The digital and innovation Bulgarian ecosystem continues specializing in the construction of platforms and technologies linked to analysis, automatic learning and the automation of megadata, which could be identified as a sign of deep technological competence emerging. Technological companies offer their solutions mainly to other technological companies or to the financial sector. Interesting, and for the first time, a new trend becomes obvious – companies providing solutions for social well -being are increasing. This shows the fourth edition of the only study of the digital and innovative company in Bulgaria – Innovationship 2019, in which 233 companies were interviewed.
“Bulgarian startups carry technological capacity and topical engagement to stimulate the change of economic portrait of Bulgaria and to position it as one of the main innovation centers in Europe and in the world,” comments Sasha Bezuhanova, founder of the reflection group. BG, which is behind the study.
Bulgaria and deep technology
But unlike a Report published earlier this year by Dealroom Declaring that Bulgaria is the new home of deep technology in central and Eastern Europe, the results of this new research maintain that “there are the first trends of a possible emergence of a new wave of startups Tech Deep ”. However, companies developing technologies in fields such as information security, biometrics, geolocation and virtual reality, which are an essential element in the field of deep technology, are rather rare, explains Anton Gerunov of the Center for modeling of socio-economic systems at Sofia University “St. Kliment Ohridski ”, which led to research.


The preview of the specialization of companies and privileged technologies used both in the 2018 and 2019 innovation survey indicates that although there is still a high interest in the most important categories, certain types of specialization have become more and more popular. Companies are mainly involved in the construction of platforms (42%), the analysis of megadonts (28%), automatic learning and AI (32%), Cloud Computing (25%) and since 2019 – Systems automation (25%). Less attention is received by offers in virtual reality and information security. The least companies are interested in offers in the field of biometrics, which is highly specialized and requires expert knowledge in many areas – biometrics has experienced a slight decrease since last year, which shows that the Bulgarian market in the field follows the world follows the world trends with certain discrepancies, reads the report.
“The heart of deep technology is more technology itself rather than business model, and the development of these technologies requires a lot of time,” says Georgi Kadrev, co-founder of Imagga, an 11-year-old company Specialized in the image algorithms of recognition. According to him, even if the technological ecosystem in Bulgaria has matured a lot in the past five years, there is still a path to go.
“To develop skills and expertise in deep technology and advanced technologies, Bulgaria needs major R&D centers and important infrastructure. It is not enough to have a lot of small businesses that have trouble developing such technologies. The ecosystem must start to take advantage of what is already given – the new supercomputer in Sofia Tech Park and financing programs like Horizon202020, “said Todor Kolev, co -founder of Comrade Cooperative, comments the data presented.
In particular, the development of these technologies requires capital. Indeed, 36% of companies report that access to financing has been among their challenges in the past year. One possible reason is the delay in the closing of some of the funds expected in 2019 focused in these areas, for example, VCs like New Vision.
An emphasis on social well-being
A 2019 edition of the report also shows another trend – the growing number of technological and digital companies developing solutions to societal challenges. While the majority of companies questioned are still sold in the financial sector (Bulgaria being the County of EEC with the greatest number of fintech companies), and other IT companies, in the first ten of the sectors where small and young companies also concentrate education, health care and culture.
A third of micro, small and medium -sized digital companies focus on providing the solutions to technological industry and 24% are focused on the financial sector. The third most popular industry on which to concentrate is surprisingly education, 22% of companies reporting it as a main objective.
The profile of the technological and digital ecosystem in Bulgaria
In addition to the two potentially interesting trends described by the report, the development of the ecosystem in terms of market orientation, financial performance and favorite commercial models has not changed much since last year. The Bulgarian ecosystem is still at the origin of services – few people only offer a product (21%), the vast majority combine both the product and the service (47%) or have been concentrated exclusively on the service of ‘A service (32%). The income generated by digital and technological, small and mediums are still rather modest.
Nearly a third of the participants are sample companies founded in 2018 and 2019 and half of them have still not recorded any income. From the overall sample, about a quarter had no income in time of existence. A major segment of the companies questioned – 27% have an annual turnover of less than 25,000 euros, which serves as proof of a large number of newcomers in the digital ecosystem and alludes to the growing interest of entrepreneurship in the field. Only 14% of companies have a turnover of 51 to 150,000 euros and 14% are companies that are 151 to 500,000 euros. Companies that have managed to spend the 1 million thresholds represent 10% of respondents. 2% of companies declare a turnover of more than 10 million euros, about four times more than the previous year. The results also show that 54% of companies have a positive cash flow, which is somewhat.
In terms of market orientation, Europe and the region are still the main objectives with 65% of respondents who currently sell in these markets. Interestingly, there was a withdrawal from the national market – compared to 81% of companies that operated on the Bulgarian market, this year, 74%. The results show that two -thirds of the companies that sell on foreign markets have the main source of income.
What does the local ecosystem need to accelerate
Although the ecosystem is developing, certain challenges must be overcome in order to accelerate this process, suggests the report. About a third of companies identify lack of funding as their main concern. “Although Bulgarian and international investors seem interested in the start -up phase, funds are still insufficient. There is not enough funding for pre-series stage companies, ”explains Sasha Bezuhanva. However, on a more positive note, a new fund in this segment – the innovation accelerator – begins operations at the moment. Lack of talent is another traditionally appearing in such challenge reports, with just under 40% naming it as an obstacle.
A good 43% of participants in 2019 declare that they would benefit from better electronic government. The creation of a legal framework for digital ecosystem companies is an top priority for 52% of companies. The promotion of investment in startups through preferential tax treatments in order to attract investors and commercial angels has gradually taken importance and is now a priority for 45% of companies.
“It is a good sign of maturity that the digital company already has specific requirements and expectations that can be discussed with the State,” said Martin Danovsky, Chairman of the Board of Directors of the Government Fund for Funds. He also underlined on the work that the Bulgarian Startup Association (BESCO) Fait is crucial and that representatives of 12 ministries and institutions are already working to improve and adjust legislation to the country’s digital enterprise. How long it will take it, however, and if the measures will be adequate to the ecosystem, it remains to be seen.