BESCO – The Bulgarian Startup Association published the results of a survey on the main problems which Bulgarian startups are currently facing and a list of measures for the economic rehabilitation of the industry. The analysis is based on the responses of 100 startups and/or innovative companies from 27 different industries with total annual revenue of 155 million leva. 

Main conclusions

• More than 42% of the companies are estimating as medium or high the risk of bankruptcy during the next 3 months, and 75% are expecting that they will go out of business within the next 6 months. 
• The reason is the lack of liquidity which is a problem for over half of the startups – 53%.
• 66% of the companies are forecasting a 40% drop in revenue, and the rest are expecting losses of between  40-60% of their monthly revenue.
• 63% are planning to lay off ¼ of their staff. The positions in marketing and advertising, as well as administrative activities will be most severely affected. 
• Losing local customers is a significant problem for 65% of startups, and losing international ones – for 54%.

Proposed measures 

One-third of the startups need a rescue capital of between 50 000 and 200 000 leva. Another 31% need between 20 000 and 50 000 leva to survive the crisis. The enterprises express a clear need for financing by the banks and the state and direct monetary easing through various financial instruments. 20% believe that the government should become a client of their products and services. As a potential step in this direction companies view changes in the public procurement and tender laws. Such refinement will allow startup and innovation companies to participate in public tenders of a smaller scale.   

Another proposed measure is to ease the heavy procedures through which the allocated money from the Fund of Funds reaches the financial intermediaries and through them – the end beneficiary, the startups. The funding provided by VC funds becoming a higher governmental priority is also among the proposed concrete instruments in support of the business. 

BESCO’s analysis is carried out in collaboration with Edit.bg – Economical Development Through Innovation and Technology, BVCA – the Bulgarian Venture Capital Association, Endeavor Bulgaria, ABLE – the Association of Bulgarian Leaders and Entrepreneurs and the Bulgarian Small and Medium Enterprises Promotion Agency with the Ministry of Economy. 

The results and proposals have been addressed to the Bulgarian government, the European institutions, and other related decision-making bodies that could take action in the development of adequate measures to overcome the economic challenges lying ahead. You can find the full text of the letter (in Bulgarian) here. 

The complete analysis is available in Bulgarian here, and in English – here.

In the middle of April, BESCO also announced a joint initiative with the Bulgarian Stock Exchange (BSB). It aims to support the startups offering products or services with a potential contribution in limiting the adverse effect of the COVID-19 pandemic. A specialized platform will promote their activities by directing attention to their specific projects. In the forthcoming days, these companies will receive help in seeking investments and new markets through the BSB network. You can see the first included companies on the site of the initiative fightCOVID19.