Often enough, we hear that the Bulgarian market is too small to be attractive for digital and innovative businesses. Another evidence came last week, as the five-years-old online platform that was already working with six hundred Bulgarian farms to help people from the city have easier access to high-quality “real food”, announced its shutting down.
“When we started, the food commerce was in its infancy in Bulgaria, and the farmers’ products were sold on the streets by grannies.  We have overestimated the size of the market and underestimated the necessary investment in a business model that has outstripped its time,” wrote Rossi Mitova, CEO of the company in a blog post explaining the decision the founders made.
The physical store of the same brand in Sofia will continue operations.
Too much focus on innovation might be a trap
For the five years since Farmhopping was started, the platform managed to score several successes: onboard 600 farms and small farmers and producers of goods, and have over 6k regular clients, and 40k+ purchases throughout Bulgaria. Last year Farmhopping made a turnover of €564k and decreased its losses, at that time 21 people were employed.
“Five years later, we have to admit that our desire to always be first in innovation and to constantly improve our service at an extremely fast pace played us a practical joke,” confesses Mitova. And adds that the further investment of capital into the business designed for such a small and immature market cannot be justified. Building out the whole logistics process to ship foods from farms to cities within 48 hours has turned out to be too expensive.
Looking at the investments in the company in the past years one could see there has been a struggle for quite some time. Since its start, the company has attracted the financial support of investment funds like Eleven Ventures and business angels like Svetozar Georgiev, Vassil Terziev and Sasha Bezuhanova.
Officially, the listed investments on Techcrunch are €265k, invested in small tranches of €60k the maximum, and the last one being at the end of 2015. The documents in the commercial register show however that there are also other investors, including an American impact investment fund called Not For Sale. In other words, in the past years, the team of Farmhopping seems to have tried to move forward and innovate, constantly needing financial support.
“If we were selling discounted goods and not real food, we might have had more success, “ concludes the CEO in her post. Even though Farmhopping was among the first, if not the first company to offer foods online, it seems there is not enough demand for type and quality of goods, yet. While the real food platform has been trying to set new trends and habits, e-markets like eBag, selling well-known mass FMCG brands managed to grow several times reaching 12k customers and €3m in revenue at a loss of under €70k last year.