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What Does Photomath’s Exit Mean for the Croatian Startup Scene

What Does Photomath’s Exit Mean for the Croatian Startup Scene,
Image credit: Photomath
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Google’s recent acquisition of Croatian-based maths app Photomath has brought the spotlight back to the country’s thriving tech industry. With local media suggesting that the acquisition price may have been anywhere from €220M to €500M, the deal represents a significant achievement for the Croatian startup scene.

As one of the most successful exits in the region to date, the deal underscores the growing momentum and potential of the Croatian tech ecosystem. With Photomath’s technology and Google’s resources, the acquisition sets the stage for exciting possibilities and opportunities for innovation.

“We can confirm that we entered into an agreement to acquire Photomath in May 2022, subject to regulatory review. Photomath’s technology will help Google to enhance its ability to provide better math learning experiences to students, helping to build out Google’s homework help offerings for users,” a Google spokesperson told Reuters, adding that EU antitrust regulators now have until March 28 to clear the deal, or suggest additional inquiry into it.

The inspiration for founding Photomath came to Croatian entrepreneur Damir Sabol during a time of frustration and helplessness. As a father, he struggled to help his sons with their math homework, feeling unequipped to provide the guidance they needed.

It was during one such occasion that he realized the potential of technology to revolutionize the way students learn math, and in 2014 he founded Photomath – a smart camera calculator which lets users point the phone’s cameras at a mathematical formula and instantly receive an answer. Previously Sabol had also founded another successful Croatian company – Microblink, a mobile payment app with text recognition.

His latest company has raised significant rounds in the past years – in 2021 it managed to attract $23M, and at that time it also got its biggest popularity, when it was downloaded more than 220 million times.

According to regional VC fund South Central Ventures, while in the last few years the Croatian ecosystem has been experiencing a boom, the Photomath deal is another testimony of how the country can be resourceful when it comes to creating global companies.

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“The acquisition of Photomath once again confirms that global companies can be built in Croatia. The acquisition by Google means that there will be even greater interest from global funds and customers for IT companies, and we are extremely proud to be a part of that ecosystem,” Vedran Blagus, principal at SC Ventures, tells The Recursive.

“One of the defining moments of the Croatian tech ecosystem”

For Croatian business journalist Bernard Ivezic, the Croatian startup ecosystem has never been closer to experiencing the Skype effect seen in Estonia, or having its own PayPal mafia that ruled Silicon Valley.

“Google’s acquisition of Photomath allows this to happen in Croatia. The founder of Photomath, Damir Sabol, is the first local startup founder who made a massive exit 17 years ago, and now he is doing it again, but at least 10-20 times more lavish. Last year, Startup Report magazine found more than ten local founder-investors already financing Croatian startups. The largest was Sandro Mur from Bellabeat, who invested EUR 6 million in the 1st entirely local Croatian VC fund Feelsgood. So the foundation for the Skype effect already exists locally. If Damir Sabol decides to ride that wave, it will become The Wave!” Ivezic, who is also editor-in-chief of the Startup Report magazine, tells The Recursive.

According to Netokracija’s founding editor Ivan Brezak Brkan, the Photomath deal will also go down in history as one of the defining moments of the local tech ecosystem and prove that global B2C products can be built from Croatia.

“While we have seen a number of great outcomes for Croatian tech in recent years – from Rimac Automobili and Infobip becoming unicorns to the acquisitions of Nanobit and Five – those were either companies in the B2B sector or in a very specific industry (gaming) in the case of Nanobit,” Brkan explains.

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However, Photomath’s acquisition is different for two reasons, he points out.

“First, Photomath is a widely popular B2C mobile app that has been downloaded more than 250 million times. Secondly, Photomath is going to be acquired by Google, one of the „Big Tech“ companies which is by itself recognition for the Croatian tech community,” Brkan says.

Brkan is also adamant that while founders like Sabol previously had to fight an uphill battle convincing investors that it was possible to create a B2C product from Croatia, future founders will find raising capital easier thanks to the efforts of him and his team.

“I’m quite interested in how Damir will work with future Croatian founders, especially since now he might have capital to invest in startups. It wouldn’t be his first time – he previously co-founded ZIP, a startup incubator in Zagreb. Although he has stated that investing in startups is not for him, he has invested in fellow founders so he might make up his mind post-acquisition,” Brkan says.

Additionally, a deal potentially worth up to half a billion euros can bring unprecedented numbers to the Croatian startup ecosystem, Ivezic stresses.

“Croatia already has two unicorns, Infobip and Rimac, at least ten soonicorns, and 900 active startups. Multiply anything by 10 to 20, and forget an evolution – that’s a transformative moment we are approaching,” he concludes.

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Bojan is The Recursive’s Western Balkans Editor, covering tech, innovation, and business for more than a decade. He’s currently exploring blockchain, Industry 4.0, AI, and is always open to covering diverse and exciting topics in the Western Balkans countries. His work has been featured in global media outlets such as Foreign Policy, WSJ, ZDNet, and Balkan Insight.