Dealroom: Bulgaria Could Be The Next DeepTech Capital Of CEE

With 15% of the startups developed in Bulgaria labeled as deeptech, the country might be the next CEE deeptech capital, tells us Darren Stauffer from Dealroom. In the past six years, his company has been developing a platform that collects data about startups ecosystems and venture capital activity across Europe. Recently, Dealroom has put together a profile of the Bulgarian startup landscape too. Alongside collecting data on funding rounds, the company has identified 50 rising stars in seven verticals.

According to the data the company has managed to collect through online sources, and local partners, Sofia is the third largest tech hub in CEE by the number of VC rounds over the past six years. The size of the investments is, however, still small.

650+ startups and scaleups?

How many startups are there in Bulgaria? This is a frequently asked question, that no one could really give an accurate answer to or compare it with any other ecosystem. On the one hand, despite many attempts like the EDIT report, for instance, there’s no structured and up to date register of the startup ecosystem in the country.

On the other hand, each country and city has its own definition of a startup, as we discussed it with Stauffer. “In some countries, everything that’s tech and is founded after 2009 might be labeled startup,” he gives an example of where the confusion comes from. In any case, when speaking of startups and scaleups – one thing is fix – these are scalable tech or digital product companies.

Scraping data from various resources such as commercial registers, research institutes, publications, Dealroom has managed to identify over 650 companies that fit into this definition. Browsing through the platform, we identified companies that not necessarily product businesses, but rather ecosystem players like NGOs, consultants and service providers.

Yet, among the product companies, Dealroom has identified four that are considered to be close to the unicorn status. Siteground, the founded in 2004 web hosting company, is on the final stretch to becoming a $1B business, the estimations show. Microfinancing tech venture Software Group, prosthetics tech company ProsFit, and AI cargo optimization platform Transmetrics are also part of the future unicorn club.

DeepTech seems to be an important vertical in the local ecosystem with reportedly 15% of the ventures developing solutions in the domain. Dealroom’s team has identified six high potential companies: Endurosat, Dronamics, Transmetrics, QuarkVR, FragaX, and AYO.

Enterprise SaaS, blockchain, fintech, and health seem to be other areas where of talent and developments are accumulated.

€85M+ investments, still small size

Since 2013 Bulgarian venture capitalists have invested over €85M+ in 255 funding rounds, the data of Dealroom shows. Our latest calculations based on data by the Bulgarian Venture Capital and Private Equity Association (BVCA) and own sources show that only between 2015 and 2018 €64.5M have been invested. This, however, includes predominantly the activity of funds backed by the European Investment Fund, and only a small amount of the private capital.

Based on Dealroom’s data, Bulgaria lands among the top 3 hubs by the number of rounds in CEE, right after Poland and Estonia. Just like here, the VC is concentrated in the capital cities across the whole region.  Based on the amount of money put into tech ventures, Bulgaria ranks ninth among 16 countries in the region.

Despite the large estimated number, however, the median size of the investments in Bulgaria, but also in the whole CEE region is still low compared to the rest of Europe. The average size of a seed round in Bulgaria is €0.4M, which ranks the ecosystem 21 among 23 ecosystems evaluated by the platform.

The CEE unicorn incubator

CEE’s unicorns are worth a combined value of €30B, with Skype, UiPath, Transferwise, LogMeIn, Avast leading the way, Dealroom shows. Last year there was another record for the VC activity in the region with two mega rounds of over €100M.

Bolt, the Estonian transportation network company, better known as Taxify, has secured €160M last spring, and in December the Lithuanian car-sharing company CityBee closed a €110M round. Interestingly, both the deals are in the shared mobility space.

If we add to the list the companies that went to the UK or the US to develop businesses and fundraise, we also have to mention the US-Romanian robotic process automation startup UiPath and the fintech company Monese.

All together a record of €1.3B has been invested into CEE startups and scaleups last year, and €0.7B of this went to companies that are still based in the region.