Bulgarian Innovation Capital, usually backing early-stage companies, has been selected to manage a €32 million public investment fund under the Fund of Funds’ new “Innovation in Enterprises” program. With the required addition of private capital, the total portfolio is expected to reach €36 million. The fund is part of a larger initiative by the Bulgarian Fund of Funds to support early-stage companies with a total of over €100 million in equity financing.
Fewer deals, more capital
Unlike its previous mandate, where Innovation Capital had to invest €20 million in nearly 200 companies over five years, the new structure allows for fewer but larger investments – around 40 deals over five years, or roughly one per month. The fund will focus on companies with at least a prototype, prioritizing clear innovation. Ideal candidates will offer products or services that are meaningfully different from what exists on the market, preferably with patent protection.
“With our work, we aim to improve the early-stage investment environment for startups. Some of the biggest drawbacks in the scene are the limited sources of meaningful funding for founders with no traction and with limited market validation. That’s the moment we step in to help them, right there next to friends, families, and business angels, but also by supporting our portfolio companies and by being their anchor and cheerleader,” shared previously for The Recursive Angel Angelov, Managing Partner at Innovation Capital.
Legal challenges resolved
The selection of Innovation Capital, along with Vitosha Venture Partners, Morningside Hill, and Bayena Ventures, was initially blocked by the Commission for Protection of Competition (CPC). The CPC had raised concerns about scoring irregularities and claimed that the evaluations of some bidders were unfairly inflated or deflated. However, the Supreme Administrative Court (SAC) overturned the CPC’s decision, stating there was no legal or factual basis for the objections. This ruling cleared the way for the Fund of Funds to proceed with signing contracts and disbursing capital.
Next steps
Talks with private investors have already begun, report the Bulgarian business outlet Capital. Innovation Capital expects to close the fund and begin investing by early 2025, assuming no new appeals arise. According to Dimitar Kostov, one of the fund’s key figures, the team could complete its first few investments as early as March 2026. The fund must deploy all capital by end-2029, aligning with Innovation Capital’s timeline for exiting its previous portfolio.
Fund of Funds in Bulgaria
The recent wave of funding from the Fund of Funds was accompanied by months of political and regulatory turmoil. The selection of fund managers was challenged before the Commission for Protection of Competition (CPC) by applicants, leading to the temporary suspension of key procedures. The CPC questioned the integrity of the evaluation process, claiming some candidates received unjustified scoring advantages. However, the Supreme Administrative Court (SAC) later overturned these decisions, citing a lack of legal or factual grounds.
The dispute unfolded alongside a change in leadership at the Fund of Funds, where former directors Viktoriya Hristova and Pavel Lisev were succeeded by Aleksandar Nenkov, Biser Petkov, and Aleksandar Georgiev.
