Mapping the Ecosystem of Entrepreneurship Supporters in Bulgaria

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GLOBAL EXCHANGE AND TRAINING FOR YOUTH EMPLOYMENT SERVICES 2

National report-Bulgaria 21.01.2021 Project number: 618649-EPP-1-2020-1-MK-EPPKA2-CBY-ACPALA This project has been funded with support from the European Commission.

This publication [communication] reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein.

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INTRODUCTION Entrepreneurship is described as the ability and desire to develop, organize and manage a business venture, taking all risks in order to achieve profit. The most common example of entrepreneurship is starting a new business. Entrepreneurship is characterized by innovation and risk-taking and is an essential part of a nation's ability to thrive in an ever-changing and highly competitive global marketplace. The entrepreneurial ecosystem includes a wide range of "stakeholders" who are part of the environment for the development of entrepreneurs' ideas and their quantity and quality determine its maturity. The path from a business idea to a start-up company, to a successful service or product, is quite difficult and depends on many factors, including a good business plan, access to start-up capital, office rental opportunities and use of infrastructure by providers of essential services, administrative barriers / facilities, the existence of a "base" with good examples, community. Everything matters.

ENTREPRENEURSHIP IN BULGARIA- COUNTRY REPORT A culture of support for entrepreneurship is already beginning to be built in Bulgaria.

However, there is no risk-taking attitude. The Bulgarian entrepreneur is open to innovation.

Starting a business in Bulgaria is much easier compared to many other countries, where the price is much higher at the beginning or later. In recent years, the local entrepreneurial ecosystem has begun to be dynamic in Bulgaria, as appropriate policies and initiatives to stimulate and develop its individual components would lead to the necessary stability so as to achieve growth and internationalization, and hence a clear impact on the economy. The level of entrepreneurship for 2018/2019 in our country is growing. The percentage of Bulgarians who decide and start their own business is 6%, the highest level since 2015. There are more male entrepreneurs than women in Bulgaria. Education is inextricably linked to the entrepreneurial intentions and vitality of the entrepreneurial ecosystem, as it affects the confidence of entrepreneurs that they have the necessary skills and knowledge to start a business. Government policies and initiatives can create favorable conditions for entrepreneurship. There are deficits in policies to support entrepreneurial ecosystems.

1. Government policies and initiatives The business community does not recognize government initiatives to promote entrepreneurship. The reason is that they are missing. And if there are any, they are related to corruption schemes. The dominant understanding is that funded companies are "not accidental." Therefore, the support of the government in the form of direct financing of entrepreneurship is implemented through operational programs as part of the strategic development of Bulgaria for higher competitiveness and innovation. But this is not enough, as these are additional tools, not basic ones. Government policies to promote entrepreneurship and reduce the administrative burden on business are reflected in several strategic documents. The Entrepreneurship 2020 - Bulgaria Action Plan introduces specific measures to strengthen the entrepreneurial culture and development of a new generation of entrepreneurs by promoting entrepreneurship, entrepreneurship among women and young people under the age of 29, the exchange of experience between different generations of

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entrepreneurs, support for employment, introduction and updating of entrepreneurship programs in schools, vocational education and universities. In accordance with the initiative of the European Commission "Small Business Act" in Bulgaria has developed a National Strategy for SME Promotion 2014-2020, which presents European views on: improving the business environment; providing a second chance in declaring bankruptcy; the priority attention to the smallest enterprises; the actions of the public administration related to the needs of SMEs; building skills and promoting all forms of innovation; facilitating access to finance, etc. Carrying out research and innovation by raising private investment is the basis of the Innovation Strategy for Smart Specialization 2014-2020. It is expected that by 2030 the digital transformation of Bulgarian industry will be achieved by creating conditions for modernization, automation and competitive positioning of the economy ("Industry 4.0" concept).

2. Education and training programmes More and more seminars and lectures are being organized to inform young start-ups. The focus is on creating a business support network, attracting talent and investment, developing a selection program, mentoring and accelerating entrepreneurs with great potential, providing access to mentors, networks and strategic advice. Among the organizations whose activities are related to the promotion of entrepreneurship and the development of the entrepreneurial network and the environment in Bulgaria are Endeavor Bulgaria, Innovation Starter, the Association of Bulgarian Leaders and Entrepreneurs (ABLE), the Bulgarian Venture Capital Association (BVCA), ICT Cluster “, Startup Grind, the Bulgarian Center for Entrepreneurship (BEC), Karoll Knowledge and others.

There are many initiatives and programs for entrepreneurship education in secondary education. They are provided by Junior Achievement, Innovation Starter and others. It is noteworthy that the concentration is again in the capital, and in the rest of the country they are missing or partial. Also, many NGOs that receive funding from various programs support the sector through the implementation of projects, initiatives and activities for the development of entrepreneurship and youth activities. Unfortunately, there is no single register to monitor this information.

There are enough universities and other educational institutions in the country that offer training programs for future and start-up entrepreneurs. Another issue is the relationship between the quantity and quality of education. Theoretical training is important, but does not contribute to the realization of start-up entrepreneurs, as entrepreneurship is a skill and is learned through work, not through theory. It would be good to introduce training of entrepreneurs in soft skills such as communication, teamwork, presentation skills and others in universities.

3. Infrastructure The first Bulgarian science and technology park Sofia Tech Park is a relatively new initiative of the Bulgarian government to create a unique and innovative environment. It is designed as an incubator aimed at implementing projects to promote the development of research and

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innovation, providing services to support the commercialization of new technologies, products and services, support for start-ups and innovative ideas. It still fails to impose itself and develop to justify its goals.

Despite the efforts and funding under various programs, pre-accession and operational, Bulgaria has almost no functioning business incubator. In recent years, the number of co/shared working spaces has increased. They reach over 30, of which 80% in Sofia. Such are for example the exchange and mentoring networks for entrepreneurs betahaus, Soho, Puzl coworking, shared work camp Cosmos, House of NGO, CoShare HIVE, 1Hub, Malkite5, Startup center, Startup factory, kosher, bizlab, limacon, Sbar.

4. Funding 4.1 National programmes and funding instruments However, there is a lack of vision and a consistent government policy to promote the entrepreneurial and innovation activities of SMEs. There is only one national fund to support companies, which is extremely insufficient. The government relies solely on European funds.

The improved administrative capacity of central and local administrations in working with European programs and in providing business services in recent years is an indisputable fact.

However, there is still an underestimation of entrepreneurship as a factor for economic prosperity due to lack of vision of the importance of entrepreneurship and innovation for the economic development of our country; lack of a unified national policy; lack of analysis and plan for development of innovations and innovative SMEs; lack of sufficient national and local measures, policies and actions to support the innovative activity of SMEs; lack of information and predictability regarding upcoming competitions and project sessions; lack of transparency in the procedures for evaluation and selection of project proposals and monitoring and control of projects. The analysis of the launch and functioning of the Fund of Funds includes the following conclusions: the process started with a long delay for one reason or another; the lack of administrative capacity and human resources for the creation and management of such a fund became clear; the set goals will not be met; the effect of supporting SME innovation policy will be minimal; the process did not go without scandals; lack of transparency and extensive information about the work of the fund. Under some of the other operational programs, measures have been developed and launched that directly or indirectly finance entrepreneurship and the development and implementation of innovations by SMEs. During the previous programming period, the risky investment funds LaunchHub and Eleven Venture, created with European funding, gave impetus to the Bulgarian entrepreneurial ecosystem. Eleven is ranked third among Europe's top 10 start-up funds. Other investors that have been created and registered are BlackPeak Capital, Empower Capital, PostScriptum, Neveq, Rosslyn Capital and Unicredit Bulbank. Two organizations of business angels stand out in Bulgaria - the Bulgarian Association of Business Angels ("Bulgaria Angels"), which was announced by the World Business Forum of Angels as the most promising network of this type of organizations in Southeast Europe and CEO Club Angels, providing expertise , contacts and mentoring to increase the value and investment in companies mainly in the post-acceleration stage of development. However, there is no subsequent publicity

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about the development and success of investments in selected projects. There is unofficial information that many of them simply closed after spending the initial funds and not for their intended purpose.

4.2 European commission The main framework program for research and innovation in the period 2014-2020 was Horizon 2020. Of all the programs, the most targeted tool for stimulating innovative SMEs was the SME Instrument, which was renamed the EIC Accelerator. In addition, more than a dozen programs were dedicated to supporting entrepreneurship, but they were not fully used. This is due to a number of weaknesses in the system and mechanism for applying and allocating funds - the lack of sufficient information, the availability of a large number and extremely complex application procedures, the requirement for co-financing and others.

There is a lack of qualified staff with knowledge and experience in project development and many entrepreneurs react with distrust to the possibility of receiving such funds. Nearly 20% of European funding for Bulgaria is allocated to small and medium enterprises.

5. Good practices There is a lack of knowledge and information about successful local entrepreneurial initiatives worthy of imitation. Some of the most recognizable companies are: Telerik (Progress), Walltopia, Imperia, Flipps (Bianor), Kanbanize, ChaosGroup, Enhancv, Melissa. "Betahaus", "eBag", "Roobars". "Melon", "Bee Smart Tecnologies", "Viscom", "Fight", "FinAnalytica", "Centaur", "Tuk-tam". Successful examples of start-ups in our country are constantly appearing in the public space, such as "Printivo", "Dronamics", "TaxiMe", "EnduroSat", "iCard", "Listen Up", "Prospecto Group", "Elvis. bg "," dWood "," Escreo "," Clusterize "," Playground Energy "," GoMama "and many others.

According to a study by Richard Madison, published in Forbes, in 2015 Sofia is among the ten best places in the world to create a startup mainly due to good coverage and high internet speed, relatively low costs of setting up a company and business activities, availability and the functioning of investment funds. Sofia Municipality is one of the few that create and develop their own tools in support of start-ups such as the Guarantee Fund and Innovations Sofia!

The author of the report is Mrs. Lena Karnalova- a sociologist by profession and a youth worker by vocation. She has been working for many years as a coordinator of youth programs and projects, as well as a free lance expert and trainer. The editor of the report is Gancho Kolaksazov- CEO of the ITTI. Please, find attached the desk research here!

Date: 21. 01. 2021 Place: Plovdiv, Bulgaria