The breakup of Yugoslavia created a region of small and fragmented economies, where many companies have struggled to achieve scale. Yet Croatia, with a population of just over 4mn, has seen the emergence of a slew of high tech champions in the fields of IT software and hardware, and – the most prominent internationally – Rimac Automobilii, a star of the emerging electromobility field.
Rimac, headed by 33-year-old entrepreneur Mate Rimac, is a local producer of electric hypercars. Having taken equity investments from strategic investors including Porsche and Hyundai, as automakers seek to position themselves for the industry’s electric, Rimac is now mulling an IPO. Most recently, a source at the company revealed to German business monthly manager magazin that it was considering a public listing in 2022 and would aim for a valuation of around €5bn.
The business has its origins in Rimac’s garage, where he converted his BMW 3 Series into an electric car. Its latest model to be unveiled is the €2mn all-electric Nevera. “This is it. This is the car I had in mind when I embarked on the ‘impossible’ journey ten years ago,” Rimac commented on the product launch. Just 150 of the cars will be produced, all of them in Croatia, and Rimac said he plans to inspect them personally before they are delivered to customers.
Among Rimac’s other plans are to build a €200mn campus near Zagreb and an R&D bureau in the UK, it is understood to be planning a takeover of the Bugatti luxury car brand in collaboration with Porsche, and it initiated work on an urban mobility system including robotaxis, which would put Zagreb among the first countries in the world to have autonomous electric taxis.
Overall, Croatia is punching above its weight when it comes to technology; Deloitte’s latest ranking of the 50 fastest-growing tech companies in the Central and Eastern Europe region included five Croatian companies, and this is not the first time Croatia has had a substantial number of entrants in the ranking.
The latest included cryptocurrency brokerage and payment processor Electrocoin, e-commerce platform bazzar.hr, agriculture technology company AGRIVI, Eco Mobile, which specialises in ICT solutions for waste management, and smart bench creator Include.
Include’s Steora smart benches are now present in over 56 markets worldwide, from Europe to Asia and South America. The solar-powered benches can charge smartphones, provide Wi-Fi and support street-lighting and environmental sensors, among other applications. The company recently launched a new generation of Steora smart benches, Classic, City and Cyclo, building on its experience with first-generation smart benches and over 18 months of intensive research and development. The Steora Classic smart bench sells for the price of an ordinary bench. “They are the real evolution of public space, of course, powered with the latest technology developed by Include, from distinct solar panels, most advanced battery management and numerous sensors,” a company spokesperson told bne IntelliNews.
Branching out into another area, Include has announced Terra, a range of waste management products that it says will save millions of euros for cities and reduce CO2 emissions. “Terra waste containers can store up to three times more waste compared to regular containers, thus reducing the need for frequent collection. Using smart master-module controllers and built-in precise waste volume sensors containers can independently tell when they need to be emptied,” according to the company.
While Include is expanding, the company’s spokesperson puts this in the context of the growing local tech sector. “Croatia’s IT sector is for its size and history exceptionally strong. We have great talent, and we are a small country, to begin with, so it is very interesting to see that our IT sector and tech companies are recognised not only in the region but [by] the whole world. Our engineers are some of the best, and I think that that is the key to our strength.”
Among the country’s other strengths are its location, close to cities such as Belgrade and Vienna. On the other hand, the spokesperson adds, “The main problem is that political structures are not yet fully aware of our potential, and they need to reform, from legalisation to a public sector that is agile and ready to help and support young startup companies. Some progress is made, but it is far from good, and here I see an opportunity to do more.”
The robotics revolution
One Croatian company making waves in the robotics field is artificial intelligence (AI) startup Gideon Brothers. The company has raised $31mn Series A investment in a round led by Koch Disruptive Technologies (KDT), the venture and growth arm of Koch Industries, earlier this month. DB Schenker, Prologis Ventures and Rite-Hite also participated in the investment round. Several of Gideon Brothers’ existing shareholders, including TransferWise co-founder Taavet Hinrikus and Pentland Ventures, also participated.
Gideon plans to use the funds to accelerate the development and commercialisation of its AI and 3D vision-based autonomous mobile robots (AMRs). It will also expand its manufacturing, sales, marketing and customer service operations across key markets in the EU and US by opening offices in Munich and Boston.
Gideon’s robots are already present in some major enterprises in Croatia. Croatian Post was an early adopter, launching a pilot at its sorting and logistics centre in Zagreb in 2019. The robots’ role was to increase the speed of picking and transport, and to move incoming mail from vehicles to processing locations.
Earlier this year, Gideon announced it will introduce a fleet of autonomous mobile robots into food and distribution company Atlantic Grupa’s warehouse management system (WMS) at their central logistics centre near Zagreb. The company is developing a ‘swarm’ solution, with robots receiving instructions directly from the WMS and moving between picking zones. Employees within each zone will be able to place items on the robot platforms according to details displayed on the mounted touchscreen device.
Darija Pizent, director of supply chain management at Atlantic Grupa, talked of a “robotics revolution across industries” as well as a change in attitudes to the technology. “Robots are no longer seen as a threat, as they prove to be a useful tool, working side by side with people,” Pizent commented.
“The pandemic has greatly accelerated the adoption of smart automation, and we are ready to meet the unprecedented market demand. The best way to do it is by marrying our proprietary solutions with the largest, most demanding customers out there. Our strategic partners have real challenges that our robots are already solving, and with us, they’re seizing the incredible opportunity right now to effect robotic-powered change to some of the world’s most innovative organisations,” said Matija Kopic, CEO and co-founder of Gideon Brothers, when the new funding round was announced.
In the software sphere, IT and telecoms company Infobip achieved tech unicorn status – signifying a startup valued at over $1bn – in August 2020, when it raised over $200mn in its first funding round from One Equity Partners. Following the investment, Infobip moved swiftly to take over US-based OpenMarket from Amdocs for around $300mn, with the deal announced three months later.
The Vodnjan-founded company has a relatively low profile but its cloud communications platform is used globally. The deal will accelerate Infobip’s growth and achieve a combined revenue run rate of over $1bn, the company said.
On a smaller scale, another Croatian tech company to raise a substantial venture capital round from international investors recently is Photomath. The software company, which created a maths learning app of the same name, secured $23mn in a Series B funding round led by US venture capital firm Menlo Ventures in February. The round also included GSV Ventures, Learn Capital, Cherubic Ventures and Goodwater Capital.
The Photomath app has more than 220mn downloads globally, helping students and parents solve maths problems using a smartphone. The company clearly benefitted from the shift to online learning during the pandemic. "With Photomath's mobile-first approach the company is well-positioned to supplant the massive online tutoring market and put high-quality learning support in the hands of students everywhere,” JP Sanday, partner at Menlo Ventures, said when the funding was announced.
It will now use the new funds to expand its team, invest in artificial intelligence and machine learning capabilities, as well as to boost product and marketing development.
The interest from international venture capital firms is good news for Croatian tech startups, as the country is too small to have developed a large community of venture investors. Even Romania, with a population almost five times as large, has only just started to see a venture capital ecosystem emerging.
However, there are some newly formed venture funds in Croatia, among them Fil Rouge Capital and the Feelsgood Fund, a €30mn venture capital fund that will finance Croatian start-ups with environmental and social impact, both of which launched in 2019. The European Investment Fund (EIF), the Croatian Bank for Reconstruction and Development (HBOR) and the European Bank for Reconstruction and Development (EBRD) have been instrumental in getting the process started.
In a statement issued on the launch of the Feelsgood Fund, the EIF said that the creation of the local venture capital fund managed by a fully Croatian team signalled “the maturing and development of the local financial market”.
There is also interest from strategic investors. In September 2020, Stockholm-based international gaming group Stillfront agreed to buy Croatia’s Nanobit for a consideration in the range of $100mn to $148mn. Jorgen Larsson, CEO of Stillfront, noted the founders’ creation of an “impressive gaming studio with a solid niche market in the exciting genre of lifestyle games”. Nanobit has released 29 titles – 10 apps and 19 games including narrative lifestyle role-player games (RPGs) targeting a female audience – since it was founded by software engineers Alan Sumina and Zoran Vucinic in 2008.
This article is part of a bne IntelliNews series marking the 30th anniversary of the start of the breakup of former Yugoslavia. Read other articles in the series at: