FinTechs attract 20% of all VC money in Bulgaria

Bulgarian FinTech firms have attracted nearly $6 million in investment this year.

In fact, while the country’s FinTech industry may be young, its contribution to the economy is growing with each passing year.

For example, investments in Bulgarian FinTech companies have grown from BGN 1.3 million to almost BGN 11 million ($5.9 million) in five years, according to an annual report published by FinTech Bulgaria – a non-profit organization made up of top FinTech companies in the country.

And with an average growth rate among FinTechs of 188% per year, a fifth of all venture capital (VC) investments in the country have gone to FinTech startups operating in Bulgaria as of 2021.

What’s more, that doesn’t even count the $100 million Series B expansion raised by Fintech firm Payhawk in March this year to become Bulgaria’s first unicorn. Founded in 2018, the enterprise financial management platform has since grown out of the Sofia office and is now headquartered in London.

In an interview with PYMNTS, Hristo Borisov, the company’s co-founder and CEO, explained that the company’s success was linked to a growing demand for FinTech solutions for managing business expenses, which he called a “major trend.”

He said demand is particularly driven by small and medium-sized businesses (SMEs), adding that “This is where we see much bigger pain points that need solutions like Payhawk,” he said.

Interestingly, Payhawk is not the only Bulgarian FinTech tapping into the business-to-business (B2B) market. In fact, in a survey of companies in the industry, FinTech Bulgaria found that 71% operated in the B2B space, indicating a potential opportunity for more consumer-oriented startups.

Considering its relative immaturity, Bulgaria’s FinTech ecosystem still has plenty of room for growth. Of the 156 FinTechs registered in the report, 82% were SMEs, a sign of a young but promising sector.

Fortunately for the rising FinTech scene in Bulgaria, many of the foundations for success have already been laid.

For example, when it comes to the use of non-cash payment methods, although the Balkan nation lags behind many of its European peers, it is not because of the lack of a well-established digital infrastructure.

In Mastercard’s digital payments index, the country scores 69 out of 100 for infrastructure, but only 44 for usage, reflecting a long-standing reliance on cash. In fact, 41% of survey respondents who get paid into their bank account take half in cash, while 45% of Bulgarian consumers do not receive their full salary digitally.

The discrepancy between efficient infrastructure and low use of non-cash payments points to a truism that can be observed in many European markets – the availability of digital payment solutions is not in itself enough to drive adoption. Consumers must be both made aware of and motivated to move away from cash.

To cultivate the industry

One of the government-enabled initiatives that help promote FinTech innovation and support the entrepreneurial culture in Bulgaria is the start-up visa, which aims to attract founders to make the country their new home.

Learn more: 5 EMEA destinations aimed at digital nomads

In the same way that other destinations in Europe have launched digital nomad visas, these business visas are specifically aimed at global citizens who have the most to contribute to the economy.

They also enable fast tracking of long-term residence for entrepreneurs outside the EU, helping to boost the economy and create job opportunities.

Also, FinTech jobs are some of the best paying in Bulgaria. According to the 2022 Annual FinTech Survey, the average gross monthly salary in the sector is BGN 3,248 ($1,763), more than double the average across the country in 2021.

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