It is especially important and quite interesting to track the development of different fields and industries across Europe. Today we take a look at the latest growth of the tech sector in the Bulgarian capital, Sofia.
The Bulgarian office of Endeavor, the leading global organization that supports high-impact entrepreneurs, has packed the most significant facts and figures in a recent report: Mapping the Sofia Tech Sector.
With additional research support from the Bulgarian Startup Association (BESCO), the purpose of the study is to provide insights on the sector’s current state, evaluate its strengths and weaknesses, and enable decision-makers to better understand and support local tech entrepreneurship.
Mapping the success of the Sofia tech sector
The big news of the report is that the technology sector in Bulgaria has grown more than 3 times in recent years. Even though the tech sector has always been among the most progressive ones in the country, this growth is a major achievement for the local ecosystem.
According to the report, the growth in the field of information and communication technologies (ICT) alone is from 1.8% of GDP in 2011 to 7% of GDP in 2020. The sector employs nearly 115,000 people with an average salary of 3,4 times higher than the average for the country. Nonetheless, the labor productivity levels in the sector are more than remarkable and set Bulgaria as a competitor on the global market.
Endeavor’s study states that Bulgaria has a chance to be a leader in the entrepreneurial ecosystem in Southeast Europe. Bulgaria ranks first among the countries in Southeast Europe in terms of institutional entrepreneurial support and access to capital, know-how, and information.
For instance, there are more than 17 equity and venture capital funds, incubators, and accelerators in Bulgaria. This network covers the entire cycle of the development of entrepreneurial ventures and offers major support to small businesses and entrepreneurs.
The challenges in front of the Sofia tech sector
Mapping out an entire tech ecosystem requires paying the necessary attention to the problems in the field. What are the founders struggling the most with? What causes these issues? And how could they be solved or optimized? The report by Endeavor tries to answer these questions and presents the main challenges identified by the companies involved in the survey:
- access to specialized staff (68% of companies report a lack of technical talent and 56% of qualified managers);
- access to capital (over 50% of companies in the mature phase report a lack of funding);
- lack of regulatory framework and state infrastructure.
Based on the analysis, 4 strategic recommendations were established that will contribute to the development of the technology sector in the country.
- More activities related to preserving and attracting expertise and talent in the country, as well as well-systematized capital and institutional support.
- Nurturing the development of the ecosystem so companies that are already successful can actively support the next generation of companies by becoming mentors and investors in them.
- Improving the legal and administrative environment and policies – introducing modern mechanisms for providing shares and options to employees, easing the regime for attracting quality staff and entrepreneurs from abroad, more active involvement of domestic pension and insurance companies as investors in investment funds, etc.
- Encouraging regional co-operation to strengthen Southeast Europe’s global positioning. The benefits of sharing Bulgaria’s experience with other countries, promoting successful examples, and identifying strengths and weaknesses at the regional level are mentioned here.
“Technological entrepreneurship has the potential to be the engine of accelerated economic growth in our country, and the strong entrepreneurial ecosystem built in our country in recent years can play a leading role in Southeast Europe. For this to happen, targeted efforts and a strengthened partnership between the state and the private sector are needed in defining a clear strategy, policies and instruments to support the development of this “new economy”. This study is a very good example of an important step in this direction, which outlines the challenges and possible solutions. Thank you for the partnership of BDB, SOAPI, FMFIB, and BESCO for the implementation of this study,” said Momchil Vassilev, Executive Director of Endeavor Bulgaria.
Key takeaways from the report
- Bulgaria has built a strong reputation as a software producer.
- Sofia has established itself as one of the well-developed tech ecosystems in Europe and is a potential leader in the SEE region.
- There is a strong founder-to-founder connection in the local tech sector.
- The tech field in Sofia attracts more and more qualified technical talent from the region and abroad.
- Support organizations such as accelerators, incubators, and co-working spaces play an important role in the local tech sector.
- A major lesson and a goal for the Bulgarian tech sector is to advance with policies that recognize, incentivize, and reward high potential entrepreneurs.
Who is behind the report?
Endeavor is an international NGO that helps entrepreneurs with businesses grow internationally. With offices in over 40 locations, Endeavor provides selected entrepreneurs with access to markets, capital, and talent in its network of over 4,000 mentors and investors worldwide.
In Bulgaria, Endeavor started its operations in July 2015 in order to expand the organization’s presence in Europe. At the moment, the Bulgarian office has supported 100+ entrepreneurs from 50+ companies, which have created over 2,300 jobs and generated revenues of BGN 320 million (€160 million) for the past year.