Bulgaria is looking for a unicorn


Bulgaria is looking for a unicorn

In 2022 or 2023 there will be at least one Bulgarian startup with valuation over 1 billion dollars


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This article is part of an upcoming KInsights special report on the Bulgarian tech sector

*This article was written in December 2021. Since then, Payhawk raised additional 100 million dollars at 1 billion dollars valuation, making it the first Bulgarian unicorn. The main text of the article has not been changed for objectivity reasons.

The number of unicorn companies in Bulgaria is equal to the number of real unicorns in the world - zero. In the next two years this will change, since the last two years showed that Bulgarian startups can now attract significant sums in funding. The emergence of the first Bulgarian unicorn - a startup company valued at above 1 billion dollars - is now not a question of whether it will happen, but when it will happen and who will be first. The candidates for the position are more or less clear and, unsurprisingly, all are from the technological sector.

The first unicorn will be the logical result of two trends: the emergence and development of the Bulgarian startup ecosystem in the last ten years, along with the jump in the overall sum of attracted capital, invested in European companies. The data from the annual report State of European Tech for 2021 shows that in the last year European Companies have amassed more than 100 billion dollars in funding. By comparison, for 2020 that sum was 30 billion dollars. This jump is almost exclusively due to big investment rounds amounting to more than 20 million dollars.

Bulgaria has its footprint in the statistics. At the beginning of 2021, the Bulgarian-American company Gtmhub raised 30 million dollars and set the tone for big investments. In November, Payhawk raised 113 million dollars in a round that valued the company at 570 million dollars. A month later, Gtmhub attracted 120 million dollars. These two companies are the main competitors for the title of first Unicorn - Payhawk is valued officially at 570 million dollars, while Gtmhub is unofficially valued at between 500 and 600 million dollars.

Dry numbers aside, the emergence and counting of unicorns is something of a fetish for the world of technology. One school of thought is that the effect of a unicorn is felt only by its shareholders. This is a very simplistic way of thinking, because it ignores the main gift coming out of unicorns - the founders invest their money from the exit in other companies. Simply put, Bulgaria needs unicorns not so much to brag about (even though it is tempting), but because the history of technology shows that unicorns lead to other unicorns. And so does the short history of Bulgaria's IT sector.

Centaurs, unicorns why do we need them?

Alexandra Kozbunarova has been covering the startup ecosystem since 2015 - at first as a journalist in Capital and then as part of the EDIT organization and the Austrian media TrendingTopics. If we pinpoint the beginning of the Bulgarian startup ecosystem as back in 2012, the year when both startups and funds were first launched, she has covered everything, from the hundreds of small investments from the funds Eleven and LAUNCHub, to the significantly bigger funding rounds in recent years. Over that period Kozbunarova has asked when there will be a Bulgarian unicorn so often, that she has now reached the point where she is no longer sure if Bulgaria even needs one.

"I am a lot more interested in having tens of multi million companies, which will be the base for everything, rather than one unicorn," says Kozbunarova.

In the world of startups, where everyone is obsessed with terms and labels, there are not only unicorns, but also "centaurs" - companies valued at more than 100 million dollars. The most famous Bulgarian centaur by far is Telerik, a company bought by the American software firm Progress for 262 million dollars in 2014. From that one deal alone emerged more than 40 new companies and millions of dollars for investments. The three companies with the largest rounds of investment in 2021 - Payhawk, Gtmhub and OfficeRnD, are all founded by ex-employees of Telerik. At this point only Payhawk has a valuation more than double that of Telerik, but this is also a question of timing - today the billions for startups are much more available and easier to attract than eight years ago.

The origin of the trio is the short explanation why Bulgaria would benefit from a unicorn - if so many companies can come out of a centaur, imagine what would be the effect of a unicorn. But these two mythical creatures usually go hand in hand. It is hard to have a unicorn without having the foundation of centaurs.

Kozbunarova explains the jump in the size of funding rounds and valuations in two ways: first, most of the work in attracting investments is done under the radar, through organizations such as the Bulgarian venture capital association, the entrepreneur organization Endeavor and the Bulgaria Innovation Hub, founded by Bogomil Balkansky, Vassil Terziev, Pavlina Yanakieva and Ivan Dimov. All of them make connections with bigger foreign venture capital firms and lead them to companies from their portfolio.

Second, Bulgarian companies play to their strength, which is business software. For someone of the ecosystem the valuations of Payhawk (company for corporate credit cards), Gtmhub (planning software) and OfficeRnD (co-working management software) might look strange, because they solve very niche problems and not the problems of the general public. "When there is a Bulgarian unicorn, it will look really boring to most people," concedes Kozbunarova.

One step further

Daniel Tomov, managing partner in the venture capital firm Eleven, can say not only that he is closely following the race for the first Bulgarian unicorn, but also that his fund has invested in some of the main contenders. In retrospect he says that the development in the last years looks logical and the big funding rounds should stay as a trend. "There are several reasons for these big rounds. First, the pandemic broke the myth that American investors only stay in the US and invest only in American firms, especially when you have such fierce competition on the East and West coast. A lot of money is chasing very few companies, which makes the VCs look for companies outside of the US."

"The second reason is that the Bulgarian ecosystem is getting better and developing much faster. We now have the so-called "top companies" - a company that is up to par with the ones in San Francisco, Berlin and London. We now have the critical mass of infrastructure and the ecosystem works very well together. Entrepreneurs are helping entrepreneurs when looking for new funding and are mobilizing contacts. I can't say when it happened, but we went one step further," says Tomov.

According to him the emergence of a unicorn is important, but with many centaurs around him. For that goal to be achieved, Bulgaria needs professional companies of quality, because "even if you know all the VCs in the world, if you don't have a company to show them, nothing is going to happen." But the most important thing is that these companies are not exceptions, but the result of systematic work. "The idea is not to say 'let's help and have an unicorn' and then to never have a second company like that."

Tomov says that the emergence of Bulgarian unicorns is an important task because of two reasons: the self-esteem of entrepreneurs and founding of new companies as a side (or direct) effect.

"If the unicorn happens, it will lead to other big companies. One thing will lead to another, but it won't happen fast. Even if we have a unicorn next year, the direct effect will come after years, when there is an acquisition. All of this is very important for the self-esteem of the ecosystem, so that someone can tell himself "if they can, we can", and not just watch foreign examples", says Tomov.

So when?

All of this leads us to ask when Bulgaria can expect its first unicorn. Theoretically, this could happen even this year. The main contenders, Payhawk and Gtmhub, raised 113 and 120 million dollars respectively in November and December, only months after their previous rounds. In other words, if companies see the opportunity for a big round of financing soon, it will be highly unlikely for them to pass on it.

Daniel Tomov says that the dream valuation will probably happen at the end of this year or during 2023. Hitting the billion-dollar valuation will not mean anything in practice. For the effects of a unicorn to be felt, the company should be either sold or go public, so the valuation can become a liquid financial resource. When that happens, in a real business fairytale it would mean that the wheel is going to keep turning for innovative startups, and fund new companies at least a decade into the future. Until, that is, the existence of unicorns in Bulgaria stops being something out of the ordinary.

What makes a unicorn Bulgarian?

Defining a "startup" is hard enough, and defining "Bulgarian" is even harder. Gtmhub, for example, is a Bulgarian-American company, based in Denver, while investments in OfficeRnD and Payhawk go through British legal entities, because it is easier for foreign investors. According to Daniel Tomov of Eleven, the main criteria for a "Bulgarian company" is whether or not it launched here. In this case another candidate for a unicorn is Dynamo Software, which this year hit a valuation of 950 million dollars, after an investment from Blackstone equity fund. The majority-ownership of Dynamo, however, changed hands back in 2017 at a 70 million-dollar valuation. Alexandra Kozbunarova says that the main criteria for her is whether or not the companies have Bulgarian co-founders and whether or not they have received investment from Bulgarian funds.
Unicorn candidates


Founded: 2018

Money raised: 136 million dollars

Valuation: 570 million dollars

Number of employees: ~100

Payhawk develops a product for managing corporate cards, accounting of firm expenses and others. Company founders Hristo Borissov and Boyko Karadzhov are former employees of Telerik. The most impressive feat of the company so far is the speed with which it attracts new funding, along with the wide jumps in magnitude - the first rounds was for about 3 million dollars, the second - 20 million dollars, and the third - 113 million dollars. All in less than two years.


Founded: 2015

Money raised: 141 million dollars

Valuation: between 500 and 600 million dollars (unofficial)

Number of employees: ~250

Gtmhub develops planning software using the so called OKR system - Objective and Key Results. It was founded by Ivan Osmak, a former employee of Telerik, and the first investors in it are the Bulgarian funds Eleven and LAUNCHub, along with Bogomil Balkansky - former VP in Google and current partner in the venture firm Sequoia. The last investment in the company is from December 2021 - 120 million dollars. Officially the valuation of the company is not known, but according to several sources it is between 500 and 600 million dollars.


Founded: 2015

Money raised: 14 million dollars

Valuation: ~50 million dollars

Number of employees: ~120

At first OfficeRnD developed software for managing co-working spaces, but since the pandemic it has expended into servicing companies with hybrid office. The company was founded in 2015 by Miroslav Miroslavov (former employee of Telerik) and Miroslav Nedyalkov. In October 2021, after the last round of financing - 10 million dollars - Miroslavov said that he has declined an offer for acquisition of the company, higher than the current valuation. The goal is to develop the company further in the next years.
Centaur candidates


Founded: 2014

Money raised: 12 million euro

Valuation: Maximum of 125 million euro* (see below)

Dronamics is working on an autonomous delivery drone which could fly for 2500 km with 350 kg cargo. The company is founded by brothers Konstantin and Svilen Rangelovi. It has a different way of growing: at the end of 2021 it debuted on the BEAM market, part of the Bulgarian stock exchange, raising 6 million leva, which is the maximum amount of money it could raise. The real interest was five times larger. The idea of the listing was to raise money through the Bulgarian legal entity, which will be invested in the British entity Dronamics Global Limited, which holds the intellectual property rights and could have a valuation of 125 million euro.


Founded: 2016

Money raised: 20 million dollars

Valuation: ?

Number of employees: ~50

LucidLink works on technology which allows ultrafast and secure connection to the cloud. The product is used mainly in the media industry. In the last round of financing - 12 million dollars in May 2021 - one of the participants was the software giant Adobe, the company behind Photoshop. LucidLink was founded by the Bulgarian Georgi Dochev and the American Peter Thompson. One of the investors in the company is the Bulgarian fund BrightCap Ventures.


Founded: 2016

Money raised: 6 million dollars

Valuation: ?

Number of employees: 1500

Excitel is an Internet service provider in India, founded by Bulgarians Nikolay Gorchilov, Viktor Frances and Plamen Petkov. The company serves around 600 thousand households in India, which makes it one of the top ten operators in the country. The goal for the next years is to hit 20 million households. For that purpose, the company is working on a 20 million euro outside investment and plans another series, this time for 100 million euro. Only then the three founds will be looking for an exit - either an acquisition or stock market listing. Given the large number of unicorns coming out of the Indian market, along with the valuations that are almost as liberal as the American ones, the status of unicorn is a real possibility. Excitel also has a Bulgarian office which develops the software that the company uses in its retail business.
This article is part of an upcoming KInsights special report on the Bulgarian tech sector

*This article was written in December 2021. Since then, Payhawk raised additional 100 million dollars at 1 billion dollars valuation, making it the first Bulgarian unicorn. The main text of the article has not been changed for objectivity reasons.

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