The state-run structure, tasked with managing the EU funds earmarked for financial instruments - the socalled fund of funds - has woken up just before the last quarter of 2017. Since its creation two years ago, the FoF has largely been a silent observer on the market, always planning to come up with new funding lines, yet never really implementing anything. This has changed with the arrival of a new board member and executive director, Svetoslava Georgieva, who used to work as an expert in the European Commission. She was first appointed to the board of directors and made executive director surprisingly in July, after a shake-up directed by the Ministry of Finance.
Georgieva makes no secret of her goal: to speed up the distribution of funds. The first procedure under her command is for the creation of three start-up funds with a combined value of almost 100 million levs (51 million euro). The first two funds will be an accelerator and a seed fund, and the third will be for the start-up stage. The accelerator and the seedfund will make investments of between 25 and 50 thousand euro and the third one will be making investments
from 50 thousand up to one million euro.
"The goal is to reach a wide range of small and medium-sized enterprises, excluding agriculture and
gambling, but there is no focus on certain industries, only on the development stage," says the CEO of the FNF. According to Ms. Georgieva, these funds must build upon "what has been achieved so far".
Similar funds were funded by the European Investment Fund (EIF) in the previous programming period (2007-2014) - Eleven and LAUNCHub as accelerators, and NEVEQ II, Empower and Black-Peak as venture capital funds. This means that there are trained and experienced players on the market, some of whom did not receive any money from the second round of EIF financing in 2017 and many others willing to enter this niche. "We are expecting candidates from both the existing ecosystem and newly formed teams with experience", explains Georgieva.
The FoF is looking for fund managers with experience, according to the published procurement details. Candidates eligible for the first fund are those with experience in structuring or managing equity and quasi-equity investments of up to 500 thousand euro, for the second - up to 1 million euro and for the third - 1.5 million euro. They will also have
to deliver private investment ranging from 10% to 30% and a personal stake of at least 2%.
The managers will have to commit to financing on average between 30 and 40 companies yearly for the first two funds, and up to 10 for the second. The investment period is five years, and the live-cycle of the funds - 10 years.
According to Capital newspaper, among the players with interest in the forthcoming procedure are some of the NEVEQ II executives, as well as executives from Eleven, and there are candidates who will join forces with foreign partners.
The biggest problem seems to be the desire of FoF to achieve a very difficult feat - to distribute venture capital through public procurement. Those two areas are not very compatible - the latter is assessed according to clearly measurable (though easy to manipulate) criteria, while the former is based on somewhat immeasurable factors such as
the flexibility to design and implement them. The jury is out on whether "the Bulgarian way" will beof any use for the start-up scene here and for the Union as a whole, or whether the whole experience was just another scheme to divert EU funds to wellconnected players. The previous attempt in 2008 ended miserably, this time the experience with EIF might help.
What is FoF?The fund of funds manages the money earmarked for financial instruments (various guarantees, venture funds, or
insurance products) in the current EU programming period (2015-2021). The amount exceeds 600 mn. euro for Bulgaria
until 2022. The FoF operates since 2015 and collects a management fee. It employs 32 people and had operating expenses of 830 thousand levs for 2016.