March the 10th, 2022 - Croatian tech company growth over recent years has been very impressive. Now being the home of two unicorns - the quite remarkable Vodnjan-based company for communication software solutions, Infobip, and the manufacturer of electric vehicles Rimac Automobili - this country is becoming the leading technology hub in the immediate region.
As Poslovni Dnevnik writes, back in pandemic-dominated 2020, the revenue of the Croatian IT sector reached a massive 4.2 billion USD thanks to continuous annual growth, especially during the worst of the COVID-19 pandemic, before a vaccine was on the horizon. The contribution of this industry to Croatia's overall GDP in 2020 stood at 2.5 percent.
Infobip achieved the deeply-desired unicorn status in 2020, after securing a 200 million USD investment. This company is important for the overall development of the country's technological ecosystem, as it invests in startups that develop projects in segments such as artificial intelligence (AI) and robotics, and has also opened offices in neighbouring Serbia and Bosnia and Herzegovina.
Another Croatian IT company, Infinum, also wants to expand to neighbouring Montenegro. This all represents Croatian tech company growth and all of these enterprises fully intend to invest and cooperate with various universities in these countries, because in this way they will be able to be provided with access to regional IT talent in the short term. In the long term, this approach could help develop the IT industry in parts of the region that are still lagging behind in IT and where new employment opportunities need to be created. For example, Croatia's southern neighbour Montenegro could benefit, as the unemployment rate there is close to 20 percent.
Challenges for investors
The biggest challenge facing regional startups is the lack of venture capital funds and angel investors. In most cases, Croatian tech companies like Infobip have taken on the role of investors for promising local startups. Infobip runs its own Startup Tribe, a global programme dedicated to the development of regional and global startups, which now includes more than 70 startups from across 40 countries.
While EU member states Croatia and Bulgaria attracted 956m euros in investments between 2015 and 2021, the rest of the region managed to raise just 154m euros at a time, a Google report showed. This also showcases just how much European Union membership has improved Croatian tech company growth when compared with the far more negative experience of non member states.
The main reason for the above is that most countries in the region are not fully integrated into the EU. Namely, while technology companies from Croatia and Bulgaria have been successful in raising funds, EU candidates such as Macedonia or Montenegro have very much failed, mostly due to insufficient legislative and regulatory alignment with the EU, but also political instability in those nations.
For more on Croatian tech company growth and local startups, check out Made in Croatia.
