Why the founder of fintech unicorn Payhawk turned political

The founder of fintech unicorn Payhawk, Hristo Borisov, never intended to speak publicly about the messy political situation in his native Bulgaria.

In the last four years, he has been focused on raising investments ($236 million so far), growing his team (now 150+ people), reaching unicorn status and help build the Bulgarian startup ecosystem.

But when his company was drawn into a parliamentary debate over the future of the country’s pro-tech government – with the two main political parties squabbling over which of them is behind Payhawk’s success – he felt he had no choice but to speak out .

“[Startup founders] should definitely not have political opinions,” Borisov told Sifted in an interview, a few weeks after taking to the streets with hundreds of other tech workers to support Prime Minister Kiril Petkov’s government as it faced a no-confidence vote. (He also gave all his employees a day off to demonstrate and express their views—whether they aligned with his own or not.)

“Having said that, the biggest responsibility is people like me [fight] things that are really against the sector or against what we believe. And we get a massive speakerphone, and we have to be very careful how we use it.”

The reality of the founders

During the communist era, Bulgaria was known as the Silicon Valley of southeastern Europe – its engineers created, for example a computer which at its peak accounted for 40% of the machines used in the entire Eastern Bloc. This heritage has helped to create a vibrant, capable, 70,000 people strong IT community that is now surpassing itself by setting up startups, such as Payhawk, ready for international expansion.

But the growth of the sector has been slowed by an unfavorable political situation: for years the country has struggled with the highest level of corruption in the EU, lack of judicial independence, pro-Russian attitudes and links between oligarchs and some politicians and local mafia.

Borisov experienced this big time when he launched Payhawk in 2018. I an emotional statement on Facebook he described how the road to the top happened in spite of some government rather than thanks to it. He said that when he started raising money, he approached 60 investors who refused to invest in “a Bulgarian startup”.

Later, on the verge of running out of capital, another investor told him he had to move the company’s headquarters to London. “Fifteen days before we went bankrupt in 2019, we managed to attract one of Europe’s most successful investors, who politely explained to us that we had to transfer our property to London where the laws were respected, otherwise they would not invest,” he says.

It then took the company eight months to open a bank account in London, because it came from Bulgaria.

He says his post describes the reality for Bulgarian founders looking to raise foreign capital. “If you don’t trust the local legislation, if you don’t trust the legal system, it will be something that is a showstopper for foreign capital.

“I’ve been very pragmatic, not very emotional about it, because it is what it is,” he adds. “But I have one rule: you should never treat yourself like a victim.”

Fight against corruption

Petkov’s We Continue the Change party consists of progressive, Western-oriented graduates from some of the world’s best universities, some of whom are active members of the startup world. It came to power on an anti-corruption and pro-Western agenda in December 2021, as part of a four-party coalition. It promised to give the country, and its founders, a new, fresh start.

The party’s members have start-up experience: Petkov’s company ProViotic has several patents in biotechnology in the USA; his deputy Asen Vasilev co-founded Everbeard, a ticketing company; and Minister of Innovation and Growth Daniel Lorer is the founder of a Sofia-based VC firm, BrightCap Ventures, and calling himself “a unicorn hunter”.

During its short seven-month term, the government has pushed to simplify the country’s stock option scheme and introduce visas for technology workers.

“We have not heard the word ‘unicorn’ from any person in the parliament before this government,” says Borisov.

But the progressive agenda that appealed to young and successful entrepreneurs in Sofia did not sit well with the more conservative and traditional sections of the population, or the party’s partners in the fragile coalition.

The main points of contention were the government’s soft stance on North Macedonia’s accession to the EU and its tough stance on Russia after the invasion of Ukraine – which ended with the cut off of Russian gas and the expulsion of 70 Russian diplomats from Bulgaria.

In the no-confidence vote in June, Petkov’s cabinet lost the support of its coalition partners and the prime minister officially resigned. Negotiations are now underway to reach a new agreement between the parties – a process that may ultimately end in a new election.

For Borisov, there is still hope that the more progressive side of Bulgarian politics will endure.

“I think that was the biggest realization for Prime Minister Petkov – change is not going to be easy,” he says. He already sees more maturity in the party’s actions and narrative. “Initially it was a bit naive: we’re going to go and just wipe out corruption.” Now, he says, the party realizes that progress will require a generational change in the mentality of Bulgarian society. “They’re much more sober about the real effort it’s going to take,” he adds.

It’s like a startup, he says. “You go into a startup, you get knocked out of the market, you go back to the drawing board, you pivot and then you go back with a new version. So now I’m waiting for version 2.0 of that government.”

Zosia Wanat is Sifted’s Central and Eastern Europe reporter, soon to be based in Warsaw, but currently in Brussels. She tweets from @zosiawanat