Given the challenges businesses have been facing over the past few years, one would think that the tech sector would face difficulties as well. Unlike most other industries, however, the Information Technology sector is growing rapidly worldwide, Bulgaria included.
At least 3,400 active job ads can be found on the DEV.BG Job Board as evidence of this. The Bulgarian software industry has maintained an annual growth rate between 15 and 20 percent since the beginning of the COVID-19 pandemic and there are no prospects of this changing any time soon.
If we take a look at the country’s GDP, we will see that the tech industry occupies an increasingly larger part of it and contributes significantly to the Bulgarian budget and economy.
Major achievements of the Bulgarian tech sector
We cannot help but mention one of the hottest topics of the year – the first Bulgarian unicorn, Payhawk. The local startup received a strategic investment of USD 100 million, and with its help in recent months it managed to set foot on American soil with a new office in New York and a new product, a credit card. The company, co-founded by Hristo Borisov, is currently the most successful of its kind, and some experts, like HR Capital founder Hristo Hristov, expect a second Bulgarian unicorn to appear on stage within the first quarter of 2023.
The fintech sector growth continues to be high, now almost by tradition, and about 135 companies generate revenues of around BGN 1.5 billion annually.
Further development in this direction is marked by myPOS, which operates POS terminals without subscription fees. It opened new offices in Bucharest and Rome, while in Bulgaria the number of its terminals increased to nearly 10,000.
Two leaders in the sector, Paynetics and Phyre, recently joint forces to create a mobile payment application that facilitates donations for Ukrainian refugees, demonstrating the great potential of the tech sector to exert positive influence on the country’s social sphere.
There has also been significant international recognition based on objective indicators. Two Bulgarian technology companies were ranked in last year’s edition of the prestigious Deloitte Technology Fast 50 Central Europe 2022 programme. Thanks to their fast growth rate, the current top 50 includes Quantive (formerly Gtmhub, software for goal management and employee experience) and Evrotrust (electronic verification of natural persons and legal entities), entered the current top 50 with growth rates of 1911% and 958%, respectively, which ranked them 14th and 34th, respectively. Four other Bulgarian companies were included in Deloitte’s additional categories ranking. For context, the top-ranked company is the Czech fintech company FTMO, with the staggering growth rate of 25,255% over the past year.
The total revenue last year of the 30 largest software companies in Bulgaria exceeded BGN 2 billion. The average revenue growth rate in the sector is about 20%, and for the leader VMWare the percentage is 28.
In Bulgaria there are more and more successful initial public offerings (IPOs) supported by the Bulgarian Stock Exchange and many fast-growing and highly ambitious Bulgarian investors, who devote a great deal of effort to help the development of Bulgarian business. Thanks to them, the Bulgarian stock market remains strong despite the double-digit inflation and the unpredictable economic environment. Among these investors is MFG Invest – a circle of angel investors, who have helped the development of Bulgarian tech startups. MFG made its IPO last month and managed to raise over BGN 4 million.
The Bulgarian Enterprise Accelerator Market (BEAM) had a successful year with 13 successful primary offerings in this sector. An example of this in recent months was the initial public offering of the company ITF Group, which entered the BEAM market after raising over BGN 3 million during its IPO. ITF is an innovative non–bank financial institution that provides borrowers with an extensive portfolio of financial services.
The company Bee Smart Technologies, which develops software and technology for the remote monitoring of beehives, also had a successful IPO and established the Real Honey Platform, which sells organic honey. The company raised the necessary BGN 1.2 million by offering 43,636 shares and will use this capital to expand its operations to other European countries and markets.
With similar achievement, perhaps even more impressive, since it took place on the main market, can also proudly boast Telematic Interactive, the largest Bulgarian company for developing software for gaming halls and online games with bets. Telematic Interactive received requests for over BGN 16 million, thus failing to reach the set goal of BGN 20 million. The fundraising subscription ended on February 18, with 434 applications for over 320,000 shares processed. With the funds raised, Telematic Interactive began its expansion into new markets, including Peru. We should also note the remarkable growth of Telematic Interactive’s business over the past few years: the company has increased its revenues almost 38 times in the last three years, with revenues reaching over BGN 78 million and net profit, over BGN 20 million in 2021.
Another BEAM success is Biodit. This is actually the first company that was listed on the market. It successfully increased its capital by BGN 1.7 million and sold practically all the shares offered. The company reported solid revenue growth and profitability, continuing to sign new contracts for automation of hotels and office buildings.
Who attracted capital
The successful examples in the Bulgarian technology sector are numerous. Bulgaria is a leader in the startup sector in South-Eastern Europe, with local companies attracting investments of over EUR 250 million last year. It should be noted that this does not compare to the record from 2021, when funding reached almost EUR 500 million.
BIODIT, an established biometric security solutions company, successfully raised capital and opened up 4 offices in France and Spain, creating potential for significant growth in the medium term.
Another company, already known to many of us who follow the Bulgarian startup scene, AMPECO, at the very end of 2022 initiated the raising of between USD 5 million and USD 20 million to expand its award-winning software development business for electric car charging stations. The company was founded in 2018 by a group of young Bulgarians and has achieved an enviable growth of up to 400% annually in a short period of time.
There are also promising newcomers on the Bulgarian technology scene. Recently, the startup Holoma won the Drazkite Competition and secured funding from the British Embassy and DIT UK (Department of International Trade). Thus, the company, which develops holographic models to assist personalized bone surgery, is confidently embarking on its development path.
Another company we should mention is Barin Sports – a platform for tracking individual athlete performances, which has won a place in the BeamUp Lab accelerator program of the Bulgarian Stock Exchange.
A Bulgarian fintech startup, PlanDelta, managed to secure over EUR 2 million in venture capital from numerous large investors at the very end of 2022. With this money the company plans to officially enter the market in 2023 and expand its teams in several countries.
Agriniser, a Bulgarian company that develops an online grain trading platform, started the process of raising EUR 500,000 in order to expand its business in Romania. This was made possible thanks to SeedBlink’s crowdfunding platform and the well-known fund Vitosha Venture Partners.
There are also some non-standard emerging businesses. The Bulgarian start-up for caravan reservations, Karavani.bg, won the support of an investor just a year after its creation. The company attracted EUR 50,000 from the venture capital fund Innovation Capital. With this money Karavani.bg will expand its business internationally, and the first targets are Greece and Romania. In addition, the founders are also planning to build an internal team responsible for the entire process of caravan maintenance.
The company for buying and selling second-hand phones, Swipe.bg, founded by Mihail Dimitrov (known from OLX), Ognyan Popov (Broshura.bg) and Nikola Pavlov (former technical and operational director of Grabo.bg), raised over BGN 1 million in investments to expand its business. Swipe was recently awarded the Collaboration Champion Award as part of Endeavor’s Growth Program – Dare to Scale 2022.
The year was marked by relative caution among investors and entrepreneurs, but nevertheless it remains in history as evidence of the sustainability of the local business and the ambition of the Bulgarian tech sector (and beyond) to create startups and develop them regardless of circumstances.
The second part of the material will contain more information about the companies that raised funding in 2022, as well as the names of the companies that merged or were sold to foreign corporations.