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Digital Footprint

Exploring the transformation of Croatian startups and companies in the new market circumstances

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. 

 

Digital footprint

What did we find out about startups?

Croatian startup ecosystem is still at the early stage of development

Main startup characteristics

61% of startups have existed for less than 2 years


Main startup characteristics

73% of starups place their products/services on the EU and Croatian market

Main startup characteristics

89% of startups have up to 10 employees


Main startup characteristics

34% of startups are still not generating profit

Main startup characteristics

48% of startups have
 1 founder



External financing

  • The total level of investment received by startups under review amounted to EUR 42 million.
  • 62% of startups received external financing and the average investment per startup was about EUR 400,000 if we exclude one outlier investment (being much larger in size than the others).

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The impact of the COVID-19 pandemic

  • 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.

*Click on the chart to change the layout


How have startups adapted to the new circumstances?

  • 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.

How have startups adapted to the new circumstances?

What did we find out about companies?

Croatian companies place their products primarily on EU and Croatian market

The impact of the COVID-19 pandemic

  • 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.

*Click on the chart to change the layout


  • 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.

The impact of covid 19

How have companies adapted to new circumstances?

  • 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.

How have companies adapted to new circumstances?
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Key challenges and recommendations

Wealth icon

Lack of early-stage startup financing

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.

Limited global connectedness

Limited global connectedness

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.

Slow pace of digital transformation

Slow pace of digital transformation

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.

In cooperation with

Contact us

John M. Gasparac

John M. Gasparac

Territory Assurance Leader, PwC Croatia

Tanja Kuzman

Tanja Kuzman

Senior Manager, Startups and Corporate Innovations, PwC Serbia

Bruno Curcija

Bruno Curcija

Director, PwC Croatia

Tel: +385 (0)99 3110 677

Niko Letilovic

Niko Letilovic

EU Services Senior Associate, PwC Croatia

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