There is a good chance that you have never been to this small European country. Bulgaria joined the European Union in 2007 and since then has become a magnet for tech startups.
At the begining the main drivers were the much lower wages, if compared to the other EU countries and the US, and the plenty of qualified IT specialists. There are 16+ universities offering various IT majors. On top of that, the education is subsidized and the fees are low (EUR 200 per semester on average). Many of the graduates are trained by SAP Labs, HP, IBM, etc.
Add to that a flat 10% tax rate on both corporate and personal income, and you already have a good climate for starting a new tech business. It took some ten years for the startup community to develop but now there are regular conferences and networking events. Most Angel Investors and VCs provide seed and ‘’A’’ series funding to both local and foreign entrepreneurs.
Sounds attractive? Prior to packing your luggage, I will outline below both the pros and cons of founding your tech startup in Bulgaria:
- The country is in the EU, so if your startup is founded there you might have a chance to apply to one of the many EU funded programs providing grants to small and medium businesses;
- Currently, Bulgarian Internet speed is one of the fastest in the world. However, the access to the highest speed possible depends on several factors - location, coverage etc. Fiber-optic cable connecting and ADSL connections are the most popular choices for Bulgarians when it comes to Internet access. The prices of ADSL and fiber-optic cable connections differ slightly, starting at approximately 6.5-8 euros for a 12-15Mbps connection and not exceeding 30-35 euro) for a 100Mbps connection. It is becoming rather usual for installation to be free of charge. Also, a customer may be given a free Wi-Fi router if they agree to sign a contract for a certain period (usually 1 or 2 years). In most big cities the number of Wi-Fi hotspots is growing and it is cheaper and more convenient to go to an Internet club/cafe rather than to use a pre-paid dial-up card (which can also be hard to find, since there is very little demand for it);
- The operating costs, including rent, co-working space, utilities, are among the lowest in EU. You may pay EUR 350 for co-working space for 5 team members per month on average, the use of office equipment and utilities included;
- Lower employment costs if compared to EU and the US;
- Low taxes – 10% flat on both corporate and personal income
- Supportive startup community and regular fund raising events. Most of the local investors have good connections with investors in Europe and the US and may refer you for ‘’B’’, “C’’, etc. funding rounds;
- The living expenses are low (EUR 250 on average for a furnished one bedroom flat in Sofia) and so are the travel and entertainment costs. Several low cost airlines have regular flights connecting Sofia with the major European airports;
- The medical services are generally good and you may expect to pay EUR 15 on average for a medical exam
- Nice climate and plenty of ski and seaside resorts
- The business activities of your tech startup will be governed by the local legislation. Most of your foreign clients and suppliers might insist that the applicable low governing the relationship with them is the law of the country they are domiciled in, e.g.US, UK, Hong-Kong, etc. In some cases this may result in double legal advisory fees as you may want certain high value agreements to be reviewed by legal advisors having expertise in the respective law;
- Sometimes you may have to compete for talent as there are already many startups, unicorns- the on-line payments provider Skrill keeps its operations in Bulgaria, and multinationals – SAP Labs, HP, IBM to name a few;
- Most VCs and Angel Investors will require your team to be based in Bulgaria, although in some cases it might be acceptable that you manage a remote team elsewhere in the world;
- The infrastructure is generally good but not to be compared to London or Berlin;
- It is far from Asia and the US