Scalable Start-Up Business Models in the Innovative Development Process

Introduction

Modern functional business models of startups imply the realization of business goals with the creation of innovative business ideas for development and creative action. The potential for technological transformation of startups depends on existing financial resources. The resources that startups have at their disposal influence the initiation of action for innovative transformation and problem-solving that is driven by social interests. The startup's priority goals are solving urgent current problems versus goals related to the development of long-term strategies. The basic theoretical model of Schumpeter's growth paradigm is based on growth determinants such as: 1) innovations, 2) entrepreneurial investments, which are the consequences of innovations with the main motive - monopoly rent, and 3) creative destruction where old and destructive technologies are replaced by new technological innovations. Small companies grow faster, so there is a significant correlation between company size and age. According to Startupblink (2023), „a startup is any business that implements an innovative technology-enabled solution that has the potential to achieve scalability“. In today's conditions, the effects of inflation were reflected in the necessity of improving the startup business model by entrepreneurs to maintain the existing and achieve future profitability. Funding has become less accessible for founders, which is why they decided to start their ventures (Startupblink, 2023). The economic crisis and inflation with increased interest rates in the world and Serbia affected the economic status of startups due to the potential risks of investments. In Serbia, there are specific problems related to the incorporation of startups related to an unreformed legal system, with complicated bureaucratic procedures, an unintegrated administration with a large amount of unnecessary paperwork, and at the same time an underdeveloped and disconnected international market. To remove existing obstacles in terms of administration, state bureaucracy, financial support, and connection with the market, a significant contribution would be the support of foreign investors. Investments are significant because they create conditions for the realization of research and development with an adequate business model and business-driven decisions to turn creative ideas into profitable products. Despite the obstacles, the advantage of starting a startup in Serbia is the many talented individuals with higher education in the information technology and software sector. According to Berndt (2019), in Serbia, the software industry has the fastest pace of development compared to other private sectors, where business models for innovative and profitable products have improved at a high level. Young people have the opportunity to engage in technological startups in Serbia and join startups in Europe and the world thanks to certain foundations that provide support for “algorithmic literacy”. However, foreign investments in information technology are insufficient and lagging internationally, as they amount to an insignificant 0.7%, which also applies to employment, which is only 2%. A significant competitive advantage of startups in terms of software products and services with a high level of expertise and programming. Continuous brain drain is a stumbling block to the development of entrepreneurship and marketing skills (Berndt, 2019). The contribution of the chapter is to point out to decision-makers and political actors the necessity of eliminating all restrictions to secure sources of financing, knowledge, business experience, and national and international networks of entrepreneurs. The subject of the chapter is AI startups with a focus on Singapore, with digital business models that become scalable and profitable and would ensure their high rating and reputation on the global level.