Slovenia lags behind bigger economies in development of start-ups, but is an excellent trial market for new ideas, an official from the industry highlighted as part of the Startup Cafe held in Ljubljana.

One of the main obstacles to development of start-ups is limited investment options, with financing restricted to money provided by business angels, venture capital funds, strategic investors and incubators, Aleš Pustovrh of the Ljubljana incubator ABC said.

Bank loans are virtually out of reach for start-ups, even though they would be the best option for owners, said Pustovrh.

Despite this Slovenian start-ups raised the most private and public investment funding to date in 2014, worth a total of EUR 60m, bringing the total to date to EUR 150m.

Among the available option, strategic investors are becoming an increasingly important option. "While acquisitions of start-ups by strategic investors, such as multinationals, are commonplace in the US, they are also gaining in popularity in Europe and Slovenia."

According to Pustovrh, bootstrapping remains the most popular method of financing start-ups. "If companies are able to finance their growth from the revenue stream, the owners don't have to sell stakes."

Incubators provide an important service going beyond investment by providing various services and social capital. "The companies obtain links, buyers and know-how...they can also act as a filter for subsequent investment by venture capital. It uses incubators to select projects they want to back."

A key limitation hindering growth of Slovenian start-ups is that they are often focused on development rather than growth. Investors are not inclined to funding development, but want to back growth once companies already have a product, said Pustovrh.

The Startup Cafe was held as part of the ongoing Startup Europe Week organised by the namesake initiative and held in 200 cities in 40 countries. The event is dedicated to presenting support and financing mechanisms to start-ups.