Seed the Future

Why Bulgaria Seems to be at the Bottom of Europe by Amount of Early Stage Funding

Overall early stage investments in Europe are growing. It seems that collecting data is still an issue in some countires. ©Pixabay
Overall early stage investments in Europe are growing. It seems that collecting data is still an issue in some countires. ©Pixabay
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Bulgaria seems to be at the bottom of the early stage funding for startups ranking according to Seed the Future, a recent report by The study covers the period between Q2 2015 and Q2 2018. The amount venture capital invested in Bulgaria based companies in this time frame is 0.01% of the whole capital deployed in the 33 countries that participated in the study. A joke that Bulgaria is the country of funds has been around recently. It is because of the around 10 funds that have been or are expected to be closed soon. The joke is however not that funny, since the data shows total discrepancy and Bulgaria ranks under similar sized economies and perceived as the developed ecosystems like Croatia, Slovakia or even Cyprus.

On the one hand, the conclusions of the report contradicts the popular perception that Bulgaria is a great location for early stage startups and pre-seed and seed funding. In the same time, several factors explain the data snapshot: our data shows that since April 2015 there are 44 deals finalized by Eleven, and by Launchub – around 20  These are the two early stage funds in Bulgaria. Investments of business angels, e.g. the over 70 companies the co-founders of Telerik have backed, usually remain under the radar. And last, but not least, some of the funds like Launchub, the veteran NEVEQ and the newcomers NeoVentures and BrightCap, might be Bulgarian-based funds, but investing in Bulgarian founders abroad is in their DNA.

Furthermore, there’s some interesting data from last year’s report on the local startup ecosystem Innovationship, which shows that 61% of the participating companies have relied on their own investments for starting the business. Only 7% of companies raised their initial funding from one of the two funds (Eleven and Launchub), and 17% said they received funding at a later stage.  Over two-thirds of participating companies were created in the period since 2012, reaching the highest peak in 2015 and 2016 when both funds had already invested a major part of their resources.

The top early stage venture destinations of Europe

The trend of growing early stage investment in Europe continues. In the beginning of 2015, deals totalled €400M and by the summer of 2018, the amount has expanded to over €2B. The number of deals grows accordingly – from less than 400 in early 2015 to 1200+  between March and June 2018.

The geographical examination showed clear patterns that the vast majority of early stage capital has been deployed in UK (24.59%) and France (24.04%). A second look at the data outlines an interesting finding – France actually attracted smaller but more deals than the UK did.  This could be signaling changing attitudes to entrepreneurship in France, following the country’s considerable investment in becoming a “startup nation” but also development of early stage VCs, the report outlines. Germany is third by number of deals. The country however, stands out because the average amount of investment per deal is much higher than in either the UK or France.

Sweden and Spain are the other two locations within the top 5 with accordingly 7.2% and 3.9% of the venture capital invested in Europe.

Given the topic and the nature of startups, especially the ones from smaller markets like Austria or Bulgaria, one needs to take into account the fact that early stage ventures not necessarily have their headquarters where the team, the IP or all the investments are.

Trending Startup Topics in Europe

Fintech and Medtech are the two domains that have attracted the greatest share of early stage investment, while topics like governmental technology, legal tech and even engineering seem to be unappealing for early stage VCs. The top fintech investment destinations remain the UK and Germany, but unlike two years ago, the distribution of spending in the UK is much more varied than it has been.

Speaking of average investment per deal, fintech is no longer the winner. Companies in medtech and ones that develop semiconductors seem to close bigger seed and series A rounds (close to €4M on average). Fintech ranks third (€3.2M), followed by robotics (€3.17) and gaming (€3.13M).

All this is an evidence that the amount of money invested in Europe’s early stage ventures is larger than ever before. Despite concentration of VCs in several major hubs in the UK, Germany and France, the landscape has begun to change its face and the continent overall boasts more success stories and more local support organizations.


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