When it comes to startups, most people’s minds automatically jump to Silicon Valley, China, or Southeast Asia. However, the world is rapidly changing, and so are the success stories of innovative startups around the globe. In my recent blog post, I noted that startups can now come from anywhere, and this couldn’t be more true. A country that I’ve been closely following has been Croatia, which recently has become a powerhouse for nurturing successful startups. While most people overlook this region, I’ve seen the tremendous growth of Croatia’s startup ecosystem within the past few years. To name a couple of examples, Croatia’s EV-making startup Rimac recently surpassed a $6B valuation and plans on an IPO in 2022. Infobip, an omnichannel communication SaaS startup, also joined the unicorn club this past year. Following other numerous fast-growing Croatian startups has got me thinking: how are they able to do it? I had to find out for myself.
Looking deeper, I believe that the country’s policy “E-Croatia Strategy” has a lot to do with the recent explosive growth. The “E-Croatia Strategy” aimed to comprehensively digitize the country. In regards to government services, the policy completely digitized the country’s administrative processes and information channels, and after organizing government data into digital databases, the country publicized large chunks of government data as open-source information to the public. This not only increased administrative efficiency and transparency, but also gave more opportunities for startups to analyze market trends and opportunities. Students and teachers also had much to benefit from the policy. Increasing tech access to students improved their ability to intake information as well as increased their employment competitiveness in the job market. Teachers benefitted from supplementing their existing teaching methods with technology to improve the overall quality of education and help students study more effectively. All the while, technological integration in education laid the foundation for high-quality talent that would become invaluable to Croatia’s startup ecosystem. Overviewing Croatia’s startup success now, it’s not hard to imagine that the country’s “E-Croatia Strategy” had a key role in boosting the overall startup space.
With over 220 million downloads around the world, Photomath is an intelligent math problem-solving app that is highly popular among students and is one of Croatia’s rising startups. Unlike other apps that require manually inputting information by hand, Photomath utilizes image recognition that can read handwriting or printed texts while also providing students detailed steps in finding math solutions. The pandemic in 2020 interestingly was Photomath’s breakout moment. During a time when students all over the world began taking virtual classes, many parents took up the responsibility of tutoring their own children. However, when parents encountered difficult math topics, Photomath soon became students’ go-to virtual studying tool. With a rapidly growing user base, Photomath received a $23M Series B funding in 2021 and plans on expanding their market through improving their AI recognition and machine learning capabilities.
Another stellar Croatian startup is Bellabeat, a data-centric health tech company that aims to improve women’s health through software. Bellabeat develops extremely stylish health trackers that monitor physical indicators, anxiety, and sleep activity to provide real-time health information to women around the world. Much like Photomath, the pandemic similarly boosted Bellabeat’s growth; health monitoring data has given women more control over their own wellbeing by offering invaluable insights into their daily activities and even measuring anti-stress abilities. And Bellabeat thus far has been able to sell over 700K items, improving the quality of women’s lives one bracelet at a time. While Bellabeat and Photomath belong to entirely separate genres of innovation, they both similarly apply data technology to improve the overall experience of their users. Their niche focuses have also given them leverage in expanding tremendously on an international scale.
In addition to the “E-Croatia Strategy”, the overall policy support for Croatian entrepreneurship helped incubate global startups from their own backyard. One example of favorable policies for startups is that companies that earn as low as $1.1M USD in yearly revenue are able to receive lower tax burdens. The Croatian government also collaborated with the World Bank in 2015 to establish a fund of €2B to support domestic entrepreneurship. This fund has been able to serve as angel funding to help launch businesses and accelerate product-to-market development. The Croatia of the past almost had no VCs or accelerators of their own, therefore, Croatian startups had to receive the validation of overseas investors to get any financial support. However, the Croatia of today is a different story. The shift in policy support for domestic startups has incredibly boosted the Croatian startup ecosystem, giving startup founders greater opportunities to innovate and take risks within their own home territory.
It’s becoming increasingly clear that startup success stories can come from anywhere. Even with a population of 4 million, Croatia successfully nurtured a flourishing startup ecosystem through policy pushes for domestic digitization, and now, Croatia closely rivals startup hotspots around the world. This makes me think: if other similar markets around learned from Croatia’s success, how much more innovation is possible in the world?
