Bulgaria: A Regional Leader in Venture Capital and Innovation
6 December 2024Introduction: Bulgaria’s Emerging VC Ecosystem
Bulgaria has emerged as a leading country in Southeast Europe (SEE) for venture capital (VC) activity, managing approximately €500 million in capital through locally established VC funds. A November 2024 report by the Bulgarian Venture Capital Association highlights the country’s role as a regional leader in investment value and deal count per capita over the last five years. Furthermore, SEE has been identified as Europe’s fastest-growing region during the period 2019–2023.
This success is attributed to a thriving ecosystem, underpinned by the support of the Fund of Funds and a growing network of angel investors and accelerators. Together, these factors have positioned Bulgaria as a popular destination for innovative multinational companies.
The Fund of Funds: Revitalizing Bulgaria’s Venture Capital Scene
Established by a Council of Ministers order on 22 July 2015, the Fund of Funds (officially known as the Fund Manager of Financial Instruments in Bulgaria) has played a pivotal role in revitalizing the VC ecosystem. It manages resources designated for financial instruments under EU-co-financed operational programmes, adhering to both national and EU laws.
Through targeted financing schemes, the Fund of Funds allocates public funds from EU programmes and national co-financing, enabling entrepreneurs to access financial resources more efficiently. By fostering strategic investment partnerships, the Fund of Funds has accelerated the growth of Bulgarian startups, empowering them to compete on the international stage.
Impact on Startups and Angel Investment
Bulgaria’s expanding network of angel investors and startup accelerators complements the efforts of the Fund of Funds by providing early-stage companies with seed capital, mentoring, and networking opportunities. These initiatives have fostered a fertile environment for innovation and entrepreneurship.
Much of the capital flowing into startups is sourced from VC funds, which act as financial intermediaries under tender procedures organized by the Fund of Funds. Private co-investments further amplify the impact of these initiatives, enhancing the growth trajectory of Bulgarian startups.
Transition Period: Preparing for the Next Wave of Investments
As of November 2024, the investment period for VC funds financed by the Fund of Funds has ended, with new tender procedures underway to select fresh fund managers and establish new VC funds.
One of the key ongoing initiatives is the Entrepreneurship Fund 2021–2027 under the “Competitiveness and Innovation in Enterprises” (CIE) programme. This initiative, currently at the stage of selecting financial intermediaries, aims to provide more than €100 million to support enterprise growth.
Another significant initiative, the “Innovation in Enterprises” tender, is expected to allocate €32.17 million for innovation-focused investments. The funds, available in 2025, will fuel a five-year investment period, catalyzing the development of new startups and bolstering existing businesses.
Future Outlook: A Thriving Innovation Ecosystem
Although institutional investment activities have temporarily paused during the selection of new fund managers, the future outlook for Bulgaria’s startup ecosystem remains optimistic. With the anticipated launch of new VC funds, the coming years are expected to see robust growth in entrepreneurial activity and innovation.
NBLO: Your Trusted Legal Partner in Venture Capital
With extensive experience advising UK, EU, and Bulgarian VC funds and startups, New Balkans Law Office (NBLO) is uniquely positioned to guide clients through the complexities of the VC investment landscape.
Our services include:
- Tailored legal solutions for VC fund formation and management
- Strategic advice for securing funding and investor relations
- Compliance support to ensure adherence to EU and Bulgarian regulations
Whether you are a fund seeking to maximize your investment potential or a startup navigating the path to success, our dedicated team is here to support your journey.
Contact us for expert legal guidance and customized solutions to help you achieve your goals.