Equinix, the $19M Investment in Sofia and the Ecosystem Effect
On April 9, the US-based public interconnection company Equinix launches its second data center in Sofia. With its 25K sq m space, the new location is becoming a strategic communication point for the region. The company is investing $19M in the project and has bought the land for the new center.
“Such an investment puts Bulgaria in a strategic position,” says Konstantin Petrov, managing partner at the venture fund NEVEQ, one of whose early investments is part of the reason for Equinix’s expansion in Bulgaria. He states this during an event not related to Equinix’s location launch while explaining the role of venture capital for the local economy.
Already last year, as the investment was announced, the US company stated that it sees Bulgaria as a strategic location within the Balkans thanks to the access to the EU, Turkey and the Caucasus.
Key communication point
The new center in Sofia is called SO2 and runs on 100% green energy, it is able to provide 350 cabinets in the first phase of development and could add up 1.1K cabinets in subsequent phases. The expansion project is primarily aimed to meet the needs of the company’s local customers. On the local market, the company has over a hundred clients and most of them are providers of cloud services, network operators, including software developer VMware and hosting provider SuperHosting.
The expectations of the local management are that the company will expand rapidly in the coming years, tapping on Bulgaria’s development as a regional digital hub, SeeNews reported recently. For the local IT business, the establishment of the new center means more stable and less latent service for their own clients, and also growth opportunity.
Equinix’s global interconnection platform of 200 data centers in 52 markets around the world connects their clients to business partners and customers across their digital supply chains. In 2017, the company has generated $4.4B revenues. The Bulgarian unit, with its team of 19, has made close to $4M.
The role of the local VC industry
Equinix is strengthening its presence in the region ten years after the local data center 3DC was launched, and ended up playing a major role in the current investment.
“We were investors in a local company which opened up the largest data center in Bulgaria and as a result of this exit, the largest independent collocation operator in the world came here,” explains Konstantin Petrov. Back in 2009, right at the start of 3DC, a domestic collocation data center, NEVEQ backed the company receiving a 70% share of the business. Four years later the local player was acquired by UK data center operator Telecity Group, which later merged with US-based Equinix in a $2.2B deal.
In a nutshell, the local technology ecosystem keeps maturing and attracting global players that invest in Bulgaria. In January, the US data management company AtScale announced it’s already forming a team in Sofia as the first phase of its European expansion and plans to invest $25M on the local market.