Zagreb Startup Scene: Insights from Investors, Execs & Founders

Croatia's Emerging Startup Scene

While often recognized for its scenic beauty, Croatia is steadily gaining recognition as a burgeoning hub for startups. Historically, the nation’s economic focus has largely centered on tourism, which contributed approximately 20% to its GDP in 2018.

Despite this, Croatian entrepreneurs are making significant strides. Companies such as Infobip and Rimac have become prominent success stories, demonstrating the country’s potential in sectors like tech, automotive engineering, manufacturing, and agricultural technology.

Investment and Growth Factors

Currently, Zagreb, the capital city, is home to only two venture capital firms. However, Croatia’s recent accession to the European Union has unlocked access to a wider range of investment opportunities.

Favorable tax policies, specifically a zero capital gains tax rate for holdings exceeding two years, alongside the introduction of a ‘digital nomad’ visa, are proving effective in attracting both investment and skilled professionals to Croatia.

The availability of external funding is a key driver of expansion. To gain deeper insights into Zagreb’s rapidly evolving startup environment, perspectives were gathered from nine local founders, investors, and executives.

Key Tech Sectors in Zagreb

Respondents identified several areas of particular strength within Zagreb’s tech landscape. These include solutions for HR, the automotive industry, fintech, mobile gaming, the IoT (Internet of Things), insurtech, and AI (Artificial Intelligence).

The angel investor network remains underdeveloped, potentially due to the relative youth of the ecosystem.

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Work-Life Balance and Talent Retention

Zagreb offers an appealing work-life balance, contributing to a strong desire among local talent to remain in the city. One investor noted that the COVID-19 pandemic has facilitated remote work opportunities, further bolstering the local ecosystem.

As competition intensifies, startups seeking substantial investment may need to explore opportunities beyond Croatia’s borders, while simultaneously working to retain their engineering workforce.

Fortunately, an increasing number of international investors are now considering Zagreb as a source of promising investment prospects.

Notable Croatian Startups

Some of the leading startups originating from Croatia include: Agrivi, Amodo, Ascalia, Bellabeat, Cognism, Degordian, Dok-Ing, Infobip, Mindsmiths, OptimoRoute, Oradian, Photomath, Repsly, ReversingLabs, ScoreAlarm, Sportening and AdScanner.

Survey Participants

• Lucija Ilicic, CEO, PlatePay
• Julien Coustaury, partner, Fil Rouge Capital
• Josip Orsolic, COO and founder, Lilcodelab
• Vedran Tolic, founder & CBO, Q agency
• Bozidar Pavlovic, managing director, Jackie
• Matej Zelic, COO, Spotsie
• Miroslav Kovac, CEO, Coffee Cloud
• Vedran Blagus, investment manager, South Central Ventures
• Daniel Stefanic, investor

Lucija Ilicic, CEO of PlatePay

What startups in your city are particularly noteworthy? Photomath, Sportening, and Mindsmiths stand out as especially interesting ventures.

How would you characterize the local tech investment landscape? What are the primary areas of investor focus? Investors in the region are largely focused on companies demonstrating strong revenue generation.

Considering the rise of remote work spurred by the COVID-19 pandemic, how do you anticipate population trends will evolve in your city? The pandemic actually prompted an influx of people choosing to reside here. This trend was further supported by Croatia’s introduction of the digital nomad visa program.

Could you identify some of the most influential individuals within your city’s startup community? Key investors include representatives from Fil Rouge Capital, Feelsgood, Zicer, and Bird Incubator. Notable founders are Ivan Klarić, Damir Sabol, Mislav Malenica, and Mate Rimac.

What is your vision for the future of your city’s tech sector over the next five years? The Croatian startup ecosystem experienced significant growth in the past year and possesses considerable potential. It is poised to become a prime destination for digital nomads.

Are there any companies you would suggest for consideration in our global Startup Battlefield competition? I would recommend Sportening, Mindsmiths, and, naturally, PlatePay.

Julien Coustaury, Partner at Fil Rouge Capital

What are the strengths of your local tech ecosystem? Which areas generate the most excitement? Conversely, where does it fall short?
Zagreb demonstrates considerable strength in the fields of financial technology, the automotive industry, insurance technology, and artificial intelligence. We observe significant growth throughout the entire ecosystem. Leading companies like Rimac, Optimoroute, Oradian, Infobeep, Agrivi, Tvbeat, Orqa, and Bellabeat exemplify this progress. This is further supported by our funding partners and the recent establishment of a new private equity fund.

Which startups in your city are particularly noteworthy?
Several startups are making significant strides, including Oradian, Lebesgue, Optimoroute, Gideon Brothers, Worcon, TVbeat, Orqa, Ascalia, Epoets Society, Hoss, Jade, Miret, My Valet, Sendbee, She’s Well, Spotsie, Taia, TDA, and Twire.

How would you characterize the tech investors in your city? What is the investment landscape like, and what are their primary areas of interest?
The ecosystem remains relatively compact, making it difficult to pinpoint specific vertical focuses. Currently, two active funds operate within the city: SC Ventures and Fil Rouge Capital. Fil Rouge Capital manages an accelerator program modeled after YC. While the potential exists, the angel investment scene is currently experiencing a period of limited activity. Funderbeam maintains a consistent presence in the region.

Considering the rise of remote work spurred by the COVID-19 pandemic, how do you anticipate this will impact your city’s population – will people remain, depart, or will new residents arrive?
Zagreb’s favorable tax environment is a strong draw for individuals considering relocation or choosing to remain. With a population of one million and close proximity to a beautiful coastline, the city possesses all the necessary elements to become a prominent center within the emerging startup landscape.

Who are the key individuals driving the startup scene in your city? (Including investors, founders, legal professionals, designers, etc.)
Fil Rouge Capital is undoubtedly a central force in Zagreb’s startup community. Other key players include SC Ventures, Funderbeam, Novak Law (for legal expertise), Algebra University, ZICER, Hub 385, and Step RI.

Looking ahead five years, what is your vision for the future of your city’s tech scene?
We anticipate Zagreb will emerge as a leading tech hub in Europe, achieving parity with cities like Vienna.

Are there any companies you would recommend for consideration in our global Startup Battlefield competition?
We believe the following companies would be strong contenders: Oradian, Lebesgue, Optimoroute, Gideon Brothers, Worcon, TVbeat, Orqa, Ascalia, Epoets Society, Hoss, Jade, Miret, My Valet, Sendbee, She’s Well, Spotsie, Taia, TDA, and Twire.

Josip Orsolic, COO and Founder, Lilcodelab

What sectors demonstrate strength within your technological ecosystem? What developments generate the most enthusiasm? Where are the areas of weakness? The tech landscape excels in IT, the automotive industry, manufacturing, and agriculture, offering diverse SaaS and IoT solutions.

Could you identify some of the most compelling startups located in your city? Notable companies include Rimac Automobili, Microblink, Five, Nanobit, and Agrivi.

How would you characterize the tech investment community? What is the current investment climate like in your city, and what are the primary areas of investor focus? The investor network is relatively compact, lacking significant diversity, though improvements are being observed. A new generation of successful, young investors has emerged recently.

Considering the transition to remote work prompted by the COVID-19 pandemic, what impact do you foresee on population distribution within your city? Will residents remain, relocate, or will new individuals move in? It is anticipated that residents will largely remain, potentially shifting to suburban areas. However, current rental market trends suggest no substantial outward migration from the city center.

Who are the pivotal figures driving the startup ecosystem in your city? Key individuals include Mate Rimac, Damir Sabol, Alan Sumina, Tomislav Car, and Luka Abrus.

What is your vision for the future of your city’s tech scene over the next five years? Continued growth is expected within the tech sector. An increasing number of companies from abroad are establishing engineering centers in Zagreb. The availability of skilled talent and positive media coverage are attracting individuals to tech careers.

Are there any companies you would suggest for consideration in our global Startup Battlefield competition? We recommend Agrivi, Parklio, Seek and Hit, Electrocoin, TestDome, Include, Sportening, Codebooq, and Gideon Brothers.

Successes within the tech industry receive considerable media attention, fostering a supportive environment, even alongside thriving businesses in other sectors.

Vedran Tolic, Founder & CBO at Q agency

What sectors demonstrate strength within your technological ecosystem? What developments generate the most enthusiasm? Where are the areas of relative weakness?
Our strongest sectors include online wagering, human resources technology, financial technology, mobile gaming, and the Internet of Things.

Areas requiring further development are gaming for dedicated platforms and artificial intelligence solutions, which are currently at an early stage of evolution.

Notable Startups in the City

Several startups are particularly noteworthy. These include PhotoMath, Agrivi, SofaScore, TalentLyft, Jenz, and Bellabeat.

The Investment Landscape

The investment environment is experiencing growth. However, significant investment often necessitates seeking opportunities outside of the local market.

Startups frequently need to expand their search for funding beyond the city’s immediate resources.

Impact of Remote Work

Zagreb offers a compelling work-life balance, which is a key factor in retaining local talent.

The rise of remote work, accelerated by the COVID-19 pandemic, has made it easier for individuals to secure remote positions while remaining in Zagreb. This trend is expected to have a positive effect on the local tech ecosystem.

Key Individuals Shaping the Startup Community

Who are the influential figures in your city’s startup environment?
We benefit from numerous dynamic founders who are actively promoting startups and entrepreneurship.

These leaders are effectively engaging broad audiences and attracting attention from governmental bodies, educational institutions, and the general public.

Future Outlook for the Tech Scene

Over the next five years, we anticipate a transition. This will involve a shift away from primarily providing agency services for international clients.

The focus will increasingly be on developing proprietary products, particularly in the fields of artificial intelligence and machine learning. These products will likely center on enhancing customer and employee engagement, automating processes, and predicting outcomes currently managed by a substantial workforce.

Startup Battlefield Recommendations

We recommend considering PhotoMath, Agrivi, Bellabeat, and Jenz for participation in your global Startup Battlefield competition.

Bozidar Pavlovic, Managing Director at Jackie

What are the prominent sectors within your technological ecosystem? What developments generate the most enthusiasm? Where are the areas of weakness?
The tech landscape excels in Artificial Intelligence, Software as a Service (SaaS), the manufacturing of electric vehicles, and broadly, software development.

Could you highlight some of the most compelling startups located in your city?
Notable startups include Rimac Automobili, Nanobit, Infinum, Five, Agrivi, Aircash, Identyum, Airt, Mindsmiths, Electrocoin, Agency 04, Oradian, Microblink, Photomath, Agency Q, Revuto, Optimoroute, Amodo, Lemax, Ampnet, RobotiqAI, and Velebit AI.

What characterizes the tech investors in your area? How would you describe the investment environment? What are their primary areas of interest?
The investment landscape has been experiencing growth recently. As the capital of Croatia, Zagreb naturally attracts both capital and skilled professionals.

The emergence of a near-unicorn company, Rimac, bolstered by significant investments from Hyundai and Porsche, has substantially increased the visibility of this dynamic ecosystem.

Considering the rise of remote work spurred by the COVID-19 pandemic, what impact do you foresee on the population of your city – will people remain, depart, or will new residents arrive?
Even prior to the pandemic, Zagreb held considerable appeal for tech professionals globally. This was due to affordable housing, a secure environment, a comfortable lifestyle, and competitive salaries.

A return of individuals is anticipated following widespread vaccination efforts.

Who are the influential figures within your city’s startup community? (Including investors, founders, legal professionals, designers, etc.)
Key individuals include Davor Runje, Nikola Pavesic, Drazen Orescanin, Frane Sesnic, Tin Tezak, Ante Magzan, and Luka Sucic.

What is your vision for the future of your city’s tech scene over the next five years?
Significant growth is expected, largely driven by the forthcoming adoption of the Euro as the local currency.

Are there any companies you would recommend for consideration in our global Startup Battlefield competition?
Amodo, Agrivi, Photomath, and Identyum are all strong contenders.

Matej Zelic, COO, Spotsie

Regarding industry strengths, which sectors demonstrate prominence within your technological environment? What developments generate the most enthusiasm? Conversely, where are the notable deficiencies?
The oil and energy sectors, alongside Industry 4.0, represent areas of significant strength. We are particularly energized by the opportunity to contribute to the digital evolution occurring within more traditional industries.

Could you identify some of the most compelling startups based in your city?
Notable startups include Rimac, Agrivi, Oradian, Miret, and SofaScore.

What characterizes the tech investment landscape? How would you describe the investment environment within your city? What are the primary areas of investor concentration?
Croatia’s startup ecosystem remains relatively nascent. Investment activity, beyond a limited number of business angels, has only recently begun to emerge, spurred by EU support and the establishment of two venture capital firms (FRC and SVC). However, this growth has lacked a cohesive strategic direction and focused investment criteria.

Considering the widespread adoption of remote work prompted by the COVID-19 pandemic, what impact do you foresee on population movement within your city – will residents remain, depart, or will new individuals relocate?
It is anticipated that individuals will choose to remain in the city.

Who are the pivotal figures driving the startup community in your city? (Including investors, founders, legal professionals, designers, and others)
Key players include Fil Rouge Capital and South Central Ventures. Prominent individuals are Mate Rimac, Damir Sabol, and Frane Sesnic.

What is your vision for the future of your city’s tech scene over the next five years?
Due to its advantageous micro-location, the digital nomad program, and a robust pool of IT talent, Zagreb is poised to become a leading tech hub within Central and Eastern Europe, and across the continent.

Are there any companies you would suggest for consideration in our global Startup Battlefield competition?
We recommend Gideon Brothers and Spotsie for potential participation.

Miroslav Kovac, CEO of Coffee Cloud

In what industries does your technological community excel? What developments generate the most enthusiasm? Where are the areas needing improvement? The core strengths lie within the Internet of Things, software analytics, and big data, specifically as they relate to the coffee industry.

Could you highlight some of the most promising startups located in your city? Notable companies include Agrivi and Repsly, both demonstrating significant potential.

How would you characterize the tech investment landscape in your city? What are the primary areas of investor interest? Unfortunately, the startup ecosystem is currently underdeveloped and lacks robust support.

Considering the widespread adoption of remote work following the COVID-19 pandemic, what impact do you foresee on your city’s population? A significant portion of the previous year was spent under various levels of lockdown restrictions.

Who are the influential figures driving the startup community in your city? Key individuals include Sasa Cvetojecic and Hrvoje Prpic, alongside firms like Fil Rouge Capital and Bird Incubator.

What is your vision for the future of your city’s tech sector over the next five years? A realistic outlook suggests the scene will likely remain largely unchanged.

Vedran Blagus, Investment Manager at South Central Ventures

What are the strengths and weaknesses of your regional tech ecosystem, and which areas generate the most enthusiasm? The industries supported are largely sector-independent. A significant portion of companies concentrate on B2B or enterprise-level solutions.

A noticeable gap exists in expertise related to B2C strategies, comprehensive growth and expansion planning, and effective investor communication.

Notable Startups in the Region

Several startups are particularly noteworthy within the city. These include AdScanner, Agrivi, ReversingLabs, TalentLyft, Sportening, Codemap, and Gideon Brothers.

The Investment Landscape

The investment environment is characterized by a limited number of venture capital firms. Fil Rouge Capital focuses on Pre-Seed, Seed, and Series A funding, with an industry-agnostic approach, supporting both B2C and B2B ventures.

South Central Ventures concentrates on Seed, Series A, and B2B investments. Recently, a trend has emerged where corporate executives are making early-stage investments, typically up to EUR 200k, but these activities are generally kept private.

Impact of Remote Work

The transition to remote work prompted by the COVID-19 pandemic is not anticipated to significantly alter the population dynamics of the city. The expectation is that development and operations will continue to be centered in Zagreb.

However, expansion into other European cities through the establishment of new offices is likely to occur.

Key Individuals Shaping the Startup Community

The city’s startup ecosystem benefits from the contributions of numerous key individuals. Founders such as Matija Zulj, Marin Curkovic, Mate Rimac, Marin Saric, Alan Sumina, and Matija Kopic are driving innovation.

Investors like Luka Sucic and Stevica Kuharski play a crucial role in providing capital. Legal expertise is provided by Marijana Sarolic Robic.

Media representatives Ivan Brezak Brkan and Bernard Ivezic contribute to raising awareness and fostering discussion.

Future Outlook

Looking ahead five years, the tech scene is expected to evolve significantly. Founders who have successfully exited companies after a decade of building are poised to launch new ventures and invest in early-stage startups.

An increased interest from international investors seeking opportunities within Zagreb’s pipeline is also anticipated. This will likely lead to greater investment activity in the region.

Daniel Stefanic, Investor

What startups currently capture your attention?
In Croatia, both Infobip and Rimac are demonstrating significant momentum and appear to be leading the way.

Future Outlook for Croatia's Tech Sector

A wealth of highly skilled individuals in science, technology, engineering, and mathematics (STEM) fields reside within Croatia.

These individuals possess a global standard of expertise, however, improvements are needed to facilitate the transition of innovative ideas into viable businesses.

Key Areas for Development

Enhanced access to funding and more streamlined commercialization processes are crucial for the continued growth of the Croatian tech landscape.

Successfully addressing these challenges will unlock the full potential of the nation’s STEM talent.

Looking ahead five years, the Croatian tech scene is poised for substantial advancement if these necessary improvements are implemented.