Country Guide

Bulgaria

Bulgaria

Guest Editor

Etien Yovchev

Editor-in-chief at The Recursive

Etien Yovchev is a co-founder and Editor-in-chief at The Recursive, an online media platform dedicated to the emerging tech and startup ecosystems in Southeast Europe. Previously, Etien helped build the Bulgarian branch of Trending Topics, an outlet covering the entrepreneurial community in the country. Etien aims to provide high-quality and constructive reporting on the progress of the SEE innovation ecosystem, making sure that the stories of promising local founders reach global audiences. He holds a MSc degree in Innovation Management from RSM, Erasmus University Rotterdam and has more than 4 years of experience in the commercialization of new products, having worked with many early-stage companies and a few corporate innovation departments across Bulgaria, The Netherlands, and the USA.


Guest editors are local ecosystem leaders: successful founders, investors, or thought leaders. Have someone in mind? Nominate a country guest editor.

Disclaimer: all content within the Startup Ecosystem Summary and Editor’s Guide sections is written by and reflects the personal perspective of the guest editor. The guest editor is not responsible for content within the Country Snapshot and Community sections, as much of this content is compiled from external sources and does not necessarily reflect the guest editor’s view.

Startup ecosystem summary

Key Startup Cities

Sofia, Varna, Plovdiv

Connected Country Ecosystems

Romania, Germany, United States

Differentiators

  • Top tech talent and excellent digital infrastructure
  • Strategic location within Southeast Europe
  • Cost-effectiveness and favorable taxation
  • Engaged diaspora community
  • Extensive VC & EU funding opportunities for local early-stage founders

Challenges

  • Limited governmental support
  • Limited technology transfer from universities
  • Missing strategy for attracting top-tier business talent from abroad
  • Ecosystem concentrated mainly in Sofia
  • Unfavorable demographic trends

Editor's Guide

Introduction

Just a decade ago, Bulgaria did not really have a startup ecosystem despite being traditionally strong in the IT sector. However, since then, the country has been on a steady trajectory to transition from an outsourcing destination into a major innovation hub. Today, the Southeastern European nation is home to over 400 startups, 15 venture capital and growth equity firms, and an increasing number of accelerators, supporting associations, and co-working spaces. More and more founders who set up their ventures here are now reaching Series A or even later rounds. There is over €200M in VC funding available for local entrepreneurs as of the beginning of 2021.

According to the fDi European Cities and Regions of the Future 2020-21 report, the Bulgarian capital Sofia ranks 3rd in Europe when it comes to cost-effectiveness and foreign direct investments strategy. At the same time, the country enjoys a multilingual pool of over 65,000 IT specialists, constantly boosted by 15 universities and 220 high-schools with ICT classes as well as numerous private academies. In a nutshell, it’s much cheaper to build a great technology company here than in most major startup hubs around the world.

Outlook

Moving forward, the startup ecosystem in Bulgaria seems well-positioned to develop further, especially in verticals like fintech, artificial intelligence, and deep tech. The success stories of local founders are not only a mechanism for driving top talent to the country but also inspiring a growing number of future entrepreneurs to build a venture here. Bulgaria has also managed to establish a good connection with its diaspora – successful entrepreneurs and investors living abroad. For example, Bogomil Balkansky, who is a partner at Sequoia Capital, Stefan Zlatev, an investor at Breakthrough Energy Ventures, and Mina Mutafchieva, principal at Dawn Capital.

There are multiple organizations invested in ecosystem building and the development of startup know-how and mindset in Bulgaria – such as the local chapters of Endeavor and Founder Institute, as well as the Bulgarian Startup Association (BESCO), and the Bulgarian Private Equity and Venture Capital Association (BVCA).

That said, for the ecosystem to reach the next level, there are still plenty of gaps that need to be filled. When it comes to startup-friendly regulation, efforts from governmental bodies are still insufficient and often missing. For the most part, the positioning of Bulgaria as a technological hub is driven by the private sector. On a similar note, there is no unified migration strategy for attracting senior-level sales and marketing talent from abroad. Innovation output from universities is still rarely commercialized, and to date, there are not enough incentives for that to change – financial or otherwise. Outside of the fintech sector, corporations are still rarely involved with the startup ecosystem. Last but not least, founders are concentrating in just one place – the capital Sofia. While the entrepreneurial communities in other big cities such as Varna, Plovdiv, and Burgas are also developing, there is more work to be done in smaller towns.

Featured Tech Startups

Editor’s choice of the country’s top 10 emerging tech startups.

Startup Showcase

Editor’s pick of which ‘Featured Startup’ is especially worth following and why.

EnduroSat is a Bulgarian deep tech startup that engineers, builds, and operates nanosatellites, and is one of the fastest-growing space companies in Europe. The company’s offerings enable commercial and research customers to launch their Earth-observation payloads into space at the shortest-ever lead time of six months – a 10- fold reduction – and share the data they generate in a common cloud. This will enable costs to be reduced by 15 times, with practically no risk in space operations for the customer, which in its turn contributes to the commercialization of space. In 2020, the German investor Frank Thelen and his deep tech fund Freigeist Capital put €2M in the company at a €20M valuation. Over the summer of 2020, in-space transportation provider Momentus announced agreements with EnduroSat to provide transportation for two CubeSats scheduled to launch soon on a SpaceX Falcon 9 rideshare. More recently, following the successful collaboration on Kuwait’s first CubeSat mission, Orbital Space signed a new partnership with EnduroSat, with the goal to introduce more space services in the Middle East.

Focus Industries

Editor’s choice of the industries with the most potential for technology disruption and growth.

Artificial IntelligenceIn recent years, there has been a plenitude of local startups building AI-based products in various industries – enterprise software, health, finance, marketing, agriculture, travel, and others.
FintechWith over 70 fintech companies, 2 corporate fintech accelerators, and a fintech association aiming to develop the community further, this vertical is probably the most advanced in Bulgaria.
HealthtechAnother quickly developing segment with promise in verticals like 3D printing, bioconversion, as well as digital health platforms.

Talent

Editor’s perspective of the maturity level of talent in the ecosystem.

  • Technical TalentAdvanced
  • Marketing TalentModerate
  • Experienced TalentModerate
  • International TalentUndeveloped

Culture and History

Editor’s commentary on how the country’s culture and history have impacted the ecosystem.

Within the startup and tech ecosystem, we can already observe multiple examples of a giving-back mentality. Local people who are succeeding with their businesses are usually open to sharing know-how and resources with the next generation of entrepreneurs. Given the presence of communist rule in the country until 1990, the general population of Bulgaria is still working to transition to a more entrepreneurially-oriented mindset and to develop important traits like optimism and self-confidence as well as the perspective to take calculated risks and think big. The situation is a bit different with younger generations who have grown up with digital technology and the ability to travel and experience different cultures from around the world. They are much more progressive and looking to bring positive change to their environment.

Interested in becoming more involved in this ecosystem and connecting with local ecosystem leaders? Let us know.

Community

Active Investors

AE Ventures (Sofia): An investment company focusing on funding early-stage projects, as well as driving collaboration and growth of the entire blockchain ecosystem.

Blackpeak Capital (Sofia): A private equity co-investment fund focused on investing growth equity in fast-growing Southeast European SMEs.

BrightCap Ventures (Sofia): An early-stage venture capital firm investing in companies with defensible technology and significant global growth potential.

CEO Angels Club (Sofia): A group of senior executives and entrepreneurs related to Bulgaria investing their own money in early-stage startups in return for equity.

Eleven Ventures (Sofia): A pre-seed and seed VC with a focus on entrepreneurs from Southeastern Europe, that has 300+ mentors as well as 300+ startup founders coming from more than 20 countries as part of its alumni network.

Empower Capital (Sofia): A €21m fund financed by the European Investment Fund with the mandate to provide unique access to equity and quasi-equity funding to growing Bulgarian companies.

Impetus Capital (Sofia): A privately held investment company, specialized in private equity, which invests in small and mid-market companies.

Innovation Capital (Sofia): A €15.6m venture capital fund with the mandate to provide access to equity and quasi-equity funding to Bulgarian companies.

LAUNCHub Ventures (Sofia): An early stage VC actively investing in SEE and CEE tech startups in Seed and Series A stages that recently announced €44m first closing for a new fund whose total target size is €70m.

Morningside Hill Fund (Sofia): A €38.5m fund managed by the Funds of Funds that invests in equity (or equivalent) minority positions.

NeoVentures (Sofia): An open-ended investment company with entrepreneurial capital that invests in early and later stage space, AI, and health startups.

New Vision 3 (Sofia): A €23m fund that invests in the fields of Fin-Tech, AI, Blockchain Technologies, and Shared Economy.

PostScriptum Ventures Bulgaria (Sofia): A VC with a broad portfolio of sustainable investments in the energy sector.

Silverline Capital Bulgaria (Sofia): A new mezzanine fund that will manage over €42m.

Sofia Angels Ventures (Sofia): A €13m VC fund backed up by the European Investment Fund, focusing on seed-stage startups from Bulgaria, SEE, and CEE, and aiming to co-invest alongside angels.

Urban Impact Ventures (Sofia): A new Bulgarian-Dutch impact investing fund focusing on urban tech startups.

Vitosha Venture Partners (Sofia): A €26m early-stage VC fund investing in innovative businesses in Bulgaria.

incubators

Founder Institute Sofia (Sofia): The Bulgarian branch of the global pre-seed startup pre-accelerator community. It recently started a virtual program open to founders all across the Balkans.

Visa Innovation Program (Sofia): A program that provides local fintech startups with support from top payment experts, as well as access to Visa’s clients and Eleven Ventures’ network.

accelerators

Climate-KIC Accelerator (Sofia): Europe’s largest green-tech accelerator for early-stage startups. In Sofia, it’s managed by Cleantech.bg.

Innovation Starter Accelerator (Sofia): Innovation Starter Accelerator is a financing acceleration program, with a mandate to provide access to equity and quasi-equity financing to Bulgarian start-up companies with entirely private capital. The accelerator is powered by the team of the first Bulgarian innovation agency – Innovation Starter, which owns the projects Innovation Explorer Forum and Innovation Academy as well as the support of corporate partners.

Raiffeisen Elevator Lab Bulgaria (Sofia): Raiffeisen Bank Bulgaria is part of Raiffeisen Bank International’s Elevator Lab Partnership Program – the largest corporate fintech program in CEE. This year, Raiffeisen Bank Bulgaria together with Raiffeisen Bank Romania offers this Elevator Lab program:

Vitosha Accelerate (Sofia): A revolving, year-round accelerator program that takes place four times per year.

Startups Raising Capital
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Coworking Spaces/Hubs

Betahaus Bulgaria (Sofia): The first coworking space in Bulgaria and one of the largest in the region with 2 locations in downtown Sofia.

Bulgaria Innovation Hub (Sofia): Promotes knowledge exchange and cross-cultural collaboration between the entrepreneurial communities in the US and Bulgaria.

Campus X (Sofia): Founded by the team behind Telerik (the $262M Bulgarian startup exit), it hosts digital and tech startups, IT Academy, and two VC funds.

Coworking by MOVE.BG (Sofia): A co-working space that brings together young and talented entrepreneurs from various fields: start-up, digital businesses, projects of young artists, green businesses, and educational organizations. ‘The Golden Apple’, ‘Pollenity’, ‘Log Sentinel’, ‘CreateX’, ‘proof.’ have come here, developed, and grown.

Missia23 (Sofia): A community hub, coworking space, and event center that wants to bridge the gap between the tech and creative sectors.

Networking Bulgaria (Sofia, Plovdiv): Premium coworking and private office spaces with 5 locations in Bulgaria.

Puzl CowOrKing (Sofia): The biggest IT coworking space in Sofia. Since it opened in 2015, it has attracted over 800 people to its community and continues to expand.

Work and Share Sofia (Sofia): Brings together freelancers, startups, small companies, and corporations from the tech world.

conferences

Annual FinTech & InsureTech Summit (Sofia): The Annual FinTech & InsureTech Summit in Sofia is an unmissable event for all players in the financial ecosystem in Bulgaria and the region of CEE. It gathers industry leaders, visionaries and innovators and showcases how digital transformation is redefining the future of the financial services.

Biotech Atelier (Sofia): The European annual biotech conference.

meetups

Data Science Society (Sofia):  Knowledge sharing platform for Data Science enthusiasts, geeks, and experts; the community behind Data Science Meetups and International Datathons with attendees from more than 20 countries.

Government Programs

Fund Manager of Financial Instruments in Bulgaria: Operates as a Fund of Funds (FoF); it allocates targeted public funds from European Union programs and national co-financing, using special financing instruments. To date, it has supported four venture capital funds in Bulgaria.

ICT Cluster Burgas: The Southeast Digital Innovation Hub (Digihub.BG) supports the development of the data-driven economy in the southeastern region in Bulgaria.

Sandbox for Innovative Solutions: A project of The Digitalization, Innovation and Economic Development department of Sofia Municipality.

Non-Government Organizations

Bulgarian Private Equity and Venture Capital Association  (BVCA): Focal point of private investors, venture capital funds and the entrepreneurial community in Bulgaria.

EDIT.BG: Embraces innovation and technology by benchmarking the digital industry in order to to unleash the full potential of the Bulgarian digital sector.

Endeavor Bulgaria: A global network that selects, mentors and accelerates high-impact entrepreneurs in growth markets around the world, providing them with access to markets, talent, and capital.

Law and Internet Foundation: Registered scientific center to the Ministry of Education with research activities in the field of ICT law, e-education, e-justice, e-health, e-justice, etc.

LIBRe Foundation: LIBRe Foundation is a Bulgarian not-for-profit non-governmental organisation established in 2015 with the mission to contribute to the national digital policies and to facilitate the technology penetration in the professional and personal life.

Sofia Knowledge City Cluster: Aims to  transform Sofia into a smart city by supporting the development of business based on innovation and knowledge.

Universities

American University in Bulgaria (Blagoevgrad): The university that has produced some of the most prominent entrepreneurs in the local startup ecosystem.

Faculty of Mathematics and Informatics at Sofia University (Sofia): This division also coordinates the GATE CoE Research Institute – a new main structural unit of Sofia University focusing on applied big data research in areas like Future Cities, Intelligent Government, Smart Industry, and Digital Health.

Technical University Sofia (Sofia): The largest technical university in Bulgaria, it provides specializations in information technology, nanotechnologies, virtual engineering, energy efficiency, renewable energy resources, engineering ecology and engineering design.

Country Snapshot

Economy

Startup funding
Startup funding
US$35 million (2020)
Standard of living
Standard of living
Global rank: N/A
Innovation
Innovation
Global rank: 37 (2020)
Entrepreneurship
Entrepreneurship
Global rank: 69 (2022)
Annual GDP growth
Annual GDP growth
4.2% (2021)
(Global avg. 3.0%)
Ease of doing business
Ease of doing business
Global rank: 61 (2019)
Ease of starting a business
Ease of starting a business
Global rank: 113
Research and development
Research and development
0.9% of GDP
(Global avg. 2.3%)
Contract enforcement
Contract enforcement
Global rank: 42

Sources

Startup Funding: Guest Editor
STANDARD OF LIVING: International Monetary Fund - GDP per capita (PPP)
INNOVATION: Global Innovation Index
ENTREPRENEURSHIP: Global Entrepreneurship Index
ANNUAL GDP GROWTH: World Bank
EASE OF DOING BUSINESS: World Bank
EASE OF STARTING A BUSINESS: World Bank
RESEARCH AND DEVELOPMENT: World Bank
CONTRACT ENFORCEMENT: World Bank

*Updated with latest available data based on listed source.

Society

Population
Population
6.9 million (2020)
Government
Government
Parliamentary Republic
Stability
Stability
Global rank: 56 (2020)
Internet usage
Internet usage
70.2% (2020)
Smartphone usage
Smartphone usage
N/A
Literacy
Literacy
98% (2011)
Population under 15
Population under 15
14% (2021)
Median age
Median age
42.7 (2018)

Sources

POPULATION: Worldometer
GOVERNMENT: The World Factbook
STABILITY: Global Innovation Index
INTERNET USAGE: International Telecommunications Union
SMARTPHONE USAGE: Newzoo
LITERACY: World Bank
POPULATION UNDER 15: World Bank
MEDIAN AGE: The World Factbook

*Updated with latest available data based on listed source.

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