Unprecedented changes caused by the COVID-19 pandemic happened almost overnight and revealed various vulnerabilities of current business models. At the same time, we’ve seen that the resilience in today’s world has its foundations in new, innovative and transformative digital solutions.
In October 2020, we conducted research among startups and companies in Croatia to understand challenges they are facing, new market layers that appeared, and emerging trends.
Digital Footprint analyses the current state of the startup ecosystem and companies in Croatia, particularly focusing on the consequences and opportunities created by the COVID-19 pandemic. The report reveals how companies have leveraged digital transformation in the new circumstances, what the level of startup development is and how companies & startups see their cooperation. Identified challenges within the digital ecosystem are addressed through recommendations that should trigger creation of new and tailored support mechanisms.
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More than 50% of Croatian startups report a negative impact of the COVID-19 pandemic on the sale of their products/services.
41% of startups that recorded loss in sales state it amounted to more than 50% in the last eight months. At the same time, 17% of startups whose sales were positively affected by the pandemic saw an increase of more than 50% - mainly startups in the gaming and e-commerce industry.
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41% of startups adapted their products to better fit the new market conditions.
57% of startups state that their product or service is used by large companies and that they can help companies improve sales and logistics among other things.
87% of startups plan to work with large companies in order to contribute to the transformation of their processes/products/services.
77% of Croatian companies report a negative impact of the COVID-19 pandemic on the sale of their products/services.
The extent of the negative impact of the pandemic on sales of companies is significantly lower than the impact on startups. Only 15% of companies reported having more than 50% loss in sales. Simultaneously, 12% of companies have significantly leveraged the pandemic by seeing more than 50% sales increase.
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Through creation of the new market conditions the COVID-19 pandemic disrupted and adversely affected the normal course of business operations.
More than 50% of companies report significant or very significant negative impact of the COVID-19 pandemic on their supply chains and finance & liquidity.
At the same time 70% of companies report no or very limited negative impact on the number of employees.
73% of companies are already adapting their products/services to the “new normal”, seeing the greatest potential in new product development and customer relationship management.
Only 20% of companies see startups as strategic partners in their transformation.
Access to capital and lower levels of investment in the Croatian startup ecosystem represent the impediment for startup ecosystem development. It is advisable for the public sector to create initiatives that would direct EU funds and other sources of funding towards the creation of mechanisms that would support investments in startups.
The findings indicate that both startups and companies in Croatia are predominantly eurocentric. Initiatives in terms of greater startup knowledge about overseas markets and establishment of networks are needed. Such initiatives would accelerate the speed of startup development and improve the chances of their success on the global scale.
The report indicates that most companies recognise the value of digital transformation. However, the success and pace of transformation largely depends on the available financial resources. Bearing in mind the negative effects of the pandemic, the public sector should create mechanisms to support digital transformation projects and cooperation between startups and companies on such projects.