ZAGREB, September 19, 2020 — Alan Sumina and Zoran Vučinić, the founders of Nanobit, are the first two big startup millionaires in Croatia, each with about 200 million kuna in their account. They sold their gaming business to the Swedish Stillfront Group for 125 million euros.
On Thursday, Swedish publisher of computer games Stillfront Group, announced that it will take over Croatia’s largest mobile game maker. They will take over Nanobit for 125 million euros or nearly a billion kuna. It is the largest acquisition not only in Croatian gaming, but also in the overall domestic IT industry. It is even comparable to large acquisitions in telecommunications and agriculture according to Novac.
The acquisition of Nanobit is far above the amount allocated by Hrvatski Telekom for IT company Combis (EUR 25.5 million). It also surpasses one of the larger acquisitions in tourism, when Valamar took over Hotel Makarska for 23 million euros. The takeover of Nanobit gets closer to what United Group gave for mobile operator Tele2 Croatia (EUR 220 million). Or for instance, the 280 million euros that France’s Lactalis paid for Dukat.
Takeover realized in Two Phases
According to the terms that the Croatian startups agreed with EY and the publication on the website of the Swedes, Alan Sumina and Zoran Vučinić, can both expect to receive around 200 million kuna by the end of the year. In addition, each will receive another 90 million kuna in shares of Stillfront Group. Accordingly, the first part of the acquisition will be realized by transferring 78 percent of Nanobit’s ownership to the Swedes.
In the second round, in two years and according to a similar model, they should receive 70 percent in cash and 30 percent in shares. As a result, that will be a difference of up to 48 million dollars or about 300 million kuna. All of this did not include fees to intermediaries and EY, but the Stillfront Group did not go into such details.
After the publishing of these numbers, it’s not surprising that there was excitement on the domestic investment and gaming scene. There are other companies, such as Infobip and Rimac Automobil, whose founders sit on stakes worth much more. However, an “exit” of this proportion is new to the domestic startup world.
‘Important Acquisition for Croatian Ecosystem’
Stevica Kuharski, principal and scouting manager of VC fund ‘Fil Rouge Capital’, says that the acquisition of Nanobit is very important for the domestic ecosystem. According to him, it shows that Croatia can do an “insanely” great deal and succeed in a highly competitive industry.
“Alan and Zoran are committed founders and have managed to make the company attractive for acquisition. Over the years they have built a brand and strong creative teams working on interesting content for the target audience. All of this ultimately led to the growth of active users that they successfully transformed into customers, ”says Kuharski. He states that this is how they managed to find the “holy grail” of a startup that makes its own products and proceeds with persistence. Kuharski points out that such successes attract foreign investors and strengthen the ecosystem in Croatia.
“We at Phil Rouge Capital are overjoyed for their success,” Kuharski says.
‘Possible Skype-Effect and Rimac-Effect in Croatia’
Lovro Nola, director of the largest Croatian video game academy Machina, states similarly. Nola says that, after such an influx of capital into the hands of experienced founders in the gaming industry in Croatia, a similar effect could occur that happened after the sale of Skype in Estonia. Alan Sumina and Zoran Vučinić could start investing in startups, especially in those that come those of the thriving industries.
“Maybe this will encourage the ‘Rimac-effect’, where the founders of Nanobit will become a bridge between their buyers and investors or a studio that will start acquiring smaller gaming studios in Croatia. Maybe they will merge these kind of studios with Stillfront. Anyway, this is very positive news for the domestic gaming industry,” Nola concludes.
‘Momentum Allows More Growth and Development’
Alan Sumina and Zoran Vučinić made a joint statement regarding the takeover. They say that the mobile gaming industry is growing fast and is becoming more globalized. If they want to stay number one, they have to move forward.
They stated: “By joining the Stillfront Group, Nanobit gains additional momentum allowing us to continue to grow, to develop new ambitious plans and projects. It is quite natural, since we are in a position to choose a strategic partner, to choose the one that fits into our culture and long-term vision. All those qualities that we nurture internally, entrepreneurial spirit, independence and innovation, we have seen in the leadership of the Stillfront group.”
“We look forward to working with other successful studios within Stillfront. This will further accelerate the development of both Nanobit and Stillfront groups. Furthermore, our employees will have the opportunity to work with the best in the world,” conclude Alan Sumina and Zoran Vučinić.
Disbelief in Croatia’s Gaming Community
After the announcement of the acquisition of Nanobit, most of the discussions in the gaming community were colored by disbelief. Indeed, it’s an incredible amount that the Swedes set aside for the Zagreb studio. However, the Swedes themselves gave the answer to this dilemma. Last year, Nanobit had a revenue of HRK 195.2 million with a net profit of HRK 17.6 million. The Swedes, on the other hand, announced that in the first half of 2020, Nanobit recorded a rapid increase in revenue to HRK 236 million with an operating profit of HRK 44 million.
By the end of the year, they say, the Croatian studio, which currently employs 125 experts, aims for a revenue of around 460 million kuna. Nanobit produces mobile games for women who use smartphones. They sell their games in 150 countries, the most popular being My Story, Hollywood Story and Tabou Stories. They have 145 million players.
“Over the past 12 years, Alan and Zoran and their team at Nanobit have built an impressive gaming studio with a solid niche in the exciting genre of lifestyle games. Consequently, we look forward to working with them to take the company to the next level. The core gaming portfolio has seen an impressive growth over the past year. We see strong growth potential in the future, including promising new games in development,” says Jörgen Larsson, CEO of Stillfront.
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