Hristo Hristov is a versatile individual who has worn multiple hats throughout his career.

He has a diverse background as a serial entrepreneur, having played a pivotal role in advancing digital media in Bulgaria. In addition, he is also an active angel investor and a venture partner at Eleven Ventures.

Hristo also actively contributes to the startup ecosystem by mentoring early-stage companies and co-Chairman of Endeavor as part of the entrepreneurial network.

In this interview, we touch upon the following:

• Why and how to find your niche as an investor?
• Why is Hristo investing in B2C (business-to-consumer) companies?
• What is the best and the worst investment decision Hristo made?
• How he measures portfolio performance?
• Actionable pieces of advice for future angel investors.

Who is Hristo Hristov?

“I started my first digital company almost 20 years ago. I’ve always been excited about technology, and I still am.

My background primarily lies in digital media and e-commerce, explicitly focusing on B2C. One of the reasons I chose to pursue B2C businesses is because they tend to be more challenging for external companies to penetrate, providing an opportunity to build a competitive advantage.

B2B is more about global businesses.”

Nowadays, Hristo Hristov is the founder of HR Capital, a private equity company, and the CEO of Darik Radio. These roles highlight his leadership and management capabilities, showcasing his ability to excel in different industries.

“Comparatively, B2B (business-to-business) companies face a more global and competitive landscape, where rivals can lure away clients with better services, competitiveness, or discounts.”

Hristo is well-known for his deep understanding of value creation and ability to drive growth for startups. With a background in media, Hristo has a keen strategic mindset and a relentless drive to uncover hidden opportunities.

He believes in building sustainable business models and fostering long-term success. Hristo's expertise extends to various industries, especially technology, and consumer goods, where he has played a crucial role in shaping the trajectory of promising startups.

“For example, if a company wants to do TV advertising, we have the infrastructure to get the best deal on the market and help them optimize their campaigns.

Very similar if startups want to pursue social media, SEO, or online advertising. We have a range of partners we work with to support our portfolio of companies in achieving growth in this domain.”

His dedication to supporting entrepreneurs and passion for unlocking potential has made him a trusted partner in the startup ecosystem.

Investment as a Long-Time Strategy

“I think it’s the best time to invest in startups right now.

The market has little liquidity, and we have a new normality. The valuations that were skyrocketing one year ago are back to normal.”

We learn from Hirsto that the focus has shifted from competing against more aggressive venture capitalists to creating value and working on the businesses themselves.

Startups are now directing their attention toward solving problems that arise from the products they are building rather than solely focusing on fundraising. This shift has led to lower valuations, providing a favorable environment for new companies to emerge and raise capital.

The Good & The Unexpected — Hristo’s Investment Decisions

While it is difficult to predict the outcome of every investment, they all appear promising at the time of making them. However, not all of them turn out to be successful.

Let’s learn from Hristo which were the best decisions for its portfolio and which led him to learn a few lessons instead of generating ROI.

“The focus of our portfolio goes about 50% towards online groceries, and I am happy to watch it grow substantially. I decided to trust this sector in the days when it was a rough time to build a company.

With time, we could watch them get out of the troubled waters and stand up on a profitable path to growth. Our current results are not because we allocated 50% of the capital, but because the companies we invested in grew steadily.”

Now, if we look at the other side of the table, we find Hristo sharing an investment decision that brought him a few lessons learned. However, the story unfolded. Let’s find out how!

“In startup investments, unforeseen turnarounds sometimes take us by surprise. One example is our investment in advokatami.bg, an online legal service marketplace. We initially invested 60,000 EUR around five years ago, and despite ambitious expansion efforts and a significant cash burn, the company struggled to thrive.

However, a pleasant twist emerged when the founder, Stanimir, contacted us last year, expressing his intention to conduct a buyout. Quite unexpectedly, he offered to repay the full 60,000 Euro we had invested. This unexpected turn of events transformed our biggest failure into a success.

Not only did we recoup our initial investment, but the advokatami.bg continues to operate and generate revenue, adding an intriguing chapter to our investment journey.”

What is Missing in CEE?

In our region's context, two significant areas require attention and improvement: attracting international talent and increasing the availability of larger investment tickets.

“First, I don't think we're very good at attracting international talent. So I think more efforts can be made to attract global talent because international talent is going to Western Europe or the US. So it bypasses se Europe.

The other thing which needs to be added is larger rounds and tickets. We need five to 15 million euro tickets for startups and scale-ups. Right now, they are going somewhere else, outside our local ecosystem."

Common Mistakes Founders Still Make

While some founders still hold onto the memory of a booming market from a year or two ago, placing high valuations on their startups, others have yet to adjust their expectations and spending habits to the present reality.

“I still find founders who think we are in a booming market. They look at how the market was one-two years ago and use these numbers on their startups.

A big mistake because they don’t have a reality check.

At the same time, I see many startups spending money as if we were again two years ago. So, they are very aggressive and burning cash rapidly.

The next round of funding will not happen soon or at all. So, my advice will be to think wisely before consuming all of their power.”

Advice For Angel Investors

Hristo shares with us his perspective on angel investing and why he thinks the current market scenario is the best moment to invest right now.

“A calmer environment compared to the peak of the wave shows an opportune time to enter the market and explore the startup ecosystem.

With relatively lower valuations, it allows for a deeper understanding of the industry, its players, and the emerging trends, particularly in AI. It’s an ideal moment to identify promising teams and markets that align with one's beliefs and leverage the potential of AI.

However, do your due diligence and diversify your portfolio — You know, don’t put all your eggs in the same basket. — So, you’ll better understand the dynamics by watching multiple companies."

Resources mentioned in the discussion:

Connect with Hristo:

• Linkedin
• Twitter
• HR Capital

Others:

• HR Capital
• Darik.Radio
• advokatami.bg