According to Malcolm Gladwell, a tipping point is that special moment when a relatively insignificant event leads to a radical change in events. EIF believes that by launching the Acceleration and Seed Funds under the JEREMIE Initiative, the Bulgarian start-up ecosystem has already gone through such a stage.
What led us believe we are past the tipping point is the recent announcement by Earlybird Digital East Fund that it will invest in a “Series A” round in Flipps, one of the most promising start-ups funded by one of the Acceleration and Seed Fund – LAUNCHub with EUR 200k in December 2012. This is the first time a regional fund of such reputation and scale invests in Bulgarian start-up at such an early-stage. And what is more at valuation significantly higher than the money LAUNCHub invested just a year ago.
The activity under the Acceleration and Seed Funds launched in end 2012 through two funds – Eleven and LAUNCHub which apart from passionate and skilled teams encompassed partnerships with the biggest accelerators in the US and UK and secured the support of global leaders such as Google and Cisco.
A year and half later the progress is impressive, the change is stunning and the social perception of the instrument is massively positive from the student entrepreneurs all the way to the high-levels of Government of Bulgaria and the European Commission. So what are the results to date:
Over 100 innovative start-ups supported to date, which has placed Sofia as the top 3 hot spot for start-ups in Europe for 2013, only behind established start-up hubs such as London and Dublin but before cities like Berlin, Paris, Barcelona;
The Supported start-up businesses are all within the government’s priority sectors such as ICT, software and hardware, light engineering, healthcare and etc;
The establishment of start-ups and their development led directly to more than 300 high-paying jobs being created for the economy in just a year, comparable to a multi-million investment by a foreign direct investor;
- The total amount of follow-on invested capital by third-party investors in the projects supported by Eleven and LAUNCHub surpasses EUR 4m.
- Third-party investors include local professionals which have transformed into business angels to world-known accelerators such as Techstars, Y-Combinator, Plug&Play, American venture capitalists like Timothy Draper - Founder Draper Fisher Juvetson, and regional venture capital firm – Earlybird;
- Business Angel is no longer a mystery term for start-ups with more than 15 individuals committing approximately EUR 1m in multiple deals. The famous Bulgarian football player and ex-Man Utd team member, Dimitar Berbatov, has also invested a significant amount in one of the companies supported by Eleven;
City # startups
One could ask why EIF considers the Acceleration & Seed Funds to have contributed to the tipping point of the Bulgarian entrepreneurial ecosystem. It’s mostly because of the size of the instrument – EUR 21m which compared to the entire JEREMIE envelope EIF is managing in Bulgaria (EUR 349m) is insignificant, but also its viral effect – there is media buzz about the activity of the Funds or investees almost every week, and its stickiness factor – senior level management of global companies operating in Bulgaria have committed themselves to mentor some of the investees and have themselves become ambassadors of the Funds.