Croatian Venture Capital Investments Increasing

Lauren Simmonds

croatian venture capital investments

June the 27th, 2023 – Croatian venture capital investments are on the increase, which is proof that success in business in this country is growing more likely for most.

As Poslovni Dnevnik writes, how much have Croatian venture capital investments grown? The figures are vague and range from last year’s 439 million euros to as much as one billion euros.

Invest Europe

“Invest Europe, as the umbrella organisation of all national ‘private equity’ and ‘venture capital’ associations, has a more conservative investment calculation methodology that only takes into account companies that have their headquarters and activities based here in Croatia and doesn’t take into account the component of possible bank debt located within the same company.

There is also a calculation that includes this bank debt, because it appears very often in private equity transactions, and can make up more than half of the total financing agreed in a particular transaction, sometimes even 70 percent of it.

The percentage can be higher when it comes to taking over companies, while it isn’t so common in Croatian venture capital investments,” explains Mirna Marovic, the president of the Croatian Private Equity and Venture Capital Association (CVCA).

According to Invest Europe statistics, last year, Croatia collected a massive 439 million euros in venture capital, the largest part of which is the so-called growth capital financing of 410 million euros. The reasons for a more restrained assessment lie not only in the territorial limit on the company’s headquarters and activities in Croatia and in the exclusion of bank debt, but also in the fact that Invest Europe, as an umbrella association, collects data on a voluntary basis.

Many successful Croatian companies move their headquarters abroad

Many successful Croatian companies very often decide to move their formal headquarters to one of the countries that are typically more attractive to investors. Thus, we have Croatian startups that operate entirely in Croatia with their founders and development teams, but are formally headquartered in Great Britain, Ireland or even across the pond in the USA. If we include them in the calculation of total investments, Croatian venture capital investments in 2022 alone amount to a respectable 985 million US dollars.

Thereby, two transactions stand out according to their volume, both of which relate to Mate Rimac and the Rimac Group. There is a 500 million US dollar investment led by SoftBank Technology Vision Fund II and Goldman Sachs Asset Management, in which existing VC investors Investindustrial and Porsche Ventures famously participated.

In that transaction, it is assumed that part of the component was bank debt. Before that, back in April 2022, Rimac collected another 120 million dollars in financing from Investindustrial. This means that Rimac alone collected 620 million euros last year, becoming a “unicorn” and seeing his company value being estimated at 2.7 billion euros in June.

Startup report

Croatian venture capital investments include all financing from the early to the late stage of development bordering on ‘growth’ capital. According to the Startup Report, there were other major and important transactions carried out last year. Fonoa has raised 60 million euros, but is officially registered in Ireland. At the beginning of last year, Cognism as a British-Croatian startup raised 87.5 million dollars. The official headquarters of the company is in London, but one of the co-founders, Stjepan Buljat, and a large part of the development team, operate in Croatia. There is also PlanRadar based in Vienna with a respectable 69 million euros raised.

All these examples show that in the world of startups, it can be quite difficult to define what a Croatian startup is, especially since in the venture capital industry, startups and scaleups must be created for the global market from the beginning. This also applies to everyone in Central and Eastern Europe, so in the end, a fifth of them, after collecting the first million euros, move their headquarters and make it easier for themselves in future rounds of financing.

“The border between what is considered Croatian capital and what is a foreign company isn’t so clear, but we don’t have to worry about it or fear for the Croatian economy at all. In any case, this capital drives the engines of the economy, because in most cases the development team and the entire development of the company, including the founders, remain tied to the Republic of Croatia and transform the local economy, leading it in a desirable direction, which we like to describe as ‘high skill, high tech and high wage,’ Marovic explained.

Even a conservative estimate offers reasons for optimism and confirms significant market growth, because according to the same methodology, investments back in 2021 amounted to a very impressive 320 million euros, in the pandemic-dominated year of 2020, it amounted to 135 million euros, in 2019 – 95 million euros, and in 2018 – a significantly less 81 million euros. This is a compound annual growth rate of 40%, which indicates exponential growth.

Exponential growth

In the context of the share of PE and VC investment in Croatia’s total GDP, the country is going well. Last year, Croatia collected 0.65% of its GDP, making it the only European country besides Estonia that managed to collect something more than the European Union average of 0.638%. Estonia is the undisputed leader with 1,270% of GDP collected. All other countries of Central and Eastern Europe are far below that average with only 0.131% of GDP. Therefore, Croatia is five times better than the regional average and slightly better than the European Union average, which is rare when we look at a multitude of other economic indicators.

Until recently, PE and VC activities in Croatia were in their infancy, and in the last five years it has been growing exponentially. Two factors are responsible for this; the first is the formation of very strong local funds that are the first to recognise investment opportunities, and the second is the formation of a generation of founding entrepreneurs who have successfully developed their own companies.

The social impact of this is not only measured by successful financial indicators, but also by the fact that this industry has proven that it is possible to create a global and successful company and to be among the best in Europe in individual categories.


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