Bulgaria’s AI and tech ecosystem is undergoing rapid transformation, emerging as a significant player within Central and Eastern Europe. With increasing investment, the development of pioneering companies, and organized international outreach, Bulgaria is gaining recognition for its contributions to AI and deep tech innovation. However, challenges remain in aligning the ecosystem’s growth with the abundant venture capital now available.
The information in this article is based on The Recursive’s State of AI in 2024 report. Download it and get the latest insights about the CEE startup ecosystem.
Several milestones highlight Bulgaria’s progress:
– Payhawk, a financial technology company, became Bulgaria’s first unicorn in 2022.
– INSAIT, an advanced AI research institute established in the same year, has attracted over $100M in funding and partnerships with organizations like Google and AWS. The institute has drawn prominent researchers such as Luc Van Gool and has launched initiatives like AI PhD fellowships co-mentored by Google DeepMind.
– EnduroSat, Europe’s fastest-growing spacetech firm, has supported educational initiatives such as a Space Engineering Master’s Program at the Naval Academy, aimed at developing local expertise.
– Dronamics, a cargo drone airline, secured over €52M in funding, establishing itself as a global player in logistics innovation.
Notable rounds in 2024, but falling short of 2023’s performance
Bulgaria’s AI startup ecosystem is on the growth path, yet 2024 was not the best year. By September 2024, 90 AI product companies had been mapped, with only €52.7M raised in funding, compared to €101M in 2023. Funding highlights include:
– AMPECO: €24.7M.
– Dronamics: €12.5M from the European Innovation Council.
– Iris AI: €7.6M.
– Evrotrust: €3.3M.
– Smart Farm Robotix: €2.4M from the EIC.
Venture capital: An oversupply relative to startups
Bulgaria’s investment ecosystem is robust, with projections of over €1.4M in venture capital available in 2024. This includes support from local funds like the €500M Fund of Funds initiative and the support of CEE-focused VCs investing in Bulgaria, like Bek Ventures, Credo Ventures, OTB Ventures, EBRD VC, Endeavor Catalyst, and 500 Emerging Europe. While this influx of capital demonstrates strong investor confidence, the rate of high-quality startup formation has not kept pace. As a result, local venture capitalists increasingly look to diaspora founders or expand their investment scope beyond Bulgaria.
A solid foundation for startups, with more work to be done
Bulgaria offers notable advantages for startups:
– Skilled Workforce: A growing pool of tech talent, supported by initiatives like INSAIT and industry-specific educational programs, ensures access to skilled professionals.
– Cost Efficiency: Bulgaria remains an affordable base for startups, enhancing its attractiveness for foreign founders.
– Collaborative Ecosystem: Networks such as Future Unicorns Accelerator and links to diaspora communities bolster collaboration and resource sharing.
However, challenges persist. The disparity between venture capital supply and high-quality startup creation underscores the need to attract more global talent and enhance the startup support ecosystem. Strengthening infrastructure and fostering innovation beyond current levels will be critical for sustainable growth.
