid of selling their companies. The real issue is that many never seriously imagine reaching that point in the first place.

The difference between startups and lifestyle companies

Building a profitable business that provides independence and financial security is, of course, a perfectly legitimate ambition, she points out. Europe is full of successful founder-led companies that never raise outside capital and never intend to sell.

The difficulty arises when entrepreneurs seek venture investment while still approaching their businesses with that same long-term ownership mentality.

That difference in mindset, she argues, explains many of the frustrations that define the Balkan startup ecosystem today.

Investors are looking for companies capable of generating returns large enough to repay an entire venture fund. Many founders, meanwhile, are simply trying to build sustainable businesses that support themselves and their teams.

Neither side is necessarily wrong, but they are often solving different equations - which also explains why exits remain an afterthought. "I don't think they are afraid of exits. I just think they don't think it will ever come." Lukac says.

The exit starts with the first term sheet

The irony is that exits begin much earlier than founders imagine. "The first term sheet you sign, you sign the exit clauses With the first term sheet you sign, you will know how much money you will get." Lukac explains.

Most founders understandably focus on valuation when negotiating their first institutional investment. They compare ownership percentages, celebrate pre-money valuations and worry about dilution.

What receives far less attention are liquidation preferences, participation rights, drag-along provisions and the countless clauses that eventually determine who gets paid when the company is sold. "It really needs to be calculated from the very first term sheet," she explains.

Too many founders still imagine an acquisition as a straightforward calculation. If a company sells for €20 million and investors own 20%, then surely everyone receives their proportional share.

Liquidation preferences accumulate. Employee stock option pools come into play, and preferred shareholders may receive significantly more than their ownership percentage suggests. By the time the company reaches an acquisition, the number announced in the press release may bear surprisingly little resemblance to the amount founders actually receive.

This is why Lukac repeatedly encourages founders to think about exit waterfalls from the moment they raise their first cheque rather than treating them as legal details to revisit years later.

The difference between a big headline and a successful exit

The disconnect between headline valuations and founder outcomes has become increasingly visible across the global technology industry. "We've seen a lot of exits recently because not all exits are happy exits," she says.

She points to the acquisition of Brex by Capital One as an example that illustrates this perfectly. The headline valuation looked impressive, yet the company had previously raised even more capital than its eventual sale price. "Founders at the end of the exit waterfall didn't take much home."

Stories like these rarely make newspaper headlines, and almost always public attention naturally gravitates towards the acquisition price, not the mechanics hidden underneath. Yet those mechanics often determine whether an exit becomes life-changing for founders or merely closes an exhausting chapter.

The pressure is not coming only from investors eager to cash out, since venture capital itself operates against the clock. "Average lifespan of the fund is ten years," Lukac explains.

Most venture funds spend their first few years deploying capital before gradually shifting their attention towards returning money to limited partners. "At year five or seven, at the latest, you have to start selling your companies because at year ten your fund is done." 

That timeline introduces a tension many first-time founders fail to appreciate. A startup may still be refining its product, entering new markets or believing its biggest opportunity lies several years ahead. 

The hidden complexity behind exits

Unlike some larger markets where capital is abundant, Balkan funds often work much more closely with portfolio companies, encouraging strategic mergers, product repositioning or partnerships that make startups more attractive acquisition targets.

At the same time it is not always about finding the highest valuation - sometimes it is about creating a company that buyers can more easily understand. Still, the complexity behind those decisions is rarely visible from the outside.

One of Lukac's specialities involves advising companies with what investment bankers call complex cap tables - businesses that have already raised several funding rounds and now find themselves balancing the expectations of multiple investors.

In one recent transaction, the company itself was performing well. Revenue was stable, salaries were paid, and there were genuine acquisition opportunities on the table.

Eventually they discovered the investor had syndicated their position without properly informing the parties behind them about the company's real situation.

The transaction had to be postponed for six months while expectations were reset. "The situation might look on the surface very simple, but reality can be very complex." she warns.

The acquisition offer that looked too good to be true

Perhaps the most memorable story Lukac shares is one she simply calls The Indecent Proposal. The company came from the region, it had close to 20 employees, customers in more than fifty countries, and it was exceptionally profitable.

The founders recognised they had reached a stage where outside management could help them continue growing, so they entered acquisition discussions with what appeared to be an ideal strategic partner.

"They were constantly reducing the upfront cash amount," she says, replacing immediate payment with increasingly complicated earn-outs, milestone conditions and deferred compensation. "They were basically asking him to continue working to pay himself from his own money."

Eventually the founders rejected the transaction. Today, the company continues operating, has hired professional management and is pursuing another phase of growth.

For Lukac, these stories rarely receive enough attention because founders often assume acquisition prices tell the entire story.

Hence, a lower headline valuation with cleaner economics may ultimately prove more valuable than a much larger number tied to years of uncertain milestones.

The next chapter for Balkan founders

Too often, entrepreneurship in the region is presented as an all-or-nothing pursuit - either founders build unicorns or they disappear from the conversation altogether.

More mature ecosystems rarely think this way, Lukac points out. "In the UK you very often see, 'I sold my business for half a million... then I sold my next business for three million... then my next business for ten million.'"

Entrepreneurship, she argues, is cumulative. Every company teaches founders something about hiring, fundraising, product development, negotiations and leadership. "Every time you learn something more," she says. "Selling a business for half a million because it's your first business you ever built is not a failure."

Perhaps that is ultimately the conversation the Balkan startup ecosystem still needs to have.

For years, regional startups have measured success through fundraising announcements, and they are built on capital returning to founders, employees and investors - and then being recycled into the next generation of entrepreneurs. And all of this requires exits, and founders who understand from day one what kind of company they are actually building.

It requires investors and entrepreneurs who can openly discuss acquisitions before they become urgent. And perhaps most importantly, it requires an ecosystem mature enough to celebrate not only billion-euro unicorns, but also the founder who sold their first company for €500K, learned invaluable lessons and came back determined to build something even bigger.

"If you took that money in the first or the second year of your existence, you had ten years to come somewhere. That's the timeline." Lukac says.

For Balkan founders, perhaps the time has come to stop treating exits as the final chapter of the story. They are, after all, the reason the story begins in the first place.

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