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The Bulgarian Startup Association: It’s Realistic to Pass the Startup Visa Package in 2019

According to Nedyalko Dervenkov, Board Member of BESCO, Bulgaria is far behind the rest of EU in terms of startup friendly legislation, but could serve as a good example for the Balkan region. ©BESCO
According to Nedyalko Dervenkov, Board Member of BESCO, Bulgaria is far behind the rest of EU in terms of startup friendly legislation, but could serve as a good example for the Balkan region. ©BESCO

The first days of a new year is typically the time for resolutions, dreams and big plans. In 2018, we asked the community which are the cool things that happened in the ecosystem throughout the year and one of the answers was “the positive impact that the Bulgarian startup Association has on the community”. This association called BESCO officially started being operational last year and took a job that many stakeholders wouldn’t consider as their thing – bridging the state and the startups.

One of our own new year’s resolutions is to go out  more often of the private business and VC bubble and observe other relevant processes such as legislation and policies. So we decided to go to BESCO and ask what are they doing, what are they planning, where is the state in the whole startups process… And last but not least, what are BESCOs resolutions and dreams. We talked to Nedyalko Dervenov, member of the Board, and here’s what he shares with Trending Topics.  

Trending Topics: Which were the three milestones that made Bulgaria better place for entrepreneurship in 2018?

Nedyalko Dervenkov: 2018 was the year in which an initial dialogue between the startups and the state was created. Traditionally, founders and entrepreneurs have doubts and see the state as the enemy. On the other hand, the government doesn’t really understand what a startup is. In 2018, the first steps towards a fruitful discussion were made.

Another probably more tangible milestone we as an ecosystem hit in 2018 was the appointment of Bogomil Balkansky as honorary consul in the Silicon Valley. Third, but not last, was the establishment of a working group within the Ministry of Economy, which includes representatives of Ministry of Finance, Ministry of Interior, the Confederation of Employers and Industrialists in Bulgaria, BESCO etc. This is important because the voice of the startups was heard and we presented 200 policy recommendations. The goal of the working group is to pass initiatives and policies on behalf of the startup community.

Which are the most important legislative initiatives for the startup ecosystem that need to get passed in 2019?

There are two things we are focused on in 2019 – the establishment of a new simplified joint-stock company type in Bulgaria, and the passing of the startup visa initiative.  The new type of joint-stock company would regulate the option pool, convertible debt and vesting in Limited Liability Companies. We’ve studied over 30 types of companies in EU and decided to follow the French and Greek models. This company would have the mechanisms to function as a joint stock company but it could be started with much lower initial capital and won’t be listed on the stock exchange. It would have the flexibility of the joint-stock but in a much more accelerated and simplified form. We believe this will have very positive impact will prevent Bulgarian founders from registering their businesses in the UK or the Netherlands. In a nutshell – it will help angel investors or any type of investors to be protected, that their vote won’t be manipulated because they are minority owners etc.

The other initiative is the startup visa – fast track for high tech entrepreneurs from countries outside the EU. We want to establish an intermediary commission of stakeholders from the startup ecosystem, which would be responsible for the proper selection of companies to admit via the new mechanism.

What is realistic?

Both. But we don’t want to delude ourselves that everything will go the way we want it to. It will be a victory even if those two initiatives make it to the Ministry of Council (the first instance in the process of passing laws – ed. note). If we are successful, it will then go to the parliament for voting and we hope for the best, because we’ve already been in contact with some of the commissions that need to support us there.

Do you think the ecosystem gets your role? Do you face any misunderstandings?

Hell yeah. We are constantly accompanied by doubts by different stakeholders asking us whose people we are, who pays us to do whatever we do, whose interests are we serving etc. Even though the presumption of someone doing great “dalavera” (dishonest deals – ed. note) cannot be extinct we will try to challenge this with typical for the community mechanisms. In 2019, we will pass an internal startup Bushido Code (Samurai Code of Honor – ed.note) so we have a moral compass for the members of BESCO. The only way we progress as an ecosystem – we need to have the fundamental trust among us.

Is Bulgaria only catching up with startup legislation processes in Europe? Is there anything here that could be a competitive advantage?

Imagine three people in Germany sitting and thinking of what the Bulgarians have done and how to apply it (laughs). The truth is that we are way behind and in order to make things happen we need to show the administration proven solutions so the friction is minimized. In other words, yes, we are catching up and putting together puzzle pieces of models we saw elsewhere. It’s too early to talk about local legislative innovations.  

In the meantime, different organizations are labeling Bulgaria, or rather Sofia, as a digital hub of the Western Balkan region. Do you think this is correct?

Well, speaking from the perspective of BESCO, we have received some informal inquiries from Belgrade and Zagreb. They don’t have similar lobby organizations and associations and are asking for know-how. Based on this particular experience I would say we are a good example for the Balkan region and this gives me confidence that we are not only speaking of Sofia as a hub, but it is one. Looking at the context, organizations like BESCO could only be products of maturing ecosystems.   

The first days of the New Year, usually time not only for resolutions, but for dreams as well. What are BESCOs dreams for Bulgaria?

We want Bulgaria to be a hub for development and testing of software and hardware for autonomous vehicles. The whole macroeconomic environment here is suitable for this – in Bulgaria there are a lot of car components producers, software specialists, also bad roads (laughs). We are negotiating all this with the Ministry of Transport, Information Technology and Communications but it is in a very early stage. This ministry is responsible for so many other things that those topics are not part of the main agenda. This, however, leads me to the second big dream – a Ministry of Innovation or an agency that would work on those matters. This would be an agency to the Ministry of Council, which would work with other different ministries. And there is a subdream of this second – to involve the Ministry of Defense in the whole process. We have already made the first steps but it’s early, I see it happening in at least 2-3 years.  

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