Category: Investment

Becoming part of the EU single market is not just about trade—it’s about investment, economic modernization, democratic progress, rule of law, and better regional cooperation. In recent years, several initiatives have been adopted to foster regional economic integration, including the Common Regional Market Action Plan 2021-2024. These initiatives aim to build a common regional market based on EU rules and regulations and on the four freedoms. They are intended to be a stepping stone for Western Balkan economies to better integrate into European value chains and improve their competitiveness. The initiatives have focused on four main regional areas: trade, investment, digitalization, and industry and innovation. The establishment of “green lanes”—streamlined border crossings for freight vehicles—during the COVID-19 pandemic was a successful example of regional cooperation. 

The Berlin Process, a very important initiative that has pushed for faster economic integration with the EU, has also been revitalized, and the next meeting will be held in Albania in October. The Open Balkans Initiative, another project that started as an economic cooperation agreement among Serbia, North Macedonia, and Albania in 2021, has also offered some practical steps for better economic cooperation in the region. 

Regional economic integration is imperative for the Western Balkans to benefit from bigger markets and greater competition by fostering cross-border production chains and leveraging regional comparative advantages. To attract the interest of serious foreign investors, it is necessary to cooperate in a “pooled” competition for foreign direct investment. This will help countries to improve their competitiveness by incentivizing technological and industrial clusters, as well as help modernize their economies, facilitate innovation, and improve skills and productivity. 

As European companies are looking to relocate their supply chains closer to home, investing in the Western Balkans for the production of critical goods would contribute to the EU’s strategic economic autonomy, following through on the “de-risking” goals that occupy a key place in the EU’s newly published European Economic Security Strategy. 

In this context, Scalable Global Solutions (SGS), operating from Croatia within the Western Balkan region, plays a pivotal role. SGS offers SME businesses across Europe a unique digital service known as ‘Department as a Solution (DaaS).’ DaaS allows businesses to create remote Business Departments on demand, streamlining recruitment, facilitating office setup, and enabling effortless management of remote teams, all in one place through SGS’s software and mobile app. This innovative solution is helping businesses expand their operations efficiently and cost-effectively, aligning with the goals of regional economic integration and enhancing competitiveness. 

Developing European industrial clusters in the Western Balkans would increase the EU’s competitiveness, including in key areas such as green and solar industries, biotech, and electric vehicles. Ports in the Adriatic Sea are important for the resilience of trade routes and hold potential for investment in liquefied natural gas transportation as well. 

Lower labor costs in the Western Balkans and strategic connectivity in terms of energy and transport make the region attractive, but what is needed is more EU investment to improve infrastructural networks. EU investment in strategic infrastructure projects in the Western Balkans to boost interconnectedness would also counter China’s increased economic and diplomatic footprint in the Western Balkans. This growing footprint challenges European business interests and fuels practices that hinder the EU’s ability to enhance the promotion of Western norms and standards. 

Source: Western Balkans ‘nearshoring’ can turn the region into a strategic asset for the EU – Atlantic Council 

In a groundbreaking move, Google has successfully acquired Photomath, a Croatian startup renowned for its mobile app that solves math problems through pictures. Valued at an estimated 550 million USD, this acquisition marks a historic milestone in Croatia’s startup landscape. 

Despite this good news for Croatia´s startup ecosystem, the EU startup landscape has seen funding for venture-backed startups, decline by a 39% in 2023. Dropping from $83 billion in 2022 to an expected $51 billion. This decrease can largely be attributed to a retreat from U.S. investors, who play a significant role in driving funding activity in Europe. Despite these challenges, Croatia’s local and regional VC funds remain strong, presenting opportunities for growth and showcasing the country’s commitment to supporting innovation. 

Amidst the changing landscape of European startups, SGS has managed to shine with an outstanding performance in Q2 2023 compared to the same quarter in 2022. Despite the negative outlook on the funding market, the company witnessed a remarkable QoQ revenue growth of 117%. This highlights the opportunities the Covid-19 crisis has unlocked and the growing interest of businesses looking for alternative ways of working and reducing costs positioning SGS as an ideal support for any kind of business. 

However, the challenging EU fundraising market also impacted SGS’s efforts, resulting in a 74% reduction in raised funds during Q2 2023 compared to the previous year. Nevertheless, the company’s commitment to responsible financial management and sustainable growth remains steadfast. 

On a positive note, Q2 2023 witnessed an impressive client acquisition for SGS, growing its client base from 3 to 11 clients, representing a remarkable growth rate of 267%. This expansion reflects the growing recognition of the company’s brand and the trust clients place in its products and services. 

Furthermore, SGS’s diligence in executing its revenue strategy is evident in the achieving of a planned revenue increase of 250% in comparison to the year 2022. With only a slight variance of -0.30% from the planned revenue target in Q2 2023, this minor deviation highlights the company’s impressive growth. Considering we are only halfway through 2023 these numbers leave us excited about Q3 and Q4 and demonstrate SGS’s adjustability to market dynamics and its pursuit of continuous improvement. 

In Europe’s challenging startup landscape, the acquisition of Photomath by Google represents a significant milestone in Croatia’s entrepreneurial journey. Adding to the recent success stories of Croatia’s unicorns Rimac Automobili and Infobip, this demonstrates the potential of Croatia as a thriving and innovative startup ecosystem.  

SGS’s impressive Q2 performance showcases its unwavering commitment to excellence and adaptability in dynamic market conditions, with remarkable revenue growth and successful client acquisitions highlighting its strong market positioning. Irrespective of funding situations in Croatia or Europe, SGS continues to experience steady growth and continues to deliver an outstanding performance in Q2 of 2023, which serves as a testament to the market’s interest in our DaaS product and services. As we look towards the future, our primary focus remains on achieving our Break-Even point, a major milestone that will significantly reduce our reliance on external investment to cover our burn rate. Once we successfully reach this important goal, we intend to allocate all incoming investments toward the expansion of our Sales and Channel Team, as well as the development of the highly anticipated 2.0 version of our SGS ONE software. 

We sincerely thank our investors, clients, and employees for their continued support and dedication, which has been pivotal in our ongoing success, and we are looking forward to the challenges yet to come. 

2022 witnessed a glimmer of hope as COVID-19 restrictions eased, paving the way for a more optimistic outlook in 2023. The year began with aspirations of leaving the pandemic behind and embracing a new normal. However, the aftermath of the global crisis continues to cast its shadow on the business world. The World Economic Forum’s annual meeting held from the 16th to the 20th of January 2023 addressed these lingering aftereffects, focusing on the transformative impact of the challenges of the past three years.  

One of the key topics of discussion at the meeting was the future of work, encompassing anticipated changes in work conduct influenced by technology, generational shifts, and social dynamics. Part of the discussions focused on the issue of a growing talent gap in the EU, where more than 75% of companies report difficulties finding skilled workers, underscores the importance of addressing skills shortages in the region. While organizations express confidence in developing their existing workforce, they are less optimistic about talent availability in the coming years. This scarcity of talent poses a significant barrier to industry transformation, with skills gaps and difficulty attracting talent being key challenges. SGS recognizes these global issues as significant opportunities, as we focus on solving talent acquisition problems and assisting companies in adapting to dynamic market conditions.  

Part of the discussion on the future of work revolved around the aftereffects of the COVID-19 pandemic. The pandemic has brought about a major shift in the future of work, with three major trends reshaping how businesses operate. Remote work and virtual meetings have become the new norm, providing greater flexibility, and breaking down geographical barriers. E-commerce has witnessed unprecedented growth, compelling businesses to rethink their digital strategies. Simultaneously, the rapid adoption of digital technologies, such as automation and AI, has revolutionized various industries and work processes. As a result, traditional work setups are being reimagined, and businesses are now seeking sustainable growth and new ways of working. 

For SGS, these emerging trends present exciting opportunities, as the number of potential clients grows exponentially. Even conservative companies that were once skeptical about remote work are now open to exploring new possibilities. Our expertise in this area is highly valuable and relevant, as we remain committed to helping organizations navigate these changes and capitalize on the potential for success in the evolving landscape of work.  

In light of these global discussions, our company, during Q1 2023, demonstrated impressive performance and unwavering commitment to excellence and adaptability in dynamic market conditions. Notable achievements include a remarkable 232% increase in revenue compared to Q1 2022, a testament to the effectiveness of our strategic initiatives and the strong demand for our products and services in the market. 

By leveraging our current network of investors and reaching out to past investors, we achieved an impressive 69% increase in investments raised during this quarter compared to the same period last year. This success is a testament to the strong relationships we have built with our investors and their continued confidence in our business and growth prospects.  

Moreover, our client base experienced remarkable expansion during the same period, growing from 2 clients in 2022 to 10 clients, representing an impressive growth rate of 400%. This growth underscores the market’s recognition of the quality and value of our SGS ONE software and our DaaS solution. Furthermore, it is not only the growth of our client base but also our customer satisfaction, which has been a key driver of our success. Read more about the success story of our largest client ORBIS. 

Our company has consistently surpassed planned revenue targets, achieving a growth rate of 3.60% beyond the set plan in Q1 2023. This further illustrates our adaptability and ability to thrive in dynamic market conditions. 

We extend our heartfelt gratitude to our investors, clients, and employees for their unwavering support and commitment, which has been instrumental in our success. 

With the World Economic Forum’s annual meeting providing valuable insights into the future of work and the global business landscape, we are poised to navigate the challenges and opportunities ahead with confidence and resilience. Together, we look forward to a path of growth and prosperity in this ever-changing world of work. 

We are excited to announce our new partner “Der Mittelstand. BVMW” is joining our SGS Team. As one of Germany´s largest and most active business networks for SMEs, we look forward to working together toward making an impact in today’s dynamic market. 

“Der Mittelstand. BVMW” stands at the forefront of the SME ecosystem in Germany, advising and driving the success of medium-sized companies across Germany. With a network of more than 300 local consultants and international offices, they have built a reputation for providing valuable resources, advocacy for favorable business conditions, and a wealth of knowledge on relevant topics. Their core philosophy of “by entrepreneurs, for entrepreneurs” deeply resonates with our vision, and together, we are excited to make an impact in the investment world. 

Join us in celebrating this important milestone as we start on a new path together with “Der Mittelstand. BVMW”. 

Founder’s Quote:

Executive Summary 

SGS (Scalable Global Solutions) is a Croatian start-up that allows companies to employ and manage remote-working local talent without forming a subsidiary.

The company’s end-to-end solution, DaaS (Department as a Solution), is industry agnostic, covering 8 core company functions, ranging from sales and IT to customer care. It presents a breakthrough in unlocking client growth, optimising business processes and finding key talent.

SGS ONE, the company’s CRM system, was created to provide a unique experience for the hiring and onboarding process and later serve as a support tool for every department.  

While the client interviews and selects the desired employees, SGS facilitates the office space and equipment while handling payroll and local employment compliance. This way, companies can hire and manage their full-time employees globally.  

Investment Highlights 

SGS is in the position to thrive in the Future of Work (FoW) – International Data Corporation (IDC) forecasts investment in technologies supporting FoW initiatives will exceed $1T worldwide by 2024 with a robust 17% CAGR over the five-year forecast period.

The company achieved 44% monthly revenue growth since Dec 2021. 

SGS has scaled up existing clients’ teams by using DaaS. The largest client plans to ramp up its team of developers to 30 developers by the end of 2022.  

The company’s founder and CEO exited two companies (one to Juniper and one to Microsoft) and held executive positions at Cisco, Juniper, Microsoft, Xerox, and ATI. 

It has three signed clients with a €5M deal pipeline.  

SGS launched a channel partnership network with three signed partners this year. 

SGS raised €1.6M in funding from five investors, including a family office committed to investing further. 

Investment Offering

SGS is raising €2.3M of growth capital for its Seed round, with five angel investors on board committed to investing more. 

Learn more about SGS:

The CEE region is seeing a record-breaking boom in venture capital financing in recent years and has become a hotspot for VC firms wanting to invest in fast-growing tech companies in the region. The year 2021 was no exception for the venture capital sector, with the CEE market seeing outstanding growth in venture capital investments. In 2021, CEE businesses have raised over €5.4 billion in VC capital across over 1000 rounds.

Since the data only includes publicly stated rounds, the true amount of financing in Central and Eastern Europe is much higher. Compared with the previous year, 2020, where companies raised over €2.2 billion in over 1200 rounds, the total amount of investments almost tripled, while the average round size roughly doubled.

Source: vestbee.com

Today, Scalable Global Solutions is proud to announce that we have raised an additional strategic investment of €250k+ from our existing angel investors. This tremendous vote of confidence and continuing support from our investors, for which we are thankful, will assist us in realizing our vision –introducing a new concept to clients that enable them to become more successful and competitive. Following last year’s round of €600k, this additional investment brings our total funding to €1,6 million to date.

The new funding will allow us to find even more highly qualified personnel to join our ranks, close even more deals and scale existing signed deals. In addition, part of the investment will be used to upgrade our CRM system, the SGS ONE, allowing our clients to manage their remote teams even more efficiently. Our team is growing in size month-over-month, and we aim to accelerate our growth plans to become the global DaaS provider and partner with leading experts who want to become a part of our story.

On behalf of the SGS team, we thank our clients, partners and investors for putting their trust in us on this journey, and we are excited to write our following chapters together.

Opening a subsidiary is one way to tap into global talent, but it’s a time-consuming and costly procedure. A faster and cost-effective alternative will also ensure complete compliance for any foreign personnel – An Employer of Record.

As the Employer of Record, Scalable Global Solutions allows companies to commence operations in Croatia quickly and compliantly, without the costs and time restraints associated with establishing a new local entity/subsidiary. The employment relationship exists between the employee and the EOR (SGS), as we have the legal responsibility. However, the client company is responsible for the day-to-day management and activities.

When to use an employer of record?

• Whenlooking for a cost-effective solution for your hiring
• When hiring full-time employees without opening a subsidiary
• When ensuring compliance with laws and regulations in a foreign country
• When going beyond your local talent pool and expanding to a global market
• When there is no capacity or need to perform the research and operations in-house

SOURCE: https://www.linkedin.com/pulse/what-employer-record-definition-benefits-vendor-screening-mary-joseph/

Based on the latest report from EY Austria, this German-speaking country has been struggling to find qualified and experienced and experienced employees, across all sectors, for several years now.

According to their comments, three out of every four medium-sized businesses in Austria (76 %) have difficulty obtaining sufficient skilled personnel, with 23 % having significant issues. Only three out of a hundred firms, on the other hand, say they have no trouble finding qualified staff. This implies that the skilled employee’s problem is no longer as pressing from the perspective of firms, owing to the economy-related reluctance to hire people. Still, it remains a severe burden for businesses.

Two years ago, in 2020, the greatest threat for SMB’s was the shortage of skilled workforce (69%), while now, in 2022, due to Corona, most SMB’s fear a new outbreak of Corona and an oncoming economic slump (71 %) as the greatest threats to their development. Nonetheless, the scarcity of competent personnel, along with a 57 % increase in unemployment, continues to have a detrimental influence on the growth of Austrian medium-sized businesses.

Hesitance in hiring new employees

Although the financial crisis is presently driving the economy’s requirement for staff to shrink drastically, it only temporarily alleviates the lack of a competent workforce -it is painfully catching up with many industries even while the crisis is ongoing, despite high unemployment rates. There will be a shortage of qualified professionals in the medium and long run. Companies are again hesitant to hire new employees in light of the economic uncertainty, which has now been worsened by the advent of a new virus type. Like it did the previous year, the labour market crisis is hurting Austrian companies’ expansion plans.

According to the EY Austria study,

20%

Austrian medium-sized businesses expect to hire new personnel in the next six months.

Sales figures are down with vacancies across all sectors

More than a third of the interviewed companies have expressed that the talent shortage has lowered their sales numbers. The implications of a skilled labour shortage are most evident in the energy and water supply industry (57 %), followed by the finance and service sector, where almost half of the enterprises (44 %) report lost revenues owing to unfilled jobs.

The most present lack of talent is the technical area, where jobs remain unfilled in one out of every four businesses (26 % ). In addition, the digitalization drive spurred by the financial crisis has also increased the shortage of trained personnel in the IT sector, with 15% of enterprises reporting openings.

The conclusion is clear –like many other developed countries, Austria is experiencing a sharp decline in quality talent, affecting their further economic development.

Here is how we can solve the problem:

With our innovative DaaS service, we create Departments as complete Solutions for our clients. Our partnership with small and medium-sized businesses allows us to develop ideal teams and departments, placed in Croatia at only a fraction of the cost they would usually pay for them.

Read more about it here: http://sgs-daas.com/daas-solutions/

Contact us for more information at [email protected]

SOURCE: https://www.ey.com/de_at/unlocking-ambitions-of-private-businesses-and-their-owners/wie-die-coronakrise-die-situation-am-arbeitsmarkt-verschaerft