Japanese companies are showing up in Bulgaria’s IT and startup sectors

More and more Japanese companies are beginning to see the potential of the Bulgarian IT and startup markets. H.E. Marieta Arabadjieva, Ambassador of Bulgaria to Japan, made this observation during a conference dedicated to the business and tech investment opportunities between the two countries.

A growing number of Japanese companies have already recognized Bulgaria's advantages in the field of startups and IT and are opening offices and R&D centers in the country," said H.E. Arabadjieva at the beginning of the event.

She also presented data on Bulgaria's rapidly developing technology sector.

Bulgaria is third in the world in terms of IT specialists per capita, and IT and BPO (outsourcing) have been the fastest growing sectors in the last 10 years with an average annual growth of 19%," added the ambassador.

She explained that Bulgaria is unrivalled in Europe as a destination for support offices, IT services, and call centers.

As an example, she gave the Japanese video game company SEGA which started an office in Bulgaria with about 58 employees in 2017, while currently they have almost 280.

The diplomat also touched on the topic of startups in Bulgaria, pointing out that there are currently over 1,400 active startup companies in the country.

They contribute to an already dynamic technological environment," commented Arabadjieva.

Of these 1,400 startups, 490 have received funding from various funds.

Possible workforce

It turns out that not only Bulgarian students who have won international computer science and mathematics competitions can be possible employees for Japanese companies.

In fact, Bulgaria has the highest number of students studying Japanese per capita in Europe. “This is an important asset for Japanese companies looking to open offices in Bulgaria,” believes Arabadzhieva.

Bulgaria is extremely friendly towards Japan. For us, it is of strategic importance," the ambassador pointed out, adding that she would like to see "deeper and broader cooperation in the field of innovation and IT."

A young ecosystem

During the event, several experts touched on the topic of venture capital (VC) and investment opportunities in startups.

Kamen Bankovski, Managing Director at the Sreda Foundation and an investor, commented that Southeast Europe has "outpaced" most other subregions of Europe in terms of growth in the last 5-6 years.

It has developed a very large local VC ecosystem," Bankovski said.

According to him, there are funds that provide both initial capital and capital for subsequent stages of startup development.

According to Angel Angelov, managing partner at Innovation Capital, the VC and entrepreneurial ecosystem in Europe is relatively young, including that in Bulgaria.

With the exception of Great Britain, Germany and France, most European countries only began recognizing startups and riskier businesses no more than 20 years ago," Angelov said.

According to him, there are currently 20 venture capital funds in Bulgaria, or 20 active investors, "which is a very good number, investments per capita are very high”.

The great potential here is to create a larger ecosystem. We are less than 7 million people (population), and this is a small market," the expert said.

Kamen Shoylev, managing partner at the New Balkan Law Office, said that Bulgaria has advantages that foreign investors can take into account.

Bulgaria has corporate structures, such as limited liability companies, that require little capital to set up," he pointed out.

As another plus, he cited the low corporate tax rate of 10%, which has remained unchanged for over 10 years.

Translated by Tzvetozar Vincent Iolov