Search for...

Bulgarian VCs Discuss Investment Strategies and Future Plans as the Fund of Funds’ Investment Cycle Nears Its End

Bulgarian Startup Investment 2023: Yavor Gochev from Innovation Capital, Marin Iliev from Vitosha Venture Partners, Yordan Zarev from NV3 Venture Fund, Pavel Velkov from Morningside Hill Capital Management, and Evgeny Angelov, from Silverline Capital.
Image credit: From left to right: Yavor Gochev from Innovation Capital, Evgeny Angelov from Silverline Capital, Yordan Zarev from NV3 Venture Fund, Pavel Velkov from Morningside Hill Capital Management, and Marin Iliev from Vitosha Venture Partners | Canva
, ~


Only have 1 minute? Here are 3 takeaways from the piece:

  • As the Fund of Funds (FoF)’s investment cycle nears its end in 2023, Bulgarian venture capital firms reveal if they are adapting their strategies.
  • The Recursive spoke with five such firms shaping Bulgarian startup investment in 2023, each revealing their unique approach. The majority of the VCs have plans to make new investments by the end of the year. Some of them share that they are under pressure to execute faster but they won’t make hasty decisions. Rather, they remain focused on their specific investment strategies.
  • As for future plans, the VCs are charting different paths. One VC plans to start fundraising for a new fund by the end of 2023, another does not intend to take part in the next investment cycle of the Fund of Funds, while the rest are still exploring different options. Read further to get the insights.


As the Fund of Funds (FoF)’s investment cycle nears its end in 2023, questions arise about the current state of the Bulgarian startup ecosystem. In the context of Bulgarian startup investment 2023, the Fund of Funds, working with financial intermediaries like Innovation Capital, Vitosha Venture Partners, NV3 Venture Fund, Morningside Hill Capital Management, and Silverline Capital, is a key player as it allocates targeted public funds from European Union programmes and national co-financing, using special financing schemes.

The Recursive spoke to five key players in the Bulgarian venture capital scene: Yavor Gochev from Innovation Capital, Marin Iliev from Vitosha Venture Partners, Yordan Zarev from NV3 Venture Fund, Pavel Velkov from Morningside Hill Capital Management, and Evgeny Angelov, from Silverline Capital.

Delve into their investment strategies in light of the FoF’s timeline, and discover their plans for the next investment cycle. This story is the first part of a two-part series. Stay tuned for the next piece focusing on the impact of the current crisis on closing rounds, the challenges VCs face, and the gaps in the Bulgarian startup ecosystem.

What are the VCs investment strategies amid FoF’s investment cycle end?

As the Fund of Funds’ investment cycle nears its conclusion, marking a pivotal moment in Bulgarian startup investment 2023, the strategies of the venture capital firms are adapting.

Yavor Gochev, Sr. Investment Manager at Innovation Capital, says that until the end of the year their focus is on selecting and investing in the most promising startups and founders.

Read more:  Romania’s Startup Landscape in a Nutshell: 6 Key Figures

(Some of the early-stage Bulgarian startups that Innovation Capital has invested in include, Sappience, and TokWise. You can read more about them HERE)

Marin Iliev, Partner at Vitosha Venture Partners, shares that the expiration of the investment cycle doesn’t affect their strategy and process but he acknowledges the pressure to execute faster and more precisely. “We are going to be very busy until the end of the year as we’re in the process of closing a big number of deals and need to find several new opportunities over the next months while also preparing for fundraising for a new fund and supporting our portfolio companies which are facing a tougher environment both in terms of worsening economy and diminishing funding options”, Marin Iliev comments.

(You can see which are some of the early-stage Bulgarian startups that Vitosha Venture Partners has invested in through their ACCELERATE Program in May 2023 HERE)

Yordan Zarev, Partner at NV3 Venture Fund says similarly that the expiration of the investment cycle hasn’t affected their plans. Since the beginning of their Investment Cycle, back in 2019, they had a well-defined and robust plan to execute their investment strategy, outlining the number of companies they aimed to invest in. Some of the companies they’ve invested in include KLEAR (a Bulgarian P2P lending platform), CloudCart (a Bulgarian e-commerce platform), and Releva (a Bulgarian AI-powered marketing and Revenue Operations (RevOps) platform for e-commerce businesses).

“Looking ahead to the end of this year, we have specific plans to invest approximately 2.8 million euros in four to five different companies. Our focus is on companies operating in the specific sectors outlined in our investment strategy. We are particularly interested in more mature companies with a strong market presence, revenue generation, and some even approaching break-even. These companies are seeking financing to support their international development”, he says regarding NV3’s strategy until the end of the year.

Zarev says they have their sights set on several key sectors like FinTech and InsurTech. Another critical area they’re focused on is Big Data and analytics. Additionally, NV3 is actively considering investments in cybersecurity and eCommerce-enabling technologies and platforms.

Read more:  Which Is The Tiger of Southeast Europe’s Startup Ecosystems?

“To clarify, we do not intend to rush or make any hasty decisions simply to exhaust our funds by the end of the investment period. Our primary goal is to remain on track with our strategic investments”, Zarev concludes.

Pavel Velkov, Managing Partner at Morningside Hill Capital Management says that the end of the investment cycle of FoF was always known to them, and it wasn’t a surprise that they needed to have their funds fully invested by the year-end and so their strategy has remained unchanged from the very start. Most recently, Morningside Hill Capital Management invested €1M in the Bulgarian startup Yoga Llama, which is developing a self-learning yoga app based on augmented reality (AR).

Lastly, Evgeny Angelov, Managing Partner at the first Bulgarian mezannine fund Silverline Capital expresses his concern, saying: “It’s not ideal that all of the funds are reaching their end simultaneously. This creates a clustering effect towards the conclusion of the investment period, especially considering that for most of these funds, including ours, the investment period has been relatively short, typically lasting four years. However, we understand that this synchronization is driven by the funding structure from the front, so we comply with it.”

Silverline Capital has been very active in the past 18 months, particularly in the last six months. They have already made one investment in Alcatraz AI – a US-Bulgarian company for autonomous access control that uses 3D facial authentication and AI. Additionally, there are four to five other deals in the negotiation phase, moving towards the documentation phase.

Looking ahead: VCs reveal future plans beyond FoF’s investment cycle

As the investment cycle of FoF concludes, marking a significant point in Bulgarian Startup Investment 2023, the VCs have diverse plans for the future.

Vitosha Venture Partners plans to start fundraising for a new fund by the end of 2023. Marin Iliev says: “We are expecting the opening of a procedure by the European Investment Fund to select fund managers to manage a few Bulgaria-focused VC funds and the start of the next cycle by the Fund of Funds. When the specifics become available we will analyze carefully and decide what makes most sense for us.”

NV3 Venture Fund is currently in the process of deciding whether to participate in a particular program that is set to be launched or in response to a call for interest. They are inclined to explore new investment opportunities. “At this point, we do have plans to launch something new, but we haven’t made the final decision regarding whether to go with the European Investment Fund or the Fund of Funds for a different funding route. Both options have their respective advantages and disadvantages, so we are keeping an open mind and thoroughly assessing both possibilities”, says Yordan Zarev.

Read more:  Western Balkan founders set to turn ideas into MVP as a new accelerator opportunity arises

Additionally, Zarev notes that the Fund of Funds approach has its limitations as it allows them to invest exclusively in Bulgarian companies with a Bulgarian substance. On the other hand, the European Investment Fund provides a broader scope, giving them more freedom to invest in companies outside of Bulgaria. However, there’s increased competition in that arena, making it a different challenge altogether. Ultimately, their decision will come down to finding the right equation, considering factors such as the team, the investment strategy, differentiation, and competitive advantage.

Morningside Hill Capital Management does not plan to participate in the next investment cycle of the Fund of Funds as they have other strategies in mind that are yet to be disclosed. Regarding their experience with the Fund of Funds, Pavel Velkov says that FoF has been an excellent partner throughout the past five to six years. “To other potential fund managers considering applying to the Fund of Funds, we highly recommend it. If they have the opportunity to join, we believe they can turn it into a successful venture just as we have experienced”, he concludes.

Silverline Capital remains focused on finalizing investments from their current fund’s investors, including private investors. “Once we successfully deploy this fund, we will then consider the possibility of launching new funds. However, at this moment, we do not have any concrete plans for the next fund, as our immediate priority is to fulfill our current investment commitments”, says Evgeny Angelov.

Stay tuned for the second part of this article, where we discuss the impact of the current crisis on closing rounds, the challenges VCs face, and the gaps in the Bulgarian startup ecosystem that have been influencing Bulgarian startup investment 2023.

Thank you for reading The Recursive!

Over 1 million people from all over the world have learned about the tech ecosystem in Central and Eastern Europe thanks to The Recursive. In order to keep our content free for everyone, we need your help. If you believe what we do is important and have the means to do so, support us in giving a voice to Central and Eastern Europe with as little as €7. Thank you!

DONATE Keep reading this article

Help us grow the emerging innovation hubs in Central and Eastern Europe

Every single contribution of yours helps us guarantee our independence and sustainable future. With your financial support, we can keep on providing constructive reporting on the developments in the region, give even more global visibility to our ecosystem, and educate the next generation of innovation journalists and content creators.

Find out more about how your donation could help us shape the story of the CEE entrepreneurial ecosystem!

One-time donation

You can also support The Recursive’s mission with a pick-any-amount, one-time donation. 👍

Snezhana is an Innovation Journalist at The Recursive. She uses the power of storytelling to put the spotlight on the emerging innovation ecosystems in Central and Eastern Europe. With a keen eye for the bleeding edge, she delves into the depths of deep tech, unearthing captivating stories that bridge the realms of science and human imagination.