Author: Helen Ruth

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”.