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Exits In The Bulgarian Tech Ecosystem In 2019

Photo by Kevin Wang from Unsplashed
Photo by Kevin Wang from Unsplashed

Acquisitions and exits are those magical and widely celebrated moments when a well-performing company gets some cash to continue being a great business. Last year was a vivid but modest one when it comes to acquisitions on the Bulgarian tech scene. This one was even more modest in terms of number of delas. This year we’ve tracked fewer deals than last year – eight, whereas there were twelve in 2018.  Yet, as in most cases the conditions remained undisclosed, we cannot really speak in numbers and volumes, but rather in brands. 

Unlike last year, when half of the deals in the tech ecosystem were rather M&A in which foreign investors have acquired local IT service companies willing to utilize their talent, this time there is one significant startup exit – Cloudpipes that was sold to US Quick Base. And the global brand – Coursera, made its first acquisition, buying a Bulgarian tech startup. 

Although we say this every year, it’s again relevant: the upcoming 2020 is expected to bring more startup exits, not least because local investment funds like Launhub Ventures and Eleven are slowly nearing the end of their first funds 10 years-long cycles. 

Here is our list of tech M&A deals in the local tech sector in 2019. Let us know in case we’ve missed something.

Quick Base <> Cloudpipes

Sofia and London-based startup Cloudpipes that develops cloud-based integration and automation platform got acquired by the US-based Quick Base in the summer. This is probably the most significant deal of the year for the tech & startup ecosystem. Founded in 2015 by Boris Raicheff, Marco Starace and later joined by Spartak Kabakchiev, Cloudpipes is a next-gen enterprise-grade Integration Platform as a Service (iPaaS) connecting hundreds of cloud and on-premise business applications. The platform was fully developed in Sofia, where Cloudpipes has its development and customer success teams. The deal would give Quick Base the advantage of adding the skilled programmers in Sofia to their existing workforce. The company would be also expanding the current Cloudpipes location in Bulgaria into an R&D Center of Innovation to continue the growth of its development team.

This is the fourth exit for the investors from the Bulgarian-based LAUNCHub Ventures and the first one for BrightCap Ventures. “It is our biggest company exit so far,” explained Stephane Gantchev, Partner at LAUNCHub Ventures, whose previous exit was BGmenu (a €10.5m deal). The exact financial metrics behind the deal were not disclosed. 

Game Closure <> Chobolabs

Deyan Vitanov and Petar Dobrev, the founders of US-Bulgarian game developer Chobolabs, have closed an important deal. After raising nearly $10M in the past seven years and growing the players base of their title Mayhem to more than 1M, in April the entrepreneurs finalized the merger of their company with the US-Japanese Game Closure. At the end of 2017, even though the company was developing well and had increased the key metrics 16x, had players, and was featured at some of the most important conferences in the sector, founders admitted they were not growing at the pace we needed to. So, we started looking for opportunities to get out of the situation. After the acquisition deal of non-disclosed size, for the next two years, the two founders will join the team of the new company and in the meantime look for opportunities to bring together the old team. 

ALSO <> Solytron

A large foreign player entered the Bulgarian IT and software distribution sector with that Swiss-registered ALSO Holding buying Solytron Bulgaria. This is the first investor of this scale entering the local IT business (annual revenues exceeding EUR 9.2B, presence in more than 18 European countries and nearly 4000 employees). ALSO Holding acquired one of the two largest players on the Bulgarian market with a turnover of EUR 110M and over 120 employees. The deal is part of ALSO Holding’s strategy for continued expansion in Europe, with the group making several similar acquisitions last year in Slovenia, Croatia, Poland, France,and more. The company founder Peter Ivanov and CEO Ralitsa Kilian remain in the management of Solytron Bulgaria after the acquisition. 

American Eagle <> Athracian

IT consultancy company Athracian was founded by three former Telerik employees – Georgi Chokov, Peter Marinov and Tihomir Petrov, at the beginning of 2017. After developing one of the key products of Telerik (acquired by US Progress in 2014), they started a service company focused on consultancy and integration of this very same product – Sitefinity. In 2019, Athracian was acquired by Illinois based 35-years-old digital agency Americaneagle.com and will turn into Americaneagle’s hub for European expansion. Between these two events, the founders had rejected several investment and acquisition offers. 

Apple <> Ikinema

In the past several years, Apple has been doing small acquisitions of Augmented reality startups. And the latest of these series is called IKinema, a UK startup that morphs video footage into animated characters. Founded 13 years ago in the UK and officially on the market since 2009, IKinema specializes in products that improve the quality of animation and reduce the cost of producing animation. The company owns patent protected intellectual property for fast, realistic and organic animation for games and movie production. The company is a spin-out from the Surrey Space Centre, Guildford, England, and operates from offices in the UK and Bulgaria. Prominent clients include 20th Century Fox, Disney, Framestore, The Foundry, Microsoft, Zenimax, SquareEnix, Luxology, Lucasarts, Audiomotion, and Vicon. The company is in partnership with Autodesk, Sony, Microsoft, Intel, and Nvidia.

Coursera <> Rhythm Softworks

The global e-learning platform Coursera has acquired Rhyme Softworks, a US-Bulgarian startup that has built a platform for hands-on software training. This is the first-ever acquisition for the founded in 2012 Coursera. Rhyme’s team of six became part of the R&D of the platform, which has meanwhile been valued at over $1b and has attracted 43m+ learners. Rhyme is a virtual learning environment, allowing beginner – to intermediate-level learners to follow along with guided sessions while simultaneously completing a project or assignment. The technology was developed by the US-Bulgarian startup Rhyme Softworks that has only been founded around a year ago – in June 2018 by the Bulgarian Google engineer Minko Gechev, Yadav, and the San Francisco based investor Rober Hutter. After the acquisition, which was indeed the first one for Coursera, Sofia, is now the sixth location of the company. The company recently announced plans to double its team in Bulgaria.

Scalefocus <> Centroida

Centroida.ai, a small fast developing IT service company that was named startup of the year for 2018 by Global Tech Summit, has merged with ScaleFocus in February. The terms of the deal remained undisclosed. However, this is not the most interesting part – a large part of Centroida’s team of 40 now joined ScaleFocus, while the rest, who have been working on a new product recently continued under a new brand – Notyf.ai.

FM:Systems <> Rifiniti

Rifiniti was started in 2012 by Irina Mladenova and her co-founder Michael Gresty in Boston after they had observed that more than 50% of the office spaces companies occupy are not used most of the time. This year, the company, which since 2014 has an engineering team in Sofia, was sold to FM:Systems, a larger player in the facility management software space. Mladenova and Gresty developed a product that tracks a range of key performance indicators, including actual space utilization, the total cost of occupancy, and employee work styles, using data from various sources already part of a building’s infrastructure. For example, the system uses data from Wi-Fi access points, badging systems, image processing, lighting, seat sensors, and others. In June Rifiniti announced it’s been bought by North Carolina IT company FM:Systems in a deal of not disclosed size, and the co-founders joined the management board of the acquirer. This is an opportunity for Mladenova and her partner to scale their technology reaching the 1600 global clients of the new company. This means the Sofia engineering hub will continue to grow too.

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