FinTechs Attract 20% of All VC Money in Bulgaria

Bulgarian FinTech firms have attracted nearly $6 million in investment this year.

In fact, while the country’s FinTech industry may be young, with each passing year its contribution to the economy grows.

For example, investments in Bulgarian FinTech companies have grown from BGN 1.3 million to almost BGN 11 million ($5.9 million) in the space of five years, according to an annual report published by FinTech Bulgaria — a nonprofit organization made up of top FinTech companies in the country.

And with an average growth rate among its FinTechs of 188% per year, a fifth of all venture capital (VC) investments in the country have gone to FinTech startups operating in Bulgaria as of 2021.

What’s more, that doesn’t even count the $100 million Series B extension raised by Fintech firm Payhawk in March of this year to become Bulgaria’s first unicorn. Founded in 2018, the financial management platform for businesses has since outgrown its Sofia office and is now headquartered in London.

In an interview with PYMNTS, Hristo Borisov, the company’s co-founder and CEO, explained that the company’s success was connected to a growing demand for FinTech solutions for corporate spend management, which he called a “big trend.”

He said, that demand is especially fueled by small and medium-sized businesses (SMBs), adding that, “This is where we see much bigger pain points needing solutions like Payhawk,” he said.

Interestingly, Payhawk is not the only Bulgarian FinTech tapping the business-to-business (B2B) market. In fact, in a survey of companies in the industry, FinTech Bulgaria found that 71% operated in the B2B space, indicating a potential opportunity for more consumer-oriented startups.

Considering its relative immaturity then, Bulgaria’s FinTech ecosystem still has plenty of room for growth. Of the 156 FinTechs recorded in the report, 82% were SMBs, a sign of a young but promising sector.

Thankfully for the rising FinTech scene in Bulgaria, many of the foundations of success have already been laid.

For example, when it comes to the use of non-cash payment methods, although the Balkan nation lags behind many of its European peers, that’s not through the lack of a well-established digital infrastructure.

In Mastercard’s Digital Payment Index, the country scores 69 out of 100 points for infrastructure but just 44 for usage, reflecting a lingering reliance on cash. In fact, 41% of survey respondents who get paid into their bank account withdraw half in cash while 45% of Bulgarian consumers do not receive their full salary digitally.

The discrepancy between effective infrastructure and low adoption of non-cash payments points to a truism that can be observed in many European markets—the availability of digital payment solutions is not in and of itself enough to drive adoption. Consumers need to be both familiarized and incentivized to transition away from cash.

Cultivating the Industry

One of the government-enabled initiatives helping to foster FinTech innovation and support the culture of entrepreneurialism in Bulgaria is the startup visa, which aims to attract founders to make the country their new home.

Learn more: 5 EMEA Destinations Targeting Digital Nomads

Much like other destinations in Europe have launched digital nomad visas, these business visas are specifically targeted at global citizens with the most to contribute to the economy.

They also enable the fast-tracking of long-term residence for non-EU entrepreneurs, helping to boost the economy and create job opportunities.

What’s more, FinTech jobs are some of the highest paid in Bulgaria. According to the Annual FinTech Survey 2022, the average gross monthly salary in the sector is BGN 3,248 ($1,763), more than twice the whole-country average in 2021.


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