Bulgaria has long dreamed of being perceived as an innovative magnet for neighboring countries outside the European Union. It aspires to be the Silicon Valley of the Balkans. But while this is happening to some extent, and the IT sector is growing in importance, it is not thanks to the state, but in spite of it.
One of the few initiatives that has achieved at least partial success is the startup visa, which allows third-country entrepreneurs to reside in Bulgaria to set up their start-up company or relocate their business here. This provision was facilitated in the Law on Foreigners in the spring of 2021, but due to the lack of regulations, there are still no startup visas. They were due to appear by the end of 2021 (although they did not), but in their initial version they will have more restrictive stipulations than in any other European country.
Two different views on this topic explain the stalled progress. The Bulgarian Startup Association (BESCO), the organization that initiated the idea, wants Bulgaria to have a streamlined and affordable visa for entrepreneurs to bring life to the startup ecosystem. Their ambitious vision is for the country to position itself as a "sandbox" for experimentation. Their romanticism is countered by the "realism" of the Ministry of Economy (formerly under the leadership of current prime-minister Kiril Petkov) which relies on highly restrictive initial requirements for obtaining a visa to limit possible abuse. Given Brussels' s dissatisfaction with the programs for visas, or citizenship in exchange for investment programs implemented by a number of countries (Bulgaria included), this is understandable. And the idea is that once the mechanism has been tried and tested, requirements should be relaxed.
The real question, however, is whether these proposed requirements will kill off any interest in the visa and why an entrepreneur would prefer to come to Bulgaria - and not the Netherlands or Estonia, for example. In addition, many other details need to be ironed out at legislative level - but this requires a parliament that will work for more than two months. Thankfully, Bulgaria finally has that, after being without any real parliament for all of 2021.
Everybody wants a visa
"From the very beginning, when we created the startup association in 2017 and asked other companies and organizations what their problems were, startup visas often came up as an idea," says Dobromir Ivanov, chairman of BESCO. Visas are often confused with blue cards, which would make it much easier to hire staff from neighboring non-EU countries, another initiative of the startup ecosystem and IT companies.
So far, BESCO has worked with three economy ministers. Initially, the initiative was taken up by Emil Karanikolov in 2018, and at the end of the 44th National Assembly, with the help of his successor Lachezar Borisov, startup visas were regulated by the Law on Foreigners. In short, the law says that third-country entrepreneurs can obtain a D visa and reside in Bulgaria in order to develop an innovative business - but only in Bulgaria. From there, reporting is provided on an annual basis.
The problem is that in order for the law to work, an ordinance from the ministry is needed, which will also regulate the criteria for the visa in question. This job falls to the Ministry of Economy, previously in the hands of Kiril Petkov, now prime-minister. The ministry has a different vision from BESCO with regards to the requirements.
"We think about things in a simpler, entrepreneurial way," stresses Ivanov. "How can a company come to Bulgaria as easily as possible? The Ministry and Kiril Petkov think about how to avoid abuse, how to have control and how this whole thing should work. We have disagreements, but when we discuss them, we understand where they come from and what explains our differences," Ivanov added.
For example, according to the criteria proposed by the ministry, Bulgaria will look for entrepreneurs who already sell to Fortune 500 companies, have an investment of at least 50,000 euros or have a degree from one of the world's top 50 universities. The last requirement sounds a bit much, given that Bulgaria only has one university that ranks in the top 1000 (thousand) in the world. By comparison, Estonia has only one strict requirement for those wishing to establish a startup on its territory: to have 1920 euros for one year.
Of course, not every entrepreneur has to meet all these criteria. The final decision on whether or not to grant a visa will be made by a commission, which will include investors along with deputy ministers of economy and education. When the ordinance enters into force and a commission is selected to review applications, one application must be decided on within 14 days.
The battle with the administration (and parliament)
The criteria are not the only obstacle to creating a working startup visa. Ivan Vassilev, vice-president of BESCO, cites other problems for potential applicants, such as that all documents sent to the administration must be in Bulgarian. "Throughout Europe, English is used in visa applications. The exception is Spain, but there are 500 million people in the world who speak Spanish. Yet, in Bulgaria, you have to apply in Bulgarian."
"The irony is that there is a full consensus on our proposals and we joke that we have 240 deputies. But parliament only works for two months and nothing can be accepted, including allowing applications in English," Vassilev said in 2021. Now parliament seems to be at least somewhat stable and working.
Therefore, both representatives of the association conclude that neither the startup visa, nor any of the other initiatives of the startup association, can work until there is a viable National Assembly. Ivanov and Vassilev say that changing ministers is not a problem, because so far, all ministers and parliaments have agreed with their ideas. In short, they have broad support, but no time.
Of course, the most important question is to what extent there is interest in Bulgaria at all. According to Ivanov and Vassilev, there is. "Since the change to the law, we have been flooded with questions on LinkedIn and Facebook asking how to do it. Questions from Moldova, Ukraine, Russia, the Balkans, etc., without us advertising it," Ivanov adds.
When the startup visa in Bulgaria comes into operation, it is expected that there will also be a comprehensive campaign in tandem to attract entrepreneurs - just as Poland, for example, has been purposefully looking for qualified specialists from Ukraine over the past decade. At the same time, it will have to compete with better developed countries (and startup ecosystems), with lower startup visa requirements. Ideally, BESCO envisions that the visa program will bring 2,000 startups to the country within ten years.
"For us, this is a marathon. The Netherlands and Estonia are good examples, yes, but we are chasing the Bulgarian version, which will take the best practices and be done better. The Netherlands has a super visa, but it is great on other levels as well. "The people in charge of startup visas there are former entrepreneurs and investors, people who know what they are looking for. We hope that we will get there in the future, that this is a work in progress," Ivanov says.
Vassilev adds: "Bulgaria will have a very good startup visa. Just not right now."