Here’s Why EU Does Matter for the Startup Ecosystems. And for the Bulgarian in Particular
Founders and VCs often tend to underestimate or at least not think too much of the role of the European Union for the development of ecosystems. Yet, many companies that work predominantly on the European market, benefit from the digital single market regulations, travel to each point of Europe cheaply and easily to meet business partners, and even receive initial funding indirectly thanks to the European Investment Bank (EIB), are facts, that shouldn’t be neglected.
We decided to celebrate Europe Day by listing some key facts about the role the EU indeed plays for the local ecosystem:
The EIB and its daughter the European Investment Fund have been active players in the local startup and innovation ecosystem for over seven years. Back in 2012, the EIF, which doesn’t invest directly but operates through fund managers, chose Eleven Ventures and LAUNCHub to deploy €20M to startup companies through a program called JEREMIE. Since 2014, with a commitment of around €90M, four venture capital and private equity firms have been created or backed. The first three were Black Peak Capital, Empower Capital, and NEVEQ II. Three years later the two growth funds Black Peak and Empower, together with LAUNCHub received the mandate to invest the JEREMIE reflows from the previous period – another €15M each. The newest fund manager backed by EIF is BrightCap Ventures that received €20M for startup investments in 2018.
+++ Fintech Scaleup Software Group Receives €18M through a New Venture Debt Instrument of the European Investment Bank +++
According to Hristo Stoyanov of EIF, so far 230 companies, of which 180 startups, have received funding through the six funds. In 2019 EIF plans to commit another €80M reflow from JEREMIE to the development of the ecosystem through two programs.
# Easier access to a large market
EU is still the largest economic bloc in the world. The latest report of the digital business network EDIT shows that 56% of the Bulgarian tech and digital companies are operating on the European market and planning to further work in this direction and penetrate markets. Literally, almost every company we’ve covered here has a business in markets like Germany, France, Austria, Spain, the Nordics.
# Openness and networks
Bulgaria is being part of many networks on EU level, that might not look like the next big thing on the first sight but do boost local entrepreneurs. For instance, the European Institute for Technology (EIT) has its strong presence, especially in the green innovation domain through the local accelerator Cleantech. Moreover, with Sasha Bezuhanova EIT has a Bulgarian board member. This means that Bulgarian and other CEE members on the board are aware that the design of future policies and support programs for entrepreneurship and innovation in Europe will also take into account local specifics of the region. On the other hand, it means that EU-level opportunities for companies from the region are accordingly communicated.
# Regulations are sometimes opportunities
Usually, those two words don’t really go together in the EU (see below) but in the case of PSD2, they do. The regulation obligates banks to share their data with other companies, it opens up the floor for fintech startups and innovation. Ever since PSD2 banks have started opening up towards smaller companies and looking for collaboration, the fintech ecosystem gets more and more vibrant.
There’re flows, of course. Still…
Yes, the EU has also its flaws. One of those is the recently approved copyright reform, which was not widely celebrated by the startup community. Last year, the GDPR regulation also created a bit of chaos for businesses who had to find a way to comply and many of them have to give up their marketing email lists (at the end of the day, better for the users).
Even though Europe sometimes looks old next to the US and China, one fact shouldn’t be forgotten so easily – the EU is still the largest economic bloc in the world. That is why its power should not be underestimated, and the EU definitely defends its market and companies. The US giants are increasingly feeling this power as Brussels becomes more determined to punish the Silicon Valley companies.