With a total of €12 M invested in more than 115 start-up companies in Central and Eastern Europe, with many lessons learned and a renewed team, Eleven Bulgaria just announced its second venture capital fund: Eleven Founders Fund. They have already raised €6 M in firm commitments for pre-seed and seed investments.
Eleven Bulgaria is among the pioneers of the ’startup’ ecosystem in Bulgaria. It was established by the partners Daniel Tomov, Ivaylo Simov and Dilyan Dimitrov with funding provided by the European Investment Fund (EIF) under the JEREMIE program, with the goal to support ventures that frequently had no more than a 3-page business plan. Eleven’s first fund invested €12 M in startups through a total of 9 investment rounds.
Daniel Tomov and Ivaylo Simov were joined in late 2017 by Vassil Terziev, while Dilyan Dimitrov left the Fund. Terziev is a co-founder of software company Telerik (sold to Progress Software in 2014) and Telerik Academy, an in-house training center for prospective employees and would-be programmers. He had been an active investor and mentor for startup companies for several years. The current Eleven team of 6 will be the backbone of the second Eleven Fund, capitalizing on the lessons learned in the past 5 years.
Eleven Founders Fund (also known as Eleven 2.0) will follow a different model from its predecessor. After exploring the startup ecosystem in the region, the Fund’s partners concluded startup companies needed three things in order to succeed: an individual approach, a long mentoring program and sufficient financing for a longer period of development, which will be the main features of the new fund. Investee companies will again develop under one roof and will have access to additional services such as marketing and sales support, legal and strategic assistance. In addition, the time each start-up spends ‘under the wing’ of the Fund will not be limited. ‘It is best for entrepreneurs to stay with the incubator until they find the next institutional investor, with whom to continue their development’, states Vassil Terziev.
Eleven Founders Fund is expected to start operations with at least €6 M, raised entirely from private investors: technology entrepreneurs, managers of large companies from Bulgaria and the USA and successful entrepreneurs from the ‘traditional’ economy. A first closing is expected in March 2018 with the partners working to attract other individual and institutional investors for a second closing by the end of 2018. Among the major changes in the Fund’s strategy is the provision of sufficient development capital for 9 to 18 months of operation, instead of the smaller investment rounds every 3-6 months of the previous fund. This will allow entrepreneurs to focus more on developing their business rather than fundraising. Startup companies can pitch their business ideas to the Fund at any time, and the Fund intends to have an investment decision within one month of the first meeting with the entrepreneurs.
Investment Focus
The Eleven Bulgaria team will consider startup companies that use technology to drive improvements across industries. The Fund’s focus will be to become the first pre-seed or seed investor in startups with Business-to-Business products and services for companies that have already developed prototypes or validated their idea and are having negotiations with potential customers. Unlike the first Eleven Fund, the new one will now invest in fewer startups – between 6 and 8 per annum – and will be open to projects from Bulgaria as well as other countries in South-East Europe.
The target initial investment in a company will typically be around €100,000 against a 10-12% stake. With subsequent funding, the total investment in a company could reach €300,000. Eleven Founders Fund will not invest in new rounds of companies that have already been funded by the first Eleven Fund.
