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Vitosha Venture Partners, one of the newest Bulgarian early-stage VCs, officially announced the second batch of investments by backing 13 local startups with a total of €2.7M. The funds are allocated among the seven startups which joined the fund’s accelerator program at the beginning of this year, and six other startups outside of Vitosha Accelerate that received seed-stage tickets.
Having a total investment capacity of €26M, Vitosha Venture Partners is supported by the governmental Fund of Funds and plans to support over 120 companies over its 4-year term. The fund was launched at the end of 2020 and its average investment size falls in the range between €25K and €1M.
Max Gurvits, one of the Managing Partners at Vitosha Venture Partners shares that in their investment pipeline review, they looked mostly at execution and market. “Execution is part traction, part the founders’ background and experience. The market is about the size and dynamic of the opportunity: is it a big market and can it be scaled by a Bulgaria-based team,” explains Gurvits. “Also, we are sensitive to trends, as we know that in venture ‘a rising tide raises all the boats’. We’re lucky to have a large sector- and vertical-agnostic approach with this fund. While we don’t focus on any specific verticals, we do see certain ones that are more common in our deal flow, so it’s likely we’ll become more specialized in a number of verticals as the lifetime of our fund matures,” he adds.
In the next part, you can find out more about the new companies in the portfolio of the fund, the latest insights about the startup and founders trends in the region, and the future plans of Vitosha Venture Partners.
Aerospace, Pet tech, and Renewable energy
Outside of its accelerator program, Vitosha Venture Partners invested in Petmall, Assen Aero, Omnio, Meat Me Bar, TokWise, and Pellet Box. Starting from the company that received the biggest ticket of €800K, Petmall is one of the fast-growing players in the pet food and pet supplies sector. The company operates the biggest local online platform for pets and pet owners and runs physical retail shops, offering its clients a selection of over 10 000 products. Petmall aims to become a regional leader in its sector, which is believed to be the fastest-growing and fastest-moving consumer goods (FMCG) vertical at the moment.
“We will use the investment to improve the processes and internal structure in the organization with the goal to boost the overall quality of our service. This includes a portfolio expansion of our specialized pet products, optimizing the methods for delivery, increase in the services offerings, and the opening of new commercial sites, which would be closer to our clients. We also plan to launch a separate consulting department, which will advise customers on how to take better care of their pets – everything from balanced feeding and grooming to disinfection. Our ultimate goal will be to improve the petcare culture,” shares Nikola Ninov, founder of Petmall.
The next investment, which amounts to €600K, is made in the aerospace startup that produces vertical take-off and landing (VOLT) aircraft and is in the competition to make the first flying car in the world, Assen Aero. The startup, which is based in Miami and is founded by the Bulgarian Assen Andonov, has already developed two working prototypes of flying drones that can carry a person and reach a speed of up to 60mph. The goal of the company is to use Bulgaria’s strategic location for research and development in order to be among the first ones to commercialize flying vehicles. “We believe that Bulgaria has a lot of unexplored potential that goes beyond software development and in the face of Vitosha Venture Partners, we found a partner that has equally big and bold ambitions for the future. With this investment, we will continue building a company that is both developing cutting-edge technology and inspiring the next generation to innovate without limitations,” Assen Andonov shares for The Recursive.
The third company outside of the fund’s accelerator is the foodtech Meat Me Bar, which produces a fully natural protein bar made from meat, dried fruits, nuts, and spices. The protein bar does not contain any preservatives and was developed with the support of the University of Food Technology in Plovdiv. The €400K investment from Vitosha Ventures will allow the company to enter new markets, develop new recipes, and expand its product portfolio.
The next new company in the fund’s portfolio is a player in the underrepresented B2G sector. OMNIO, which received €200K, develops the first integrated financial crime compliance CRM solution. The startup uses ML and compliance understanding to help investment brokers, online gambling, and sports betting providers identify potential money laundering, terrorist financing, and other fraud concerns. With the latest investment, the startup plans to further develop its platform and integrate its solution into financial institutions.
The last two companies, which received respectively €150K and €200K, are the green energy portfolio management software TokWise and the pellet vending machine Pellet Box. TokWise builds AI algorithms to reduce the forecasting error and the balancing costs associated with renewable energy generation. Having a goal to bridge the gap between the market and the physical grid, TokWise will use the investment to build on its platform and make it available to more users in Bulgaria and Europe. Pellet Box, which is also in the energy market, is the first regional automated vendor of low emission heating fuel that also offers logistics and storage solutions for energy distribution in rural areas. With the funds raised, the company will integrate its product on the local level.
Financial boost for the cohort of Vitosha ACCELERATE
The following 7 early-stage companies from the fund’s acceleration program received a total of €350K:
|GridMetrics is an analytics startup that helps companies in the energy industry to receive valuable AI-based insights about their data. It uses ML to help companies optimize water pumping and manufacturing processes.|
|NulaBG provides online banking and accounting services for small businesses. The platform is integrated with the National Revenue Agency and offers business owners a free online invoicing solution, and end-to-end encryption, and bank-level security which ensures that all of the documents are safely stored in the cloud.|
|Augment is a platform for data analysis of E-sports that helps online gamers to outwit their opponents. The esports analytics of Augment allows online teams to have an overview of every game they have played and gather insights about the gaming patterns of their opponents.|
|TraceTheTaste is a startup in the food tech and circular economy industry. It develops a platform for online stores, restaurants, and hotels that allows them to monetize food and other goods that are near expiration or are not commercially appealing.|
|FidU develops a fintech platform that would allow Bulgarian exports to monetize the transaction at the moment when they ship their products or conduct their services. Their vision is to become the go-to providers of fintech services for SMEs which export from the developing European to the Western European markets.|
|Ecopolytechis a company that does research and development of biodegradable polymers and ecological solutions.|
|Bye Bye Shuttering is a Health tech platform that offers multilingual stuttering therapy to help people who shutter quickly overcome their speaking problems. In order to do that, the startup uses AI and personal mobile assistants and makes it possible for users to go through therapy on their own through their smartphones or PCs.|
What does the inside data tell about the local ecosystem?
Upon reviewing so many applications, the partners of the fund have identified some emerging trends about the early-stage founders in our ecosystem. “We keep a close tab on the trends and figures that we encounter in our deal flow. One interesting find was that the most popular business model is that of subscriptions, followed by direct sales and marketplaces. We’ve also noticed that a majority of the teams are composed of two founders, not three,” Max Gurvits shares.
The Q1 report of Vitosha Venture Partners, prepared by Kamen Bankovski, sheds further light on the industry and founders trends as it assesses all the startups that have applied for funding. One intriguing finding is that startups in the e-commerce sector have almost doubled in the first quarter of 2021 compared to 2020, and represented almost a quarter of all applications. Broken down according to the targeting paying customer, the startups in Vitosha Ventures’s pipeline showed a decreasing interest in developing business-to-government (B2G) solutions. Of biggest interest has been the B2B market for SMEs followed by the B2C market and the B2B market for small businesses. When it comes to the needs of the founders from the local ecosystem, data from Vitosha Ventures highlights that help with sales and business development is the main added value that founders are seeking from investors besides the financing itself. Additional needs are support with business expertise (40% of the applicants) and fundraising contacts (38% of the applicants).
Next on the Vitosha Venture’s agenda
Max Gurvits shares that in terms of investments, Vitosha Venture Partners aims to reach a total of 40 deals completed by the end of 2021. Similar to their most recent round, part of the expected new deals will come from the next edition of their Vitosha ACCELERATE program, which will be unveiled and announced towards the end of summer.
“Beyond deals, we are really looking forward to doing more community outreach and interaction, with gatherings, events, open hours, and more. This can only happen if everybody in our community who doesn’t have major health issues gets their vaccines this summer. If Bulgaria continues to be last in the EU in terms of vaccinations, we’ll have another wave of Covid after summer, and things will lockdown again. We all need to do everything we can to make sure this doesn’t happen. And if we do, we at Vitosha promise everyone great autumn, winter, and spring, full of opportunities to meet, learn, travel, and have fun with fellow venture players from Bulgaria and beyond,” Gurvits concludes.