Bulgarian Startup Scene: Why It’s So Favorable

The startup scene in Bulgaria is bustling, marked by impressive growth and ongoing innovation. This ecosystem is fueled by a combination of favorable factors, such as the country’s strategic location, access to exceptional talent, and a range of supportive government initiatives. 

These elements make Bulgaria an attractive place for both local and international entrepreneurs, as well as investors interested in the region’s potential.
In recent years, the Bulgarian government has adopted policies aimed at making the country increasingly competitive in the startup landscape. 

Thanks to reforms that have simplified bureaucracy, facilitated access to funding, and incentives for new technologies, Bulgaria has become a prime destination for those looking to build innovative businesses. This has led to an increase in tech and digital startups operating in various sectors, from artificial intelligence to financial technology, creating a vibrant and dynamic environment.
Moreover, it has also contributed significantly to the increase in demand for the company formation bulgaria.

Bulgarian Startup Scene: A Growing Ecosystem

According to Dealroom data, in 2022 Bulgaria ranked second in Southeast Europe for combined business value per capita, just after Croatia. Along with Romania and Greece, Bulgaria accounts for over 70% of the total value of the startup ecosystem in Southeastern Europe. 

The country hosts more than 800 active startups, many of which operate in the deep tech and AI sectors, which have received more than one billion euros in investments over the past few years.

The Bulgarian startup ecosystem has grown significantly over the last five years, also thanks to the support of local and international venture capital (VC) funds. Bulgarian VCs not only invest in the country but also support startups throughout the region, thus strengthening their influence as one of the main investment hubs in Southeastern Europe. 

This ecosystem has consolidated through collaboration between startups, accelerators, incubators, and investors, creating a virtuous circle that fuels innovation and growth.
Additionally, interest in technology and innovation is not limited to major cities like Sofia, but extends throughout Bulgaria, involving even smaller centers where successful startups are emerging. The growth of coworking spaces and local tech communities has helped expand access to resources and opportunities for entrepreneurs across the country.

Read also: How to start a Sole Proprietorship (ET) in Bulgaria

Advantages for Startups in Bulgaria

There are several factors that make Bulgaria an interesting destination to start a startup. Firstly, the fiscal policies are very favorable, with low and simplified taxation. Moreover, startups have access to European Union funds, which helps stimulate innovation and reduce risk for entrepreneurs. The highly skilled workforce and competitive costs are other strengths, as well as the low cost of living, which allows startups to grow without excessive financial pressure.

An interesting aspect is that about a third of startups in Bulgaria are created by non-Bulgarian entrepreneurs. This demonstrates the international attractiveness of the country and its ability to attract innovative talents and ideas from abroad. The presence of an international community of entrepreneurs contributes to creating a stimulating and diverse environment, where different skills and viewpoints combine to generate new ideas and opportunities.

Moreover, Bulgaria is known for its vibrant technological ecosystem, which includes numerous events, conferences, and hackathons that foster networking and collaboration among startups and other ecosystem players. These events are a great opportunity to share knowledge, meet potential investors, and discover new business opportunities.

Variable Capital Company: An Incentive for Innovation

In 2023, Bulgaria introduced the Variable Capital Company (VCC), a new corporate instrument that allows entrepreneurs to maintain greater control over their businesses, while promoting local economic growth. 

This measure is part of a broader regulatory framework aimed at creating an even more favorable business environment for innovative companies. The VCC is designed to reduce entry barriers and provide greater flexibility for entrepreneurs, making Bulgaria an increasingly attractive destination for those wishing to start a new business.

The introduction of the VCC has been enthusiastically welcomed by the entrepreneurial community, as it represents a significant step forward in creating a more flexible and dynamic environment. This corporate instrument offers entrepreneurs the opportunity to attract investments while maintaining greater control over strategic decisions, a feature particularly appreciated by startups that want to grow without losing their identity.

Read also: 7 Reasons to Relocate a Business to Bulgaria

Bulgarian Startup Scene: VC Funding Landscape

Venture capital firms play a crucial role in the Bulgarian startup ecosystem. Since 2012, the country has seen the emergence of numerous new funds, stimulated by the establishment of the Bulgarian Fund of Funds, which uses public and EU funding to support startups through various financial instruments. 

Today, Bulgaria is a leader in the region in terms of the number of venture capital funds, with about 500 million euros of capital managed by local funds.
VCs provide not only funding but also strategic support to founders, contributing to the maturation of the entire investment landscape in Bulgaria, with larger funding rounds and an increase in the participation of institutional investors. 

The collaboration between VCs and startups has led to the creation of a more resilient and mature ecosystem, capable of facing the challenges of the global market and attracting new capital.

Another distinctive feature of the VC funding landscape in Bulgaria is the growing presence of international investors, who see the country as an opportunity to connect with promising and innovative startups. This trend has further strengthened Bulgaria’s reputation as a favorable place for tech investments, promoting the growth of startups aiming to expand into international markets.

Conclusion

In addition to the advantages already mentioned, it’s important to emphasize how collaborative and open the entrepreneurial community in Bulgaria is. Entrepreneurs are willing to share experiences and knowledge, creating an environment where it is possible to learn quickly and grow. The presence of accelerators and mentoring programs further helps startups develop and successfully navigate the typical challenges of the early years of activity.

In conclusion, Bulgaria is a land of opportunity for startups wishing to benefit from a growing ecosystem, supported by favorable government policies, available capital, and a dynamic and open community of entrepreneurs.

For those who need to grow and prosper their own startup in Bulgaria, the help of an bookkeeping firm can be decisive. Accountancy Bulgaria can take care of enforcing all tax regulations for your company and ensuring you don’t miss out on important incentives and benefits.