What Croatian Entrepreneurs Invest in When They Sell Their Company

I grew up in Istria, in Poreč, in a small town where, to be honest, we all know each other. I know how each person breathes, how each one thinks, we also know how each one spends money. And when it comes to Istria, it is very likely that those who have money spend it on rental properties. Apartments, houses with pools, villas… All of this is in the focus of newly minted investors from all over Croatia and beyond. Therefore, it was not too much of a surprise when a previously established local entrepreneur from a completely different industry entered the real estate business.

The man who had been building his business empire with an Istrian label for years succumbed to foreign capital and sold his business, literally overnight transitioning with excess capital in hand to, no less, the construction-tourism business. Some somewhat mocking rumors began to circulate about a lack of courage because after such a sale of an entire established business, a bolder or at least less conservative investment was probably expected. It’s not that there was a lack of money. The luxury houses of the newly minted landlord didn’t even have any clever names – Villa (name of the village) one and Villa (name of the village) two – which only deepened the gossip about the lack of creativity of a man to whom business literally fell into his hands after privatization, but he still managed to elevate it a few rungs higher.

However, the entrepreneur investor, after entering the luxury real estate market, realized what a gold mine he was facing, so he recently even registered a company for design and construction, so he wouldn’t have to deal with contractors over whom he has no control, and soon plans to build real small settlements where tourists will stay instead of villas. His return on investment is secured, provided there are no severe turbulences in the tourist market; the wolf is full, the sheep and money are accounted for. Still, we will not name him because despite all attempts and diversions, we have not managed to get him for a comment, but, to be honest, this entrepreneur is not really an exception at all.

Sumina’s ‘game’ in the capital market

A complete antipode to this Istrian entrepreneur is Alan Sumina, the founder of Nanobit, a video game development company. He and Zoran Vučinić received almost a billion kuna for a 78% stake in the company they sold two years ago to the Swedish Stillfront group, one of the leading global gaming companies in the free-to-play segment. In fact, it is a slightly smaller stake because the Swedes also took over the five percent stake held by the company’s employees, a total of twenty. The founders thus shared just under half a billion kuna among themselves. Each. Alan Sumina, as a member of the younger generation, is not one of those entrepreneurs who are ready for gradual retirement and renting properties to tourists. The funds he received from the sale of Nanobit he has tried to diversify as much as possible, emphasizing that he invested the largest part of the money.

– I invested most of the money in global stocks, some in bonds, both from various countries, i.e., governments, and companies. My portfolio is actively managed by advisors. I also invested in private equity (PE) funds; these are my investments for a longer horizon, approximately ten years. They are poorly liquid and relatively risky, but in the long run, they generally yield better returns than other types of investments. My goal is to increase investments in PE funds over the years in relative terms compared to other investment classes. I also invest in Croatian public companies such as Valamar, Adris, Podravka, Ericsson Nikola Tesla, HT, which are listed on the Zagreb Stock Exchange. Finally, I invested a smaller portion in venture capital funds, which basically serves to stabilize the portfolio – notes Sumina, adding that he still wants to be completely honest and admits that he also invests in real estate, but not directly, rather through bank funds.

He says that it is mostly about commercial real estate and the goal is to ensure rental yield over the years.

– Of course, I also invest directly in real estate, however, these are all Croatian properties and quite a bit of it is actually so-called passion investment. These are properties that were either purchased for living or because I really liked them due to their unique location, view, and so on. None of this I rent out nor do I plan to – says Sumina, asserting that all of the above constitutes the bulk of his investments.

He allocated a smaller portion to startups, directly and with the help of venture capital funds.

Most Have No Idea What to Do with the Money

It is no longer a secret, nor is it overly surprising, that in the years of cheap money, an increased trend of acquisitions and mergers has been noticed. Croatia was no exception: companies and stakes in them were bought and sold everywhere, and those who made the most money in this business often, experts note, invested conservatively. Selling a business to invest in tourist rental properties in Croatia is almost a rule. After all, there is nothing shameful about someone who has built a business for years wanting a little break from the daily hustle and bustle after the sale, and wanting a long-term sustainable return of three to five percent annually. In an era of negative interest rates and cheap money, which is now slowly behind us, that was a higher return than if they had sealed the money and deposited it in a bank for ‘better days’.

Fortunately, those who have tried to diversify their money, or at least part of the funds they received from the sale, to invest in another type of business or in a startup, their own or someone else’s, are no longer such an exception, but there are indeed such examples. After all, on the wings of such investments, an entire technological ecosystem has developed worldwide, so every shift in that direction is commendable. And there are more and more people who will invest the money from the sale of shares or an entire company into various investment packages with the help of investment advisors. Typically, younger and bolder individuals, who have the patience for both riskier and less risky combinations, most often opt for such investments. But there are also those who will use the money from the sale of an established business just to settle debts and come out empty-pocketed but with a clear conscience. But this is not a story about them.

What entrepreneurs do with bags of money after selling their companies and what they invest in, as well as what those who work with them the most say about it, what trends they notice, and whether everyone sells their company and buys a ‘brick’, read in the new issue of the printed or digital edition of your favorite weekly.