Our next interview leads us back to Bulgaria. After discussing the untapped potential of Eastern Europe with Max Gurvits, we dive even deeper into the Bulgarian ecosystem to see what the angel investment landscape looks like.

Here, Milen Ivanov - Co-founder and Chairman of CEO Angels Club and Managing Partner at Sofia Angels Ventures, and Elena Nikolova - Community Manager at CEO Angels Club, joined us to shed more light on this topic.

Milen is a serial entrepreneur that turned into an angel investor and a VC manager. He has been the director for Bulgaria at the pre-seed accelerator Founders Institute for five years. Currently, Milen is a Managing Partner at Sofia Angels Ventures - a seed-level co-investment fund backed by EIF that invests alongside angels, family offices, corporates, and other private investors throughout the EU.

Elena is leading the community efforts of the CEO Angels Club, having in her set of responsibilities to create new partnerships, grow the club, and bring better deals to the community's angel investors. She is also a strong supporter of female entrepreneurship through the FEB community and is actively involved in various startup initiatives.

An overview of the Bulgarian angel ecosystem

Milen and Elena helped us zoom in on the Bulgarian ecosystem and learn more about angel-driven investments. Through their two main initiatives, the CEO Angels Club and Sofia Angel Ventures, they clustered a community of more than 80 investors. Their estimate for the total number of angel investors active in Bulgaria is around +100 and constantly growing.

Angel investing has recently gained popularity because more entrepreneurs have had successful exits and become supporters of the next wave of founders.

Let’s explore each initiative in more depth:

CEO Angels Club is a group of senior executives and entrepreneurs focused on Bulgaria ready to invest their money in early-stage startups in return for equity.

The club looks for early-stage, highly scalable, and usually post-accelerator startups with the potential to break even or reach a clear, meaningful milestone (e.g., Seed or Series A Funding) within 12-24 months after only a one-time investment. This typically means startups with small teams (2 to 5 people) having serious domain expertise and a product that is either currently on the market or at least in beta.

Sofia Angels Ventures is a EUR 13 million investment venture capital fund backed by the European Investment Fund and set to co-invest on a deal-by-deal basis alongside private investors (angels, family offices, funds, and other private institutions).

The fund is focused on finding early-stage tech startups in which to invest EUR 200k – EUR 500k for the first round and up to EUR 1.0m for the follow-on ones.

Angel investments are also powered up by the +10 local venture capital funds that invest in startups found in the early or growth stages.

3x more people into angel investing

We can’t go on with presenting the angel investment landscape without looking first at the local, recent history. Milen tells us what it looked like when Bulgarians saw the first angels investing in startups and how it has changed until today:

“There are more and more people becoming interested in angel investing. If we compare the numbers from when we started six years ago and today, we see that interest has tripled.

However, there is also an important difference in the type of angel investors. Previously, they were high-net-worth individuals with significant amounts of money to invest in different assets.

Today that is not the case. Now they are mid-level professionals that have the means to invest and the desire to do it because they have seen what’s possible. Some of them are entrepreneurs that launched their own business and now have the power to invest.” says Milen Ivanov.

The current vibe of the local ecosystem

Bulgaria had its first unicorn this year, Payhawk, and the country's capital, Sofia, ranks 3rd in Europe when it comes to cost-effectiveness and foreign direct investments strategy. Alongside an active IT sector, Bulgaria has risen as a startup community in Central and Eastern Europe.

With the help of Milen and Elena, we want to feel the vibe of the local ecosystem and get the main highlights of it as foreign investors.

Bulgarian startups are gaining traction from international investors.

“Bulgaria is very well plugged into the international ecosystem.

Startups like Rush got the attention of international investors. Additionally, we have players from the United States, such as Cavalry Ventures, Y Combinator, Speedinvest, and Sequoia, who have invested in local startups, but those are just some of the significant names." says Elena Nikolova.

“We need more success stories to show to the younger entrepreneurs and those already in the process of growing their startups out there that there is hope and proof that anything is possible. You can have the next unicorn right in Bulgaria, not only in Silicon Valley.

Founders can follow the existing examples and learn from those who have already stepped on this path. I admire people who are ready to share their knowledge and can summarize important points to help others. This act of kindness helps us increase the quality of our startups over time.” says Milen Ivanov.

More stability rather than hype and small traction

“On top of this, the recession and the recent events led to lower valuations for the local startups. In one way or another, they are affected by the global economic and political situation.

We’ve seen international investors becoming more passive with their investment portfolios. However, so far, our community of angels in the CEO Angels Club is not necessarily more passive, but they are connected with what is happening and looking after the safety of their portfolio.” adds Elena Nikolova.

“A good thing this wave of lower valuations has brought is that we’ll no longer have unrealistic expectations. Investors have changed their perspective and are more interested in the stability of the startups they are funding rather than mere traction.

**The hype is going away hard but is also bringing a breath of fresh air.**” adds Milen Ivanov.

Missing resources for local founders and investors

We are not yet the Silicon Valley of Europe, but we are slowly making steady progress. However, the local community needs further help and resources to reach that point. Here are some of the resources Milen and Elena think would grow the ecosystem even more:

A need for more active investors

Being an active investor means more than just bringing money to the table. The investment process also guides founders through some of their most difficult moments, offering mentorship, coaching, and expertise to help them grow professionally and scale their startups.

Due to this, angel investors are more dedicated and involved in investment than venture capital funds.

_“The biggest difference between an angel investor and a venture capital fund is that angels are much more involved in the company's development. _

One example is when angels help founders find the right person for a specific role. Also, when Angel investors help founders with the expansion of the company to other markets. This is beneficial, especially when investors have knowledge in a specific industry or country and can contribute significantly, bringing in new clients or potential partners.

In specific cases, angel investors can help founders craft a better pitch or track the right KPIs for future fundraising rounds.

**You need a strong relationship between the angel and the startup to collaborate successfully.**” says Elena Nikolova.

Stronger collaboration and more co-investment deals

In the past years, Eastern Europe has just started making its first steps towards joining co-investment deals in other countries. The success stories of startups like UiPath or Payhawk have highlighted these opportunities that can be available in neighbouring countries. At the same time, the democratization of investments empowers retail investors to gather their courage and join other international deals alongside well-known investors and VCs.

“People need communities, groups, or networks that bring them together to talk and inspire each other.

When co-investing with other VC funds or angels, you are building a name out there. This way, you **become a more desirable partner in future deals.**” says Milen Ivanov.

“There is a new trend: angel investors are very attracted by cross-border investments.

Angels now have the opportunity to invest abroad in startups from all over the world; the new platforms enabling those processes create more opportunities.

As the only angel network in Bulgaria, we encourage this trend and work towards helping our angel investors community join more international deals. For example, we are members of BAE and EBAN.” adds Elena Nikolova.

“On top of this, we need more female angel investors.

Only 10% of the members in our Club are ladies; we are working to make startup investments more appealing to women and, thus, increase their number.

The most recent pan-European report indicates that in spite of ongoing efforts, the percentage of women in Europe within the angel investment asset class has been stagnant at about 10% over the last decade. Despite the demonstrated higher success rate of women-led startups, these still represent around 1% of the overall capital invested. Ladies are generally less represented in the venture capital and angel world, although the numbers are changing.

Female angels add a different point of view when deciding on whether to invest or not - they tend to pay more attention to details and not hustle up the due diligence process. On the contrary, they are much more conscious about the metrics, maybe because they are slightly more conservative.

**A strong collaboration between males and females in startup investments creates equilibrium.**” adds Elena Nikolova, Community Manager at CEO Angels Club

More educational resources for angel investors

Startup investments and venture capital is something you learn by doing. There are several courses, articles, and books available internationally, but not many of them are accessible to local investors.

Milen and Elena tell us that the local ecosystem needs more resources and how they prepare to help investors with this.

“There are a few articles and books translated into Bulgarian, including Angel: How to Invest in Technology Startups--Timeless Advice from an Angel Investor Who Turned $100,000 Into $100,000,000, that we translated ourselves. (you can find the Bulgarian version, translated by CEO Angels Club, here.)

However, there is still a need for new educational resources for angel investors - much more interactive and engaging.” says Milen Ivanov.

"The wisdom and knowledge come from experienced venture capital and angel investors with numerous successful exits in their careers. So, what better people to teach the ABCs of the industry?" adds Elena Nikolova.