During the last couple of months Sofia has become a madhouse for young people who want to start a business. Almost overnight hundreds of fresh graduates from the region have convened – crystallising concepts, gathering teams and attending attending a variety of meet-ups. Here Angel Spasov from Betahaus Sofia explains why it’s rocking in the Balkans…
So what has brought this influx of fresh new talent? Its roots are in the new way the European Investment Fund (EIF) is implementing the JEREMIE (Joint European Resources for Micro to Medium Enterprises) initiative – sinking an initial €21million to boost the startup economy in Bulgaria through two funds – LAUNCHub and eleven.
Eleven manages a €12million acceleration and seed fund, and is looking to make around 200 investments, ranging from €25,000 – €200,000 per investee. It has already attracted Google as a technological partner, and Springboard – the London mentorship-led accelerator, as a strategic partner.
LAUNCHub manages a €9million ICT focused fund, aiming to make around 120 investments of between €30,000 – €200,000 over the next four years. It partners with Seedcamp and with the Cisco Entrepreneurship Institute Bulgaria.
Both have already chosen the first 20 teams to receive pre-seed funding. Twenty percent of the selected applicants come from abroad, and both programs require the startups to register in Bulgaria.
Here are some reasons why foreign startups shouldn’t feel uneasy to headquarter in Bulgaria:
It’s Bulgaria’s turn
Bulgaria is the only country where two programs have been launched simultaneously. Eleven focuses on acceleration, LAUNCHhub on seed investment. This segmentation allows a variety of projects that are at different development stages to apply.
The team and the idea are initially sufficient
Despite the rule to have your registration in Bulgaria, nobody expects you to do it before being selected. Neither is a business plan required.
The scale is humanised
How would it sound to a young person with a good idea that the EIF is distributing through JEREMIE a total of €200million for SMEs? Discouraging and unattainable perhaps? So, the Venture Intermediaries have chopped this massive sum into €25, 000 – €30 000 increments to encourage applicants with awards that seem plentiful and winnable.
Don’t worry about taxes
The 10 per cent flat tax rate make the country the cheapest in the EU to operate a business. It came into effect in 2008 to attract investments and provides a smooth transition to young entrepreneurs who previously were not paying any taxes.
Funfact: It was enacted by a socialist government.
The risk is affordable
Not only taxes, but life in general isn’t expensive in Bulgaria. Without having to worry about how to provide basic goods for living or paying the rent and bills, the focus remains on work. And according to a global survey the average internet connection speed in Bulgaria is 24.25 Mbps, ranking it thirteenth in the world.
Prominent partners and lifecycle expertise
Both accelerators have strong players on their side. Springboard together with Googles backs Eleven (and the managing director of the British accelerator, John Bradford, is a co-founder). LAUNCHub is partnering with Seedcamp and the CISCO Entrepreneur Institute. It has also attracted as partners WebFWD – Mozilla’s Open Innovation program and DreamIt Ventures, a US venture capital firm specialising in incubation and seed investments.
Along with the partners, a well-rounded army of mentors has volunteered to share with the teams its experience in development, sales, marketing etc. This expertise is crucial for a startup.
There are already some good examples
Although a new wave of entrepreneurship has just begun, the startups already have their Bulgarian role models. Projects like Open Buildings, StockPodium & Clippings are showcasing the consecutive steps of a startup success story by young Bulgarian entrepreneurs. Even giants like SoundCloud have discovered the benefits of relocating part of their dev teams in Bulgaria. Peter Brodsky – one of SoundCloud’s directors – has lived in Sofia for two years now.
Not just a virtual environment
Starting a business often involves bouncing from one coffee hop to another. It might be cheaper, but certainly it is not lucrative. A startup needs not only a real desk, but an inspiring environment too. The first coworking space, betahaus Sofia, opened in June, drawing on its Berlin counterpart’s know-how. It offers special conditions for LAUNCHub’s startups. In addition eleven has their own “incubator” in the top centre of the capital.
It’s like a game
Having a startup is competitive. It’s a long-term game for the new kids that the young adults from the region have become. And it’s fun.
It’s not only about the money
Only the developers would have worked for big software companies and the economists – for M&A corporations, mainly. It appears that it’s more a question of recognition and the satisfaction of creating new value in the marketplace. Startups are sexier than going for the cash…