Two new venture capital funds for early-stage and growth capital are launching this fall in Bulgaria. The funds are established with the participation of EU funding delivered through the state-run Fund of Funds. This is expected to put together about €60 M available for investments in start-ups by the end of 2018 with more participations expected in early 2019. In addition, a third venture capital fund manager targeting startups with a resource of €24 M is scheduled to be selected by the end of the year.
The two fund managers, which are expected to start operations this fall, are AD – Ventures and Next Tech Ventures. They have €14 M and €19.1 M of EU capital for equity and quasi-equity investments, respectively. The managers will need to add their own resources to the EU funds provided, plus additional capital attracted from private investors. The equity tickets these two funds can invest in companies are in the range between €25,000 and €1 M and are expected to reach about 200 companies. The investment horizon is 5 years, after which another 5 years are projected for exiting the shareholdings.
The team behind Next Tech Ventures is well-known in the startup ecosystem – these are partners from NEVEQ, an operational VC investor. The team includes Konstantin Petrov, Zlatolina Mukova, Yordan Zarev and Alexander Terziiski. All have a strong track record of investing in innovative companies through two funds – the first one featuring private capital and the second one funded mainly with EU funds. In the offer that secured them €19.1 M, the team proposed to add €1.2M of own funds and attract another €7M of private capital from co-investors. Next Tech Ventures also presented a pipeline of 45 startups in which they could potentially invest. The Fund committed to a 6% return on invested funds and is looking for 17.76% annual management fee. Next Tech Ventures will fund early stage situations and will have to invest in at least 6 companies a year.
The other new fund manager, which receives €14 M of public funds, is the Bulgarian-Italian joint venture AD – Ventures. Its leading partner is “Cleantech Bulgaria” – a company of Lyubomir Peynovski and Mariana Hamanova-Rondini. The Italian involvement in the project is coming from Meta Ventures of Francesca Natalie and Anna Amaty. AD – Ventures envisages attracting €446,000 of own resources and another €1.87 M from private investors. A pipeline of 215 companies is proposed, and the expected rate of return is 5.01%. The fund manager has requested a 19.99% annual management fee, which is close to the maximum allowed. The Fund is requested to invest growth capital in 25 start-ups and seed capital in 3 start-ups annually.