Bulgaria: A Leading Hub in Europe’s Fastest Growing Startup Ecosystem

Fintech, Venture Capital, Startups

At NBLO, we are honoured to provide our expertise to founders as they navigate various legal hurdles on the path to success. In addition to offering start-ups the opportunity to use our services free of charge through our Startup Pro Bono Clinic, we regularly seek to inform current and future clients on industry trends as South Eastern Europe (i.e., ‘SEE’) becomes one of the fastest growing startup ecosystems in Europe.

We are excited that Bulgaria’s start-up ecosystem will remain a vibrant and dynamic sector in 2023, according to recent insights found in the Bulgarian Venture Capital Association and Dealroom’s November 2022 report. As a global provider of data and intelligence on start-ups and tech ecosystems, Dealroom seeks to accelerate entrepreneurship and innovation by equipping many of the world’s most prominent investors, entrepreneurs and government organisations with key data analysis and insights. With the support of the Bulgarian Venture Capital Association, the European Investment Fund and the European Investment Bank, the published report summarises recent trends in the VC and start-up ecosystem across South Eastern Europe.

The report provides a comprehensive understanding of the startup ecosystem, including current investment trends, as well as upcoming challenges and opportunities for the SEE region. According to this report, the countries considered part of the SEE region include Albania, Bosnia & Herzegovina, Bulgaria, Croatia, Greece, Kosovo, Montenegro, North Macedonia, Romania, Serbia, and Slovenia.

Startups in the SEE Ecosystem: Opportunities for Entrepreneurial Growth

As presented in this report, the SEE region is one of the fastest growing start-up ecosystems in Europe, with total investment reaching a peak of $1.3B in 2022. 

Since 2012, SEE startups have grown 49.9x in combined enterprise value, significantly faster than the European average (12.1x). Although startup density varies widely across the SEE region, with Bulgaria ranking third after Slovenia and Montenegro, SEE-based startups in 2022 have attracted more funding than in 2019, 2020 and 2021 combined. 

Notably, Bulgaria is also among the top three leading countries in terms of average enterprise value growth between 2017 and 2022 in the SEE region. Romania, Greece and Bulgaria have grown to make up more than 70% of the SEE ecosystem enterprise value.

Leading Sectors for Innovation in SEE’s Startup Ecosystem

According to the report, the Enterprise Software, Fintech & Transportation sectors lead in the SEE region, having generated more than $24B in enterprise value, equivalent to 50% of the region’s value. As dynamic and rapidly evolving areas, these sectors are expected to have a significant impact on technology-based interactions between businesses and individuals. Various companies, including InfoBip, UiPath and Payhawk, exemplify the region’s capacity to help startups develop and scale their products and services.

It is important to note that Payhawk, a financial management product for credit cards, payments and expenses, is based in Bulgaria and became a unicorn (i.e., a former startup that reached US$ 1B valuation or exit in one point in time) in 2022. Given that SEE unicorns contribute half of the region’s combined enterprise value, companies like Payhawk help spin the entrepreneurial wheel by turning local talents into founders.

Bulgaria: A Leading Investor Hub for the SEE Startup Ecosystem

The Bulgarian investment landscape has matured significantly over the last several years, with larger funding rounds and greater participation rates as the startup ecosystem becomes more developed and sophisticated. In fact, more funds were raised in the last 18 months than ever before in Bulgaria. Moreover, 2022 was the second highest year for VC investment into Bulgarian startups.

In addition to VC funding, angel investors have helped to build and strengthen the startup ecosystem by fostering a culture of entrepreneurship and innovation. By supporting early-stage startups, angel investors can help to create a pipeline of new companies that can contribute to the growth and success of the ecosystem. As one of the leading investor hubs in SEE, Bulgaria attracts a growing  number of angel investors each year.

2023 Expectations for the SEE Startup Ecosystem

Based on the 2022 report, the SEE region is expected to build a strong pipeline of future unicorns and successes. In fact, SEE currently has 11 future unicorns spread across five countries; these unicorns are expected to scale and attract significant investment in the region as a whole.  

There may also be an increase in the number of startups that go public through initial public offerings (IPOs). The IPO market has been strong recently, with many successful IPOs by tech companies. This trend may continue in 2023 as more startups reach the point where they are ready to go public and seek additional funding sources.

Overall, it is likely that the startup ecosystem will remain a vibrant and dynamic sector in 2023, with many opportunities for growth and innovation.

If you feel that you may be part of the next generation of startups, we at NBLO are here to support you on your journey. We regularly advise on M&A matters so please feel free to download the Shareholders Agreement, developed with our assistance. Also, please  feel free to explore our Startup Pro Bono Clinic and additional resources  on our website for navigating the entrepreneurial ecosystem.