Subject: Project selection procedure BG16RFOP002-2.073
“Support for micro and small enterprises to overcome the economic consequences of the COVID-19 pandemic”
Dear …,
On April 14, 2020, BESCO – the Bulgarian Startup Association published a report based on research into the impact of the crisis on startup and scaleup companies. The research shows:
Over 42% of companies report being at medium to high risk of bankruptcy within the next 3 months. This is expected to increase to 75% over the following 6 months if the economic situation does not improve.
The current crisis may lead to the disappearance of an entire economic segment that drives innovation, increases exports of high value-added goods and services, attracts capital and foreign investment, draws skilled labor, supports positive demographic trends, builds sustainable competitive advantages for the economy, and contributes to a positive national image.
66% of companies forecast a revenue decline of over 40% compared to previous months, and 63% plan layoffs of at least 25% of their workforce.
65% of companies identify loss of domestic clients as a major issue, 54% report loss of international clients, and 53% report lack of liquidity.
In essence, startup and scaleup companies are micro, small, and medium enterprises. These are companies developing high technologies, high value-added products and services, with strong growth potential and access to global markets.
However, they do not fall within the groups that can benefit from the currently proposed government measures for wage support or credit access. Therefore, potential support through OPIC is of particular importance to them.
We believe that the natural focus of the Operational Programme “Innovation and Competitiveness” is precisely high-tech and innovative companies. In many EU countries, startups were supported during the crisis through similar targeted mechanisms. We believe this program is the logical support startups expect and need.
At the same time, the currently proposed procedure for supporting SMEs completely excludes companies developing high technologies and innovations. We believe this is not due to a lack of interest from the government, but rather due to the expectation of other targeted measures.
We consider it extremely important that this procedure supports SMEs developing high value-added products and services. To achieve this, we propose the following:
This automatically excludes all early-stage startups founded in 2019—many of which have high growth potential but currently face a high risk of closure.
We propose changing the requirement to include companies registered before 01.01.2020, while still maintaining safeguards against abuse.
Startups often focus on R&D and reinvest all revenues, meaning they lack assets and savings.
We propose revising the criterion to include “economic and/or research and development activity.”
Many startups have no prior revenues due to their development stage.
This requirement is also unsuitable for fast-growing companies that only recently began generating sales.
We propose supporting fewer companies but with higher funding, focusing on high value-added businesses that can drive economic recovery.
Increasing the maximum funding amount will reduce the number of beneficiaries but provide more meaningful support.
We also express concern that the deadline of May 31, 2020 is insufficient for processing 17,000 applications and propose extending it to June 30, 2020.
Bulgaria has built a strong innovation ecosystem over the past decade. Organizations such as BESCO, Endeavor, BVCA, VC funds, accelerators, Start it Smart, MOVE.BG (Edit.bg), and ABLE should be involved in identifying eligible companies.
Experience shows that funds are more effectively distributed through intermediaries such as banks, which have the administrative capacity to process large volumes of applications.
We remain available for dialogue on these proposals and hope that innovative startups will be able to benefit from this support mechanism for micro and small enterprises in overcoming the economic consequences of the COVID-19 pandemic.
Sincerely,
The BESCO Team
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