“Automation of many business processes is a fact in a wide range of industries and in some of them it has a leading position. I expect this trend will continue in 2020, including in the Bulgarian market, where I can say that automated decision-making is gaining momentum,” forecasted Hristo Hadjitchonev, CEO of the four-years-old data science startup A4E. This is what Eleven Ventures and Impetus Capital, the two investors of the company, are also betting on.
The two funds recently injected another €660K into the company’s mission to make data analytics solutions accessible for more businesses like small and medium-sized ones. Supply-chain optimization and automation of scoring for the financial sector are two of the main areas in which A4E has developed solid expertise in the past a bit over four years since the start. Since then, the startup has been developing mainly in the local Bulgarian market and managed to become profitable with a team of six people and ten clients. With this new financial boost, A4E is planning triple-team growth and expansion into the DACH market.
“A4E’s potential growth is limitless. Data Science now becomes accessible and affordable not only for giants corporations but also for SMEs, thanks to companies like A4E. Due to the cloud technology, falling computational costs, and easiness of scalability of such solutions, growth is tremendous,” says Viktor Manev, partner at Impetus Capital, that participates with €460K in the current round.
Analytics for Everyone
Actually, Analytics for everyone is what A4E stands for. Founded by the former R&D leader of Experian Bulgaria, Hristo Hadjitchonev, four years ago the startup leverages data science to improve business efficiency.
The initial idea of the company was to offer SMEs flexible and affordable predictive analytical solutions to help them with their sales and supply chain forecasts. Today the A4E is a SaaS platform targeting medium and enterprise businesses and offers solutions for different cases – from supply-chain forecasts to automated decision making in financial and insurance institutions. The company currently has products for retail and wholesalers, for customer finance businesses, and for insurance. Although these are different domains and areas, the core technology is the same, which allows A4E to easily develop solutions for different use cases from automating scoring models to supply-demand balance optimization.
Among the clients of the startup we find Coca-Cola, the largest cake chain in Bulgaria Nedelya, lending company Credissimo, online grocery eBag, insurer Bulstrad, and others.
“80% of our clients are not companies who had realized this need before we met. We actually started before there was a real market for our solutions, but we now see the segment accelerating,” comments Hadjitchonev. “We really believed what we are doing is the direction where the world will be heading soon. The initial idea was not even a product, we wanted to bring data science to businesses.”
Minus one investor
Prior to this investment round, A4E had attracted €425K funding from Eleven Ventures, Impetus Capital and Unicredit Bulbank. Part of the €1.1M funding now, the company also used to buy back its venture debt from Unicredit Bulgaria. In 2017, the largest commercial bank in the country, invested into the company €270K in the form of convertible debt. Unicredit didn’t convert it into equity but for a while, the further fundraising of the startup was slowed down as the cap table situation was also not exactly clear. At the end of last year, A4E paid off the debt and it was possible to welcome new investors.
“Our development also went slower as in the middle of last year our pipeline was already exceeding the physical capabilities of the team for the entire year. Integration could take up to three months with a single client. Small teams have natural limitations. We needed to grow to be able to acquire new customers, yet lacked the financing,” explains Hadjtichonev. The company will be expanding R&D, operations, and sales (something the company hadn’t have so far).
“This year, our expectations for Bulgaria are rather conservative, we expect to replicate the development of last year on the local market, where we currently have ten clients. Part of the financing will also flow into expansion abroad,” explains the CEO. In the past years, the company has been growing 80% YoY in revenues, reaching €250K last year, while being profitable.
According to investor Viktor Manev, the potential of the company is yet to be unleashed, as the company has also the financial resource now to focus on its expansion into the DACH market. “It turns out that automated data science solutions are much better developed and well-received by the market in our region than in Western markets, so it will be a journey,” states the investor.
Manev expects that in several years from now data science analytics solutions like the one of A4E will be a commodity for every business regardless of the size, and giant tech players will start consolidating the market acquiring smaller companies.