Theodor Radonov, Head of the Bulgarian Office of the EIB Group:

In Europe, the lack of private capital is a problem, but in Bulgaria it is a dramatic problem. There is almost no private capital here. This opinion was expressed by Theodore Radonov, head of the Bulgarian office of the European Investment Bank (EIB) group, during the Economic.bg ALL IN business forum, organized in partnership with the EIB and BRAIT.

If we look at the banks, they - in an idealistic scenario - need to shift their focus quite seriously from mortgage lending to stimulating other types of investment - innovative, green," said Teodor Randonov.

He clarified that he does not mean that banks should finance start-ups, because there are enough venture funds in Bulgaria for that, but rather pure investment diversification.

The second major aspect, according to Randonov, is pension funds.

Bulgaria is the only country in the European Union (EU) where pension funds do not invest in venture capital funds; the regulations are written in such a way as to prevent them from doing so. Over the past 10 years, there have been discussions about changes to the law to allow them to clearly and explicitly invest part of their resources in such long-term capital investments, but the law has not yet been passed," the expert commented.

He also gave a brief summary of the EIB Group's investment activities in Bulgaria. "Over the past 12 years, we have created 13 venture capital projects in Bulgaria," said Radonov.

Radonov also mentioned another EIB instrument – the so-called venture debt product (editor's note: loan financing for companies with the option of deferred payment in installments).

This product targets innovative companies, businesses that have reached a certain level of development and are looking for further growth. Our minimum investment is €10 million, and we look at the capital structure to ensure that at least as much capital has been raised at the moment so that we do not end up as the main investors," explained Teodor Radonov.

He warned that "the filter is quite serious" and out of 2,000 applications per year, only 2% are approved. As far as Bulgaria is concerned, a maximum of two Bulgarian companies apply for such funding per year. Over the past 10 years, there have been three. "The process is not easy, it takes at least nine months, but there is no other provider of this type of instrument in Europe," said the EIB representative, warning that resources are limited.

There needs to be a financial culture within the companies themselves to seek this type of investment," Radonov concluded.

Translated with DeepL.