Letter to the President of the Republic of Bulgaria Rumen Radev

TO

MR. RUMEN RADEV
PRESIDENT OF
THE REPUBLIC OF BULGARIA

CC

MR. ATANAS PEKANOV
DEPUTY PRIME MINISTER FOR MANAGEMENT OF EUROPEAN FUNDS

MR. KIRIL PETKOV
MINISTER OF ECONOMY
OF THE REPUBLIC OF BULGARIA

MR. ASEN VASILEV
MINISTER OF FINANCE
OF THE REPUBLIC OF BULGARIA

Subject: The National Recovery and Resilience Plan of the Republic of Bulgaria

DEAR MR. PRESIDENT,
DEAR MINISTERS,

Our organizations and the members we represent – leading small and medium-sized enterprises with strong local and international presence, innovative businesses, entrepreneurs, and investors – highly appreciate the efforts of the caretaker government in preparing the National Recovery and Resilience Plan of the Republic of Bulgaria and thank you for the opportunity to be part of the process through participation in discussions at the Ministry of Economy.

We all support financial instruments as a key mechanism for supporting and developing small and medium-sized enterprises (SMEs) in Bulgaria, as a proven successful model. Our members and the many companies they represent are themselves examples of this success. Based on our significant experience in financing and developing globally successful companies, we firmly believe that:

• Financial instruments are a proven and more effective tool for SMEs than grants, especially for innovative companies and those seeking rapid growth. SMEs themselves prefer this model due to its flexibility, transparency, lower bureaucracy, and more competitive evaluation of project proposals.
• The optimal model for structuring financial resources in support of SME and innovation-driven business development—particularly in the context of the Recovery and Resilience Plan—is the JEREMIE model. In this model, the European Investment Bank (EIB) plays an active role in building and managing financial instruments, ensuring transparency, expertise, and mobilizing significantly more private capital. The effectiveness of this model is demonstrated by its adoption in countries such as Romania, Greece, and Hungary, following Bulgaria’s example.
• In just three years since its launch, JEREMIE has supported 7,650 companies and 157,941 jobs; among them, 200 highly innovative startups have created over 3,000 high-paying jobs. Today, expectations are even higher given the maturity of the ecosystem: while previously 70–90% of a fund’s capital was public, in the new generation of funds public capital is expected to be (1) below 50% and (2) funds are significantly larger, resulting in more investment for Bulgarian companies and demonstrating a sustainable model.
• The overall results of all EIF instruments in Bulgaria are as follows:
• • €451 million in public funding has attracted €991 million in additional private capital;
  • 11,654 SMEs have received over €1.4 billion—more than threefold multiplication of public resources;
  • Recycled resources (>70% from the previous program) are expected to generate an additional €800 million in financing for 10,000 SMEs;
  • After full reinvestment, total financing is expected to reach €2.2 billion—nearly fivefold growth.
• Investors based in Bulgaria successfully attract additional international capital. For example, in 2020, GTMHub (from LAUNCHub’s portfolio) raised around €40 million from international investors—almost equal to the total capital invested by local funds that year.

It is clear that financial instruments provide substantial support to SMEs. Additionally, they are often preferred over grants, which also incur costs (e.g., consulting services). Without underestimating the role of grants, we firmly believe financial instruments should play a central role in the Recovery and Resilience Plan, as they effectively support innovation and global competitiveness.

Additional key points:

• Financial instruments reach more businesses:
  Over 11,500 SMEs have been supported through leveraged and recycled public funds—twice as many as grant-funded companies under previous operational programs.
• Focus on micro and innovative businesses:
  50.8% of supported companies are micro-enterprises (up to 9 employees), while only 9.6% have over 50 employees.
• Strong innovation and knowledge economy focus:
  Financial instruments support digitalization, green transition, and commercialization of research. Bulgaria still ranks among the lowest in the EU in innovation and digitalization, highlighting the need for continued support.
• European approach:
  The EU promotes blended financing (grants + financial instruments + private capital), aiming for at least 3x return on public funds, as seen in the European Innovation Council (EIC).
• Examples from Romania and Greece:
  Romania allocated €900 million and Greece up to €5 billion for financial instruments, while Bulgaria has allocated only about 5% of its plan.
• Bulgarian ecosystem success:
  The financial instruments model has built a strong entrepreneurial ecosystem in Bulgaria, creating jobs, innovation, and international recognition.

We express our readiness for a meeting to discuss the importance of financial instruments in the Recovery and Resilience Plan, in the presence of President Rumen Radev, Deputy Prime Minister Atanas Pekanov, Minister of Economy Kiril Petkov, and Minister of Finance Asen Vasilev.

06.07.2021

Sincerely,

Evgeni Angelov
Chairman, Bulgarian Private Equity and Venture Capital Association (BVCA)

Sasha Bezuhanova
Chairperson, MOVE.BG

Dobromir Ivanov
Chairman, Bulgarian Startup Association (BESCO)

Momchil Vasilev
Executive Director, Endeavor Bulgaria

Kremena Dervenkova
Executive Director, Association of Bulgarian Leaders and Entrepreneurs

Irina Altanova
Bulgarian Center of Women in Technology (BCWT)

Milena Stoycheva
Executive Director, Junior Achievement Bulgaria

Iliya Krastev
Chairman, AIBEST

Dimitar Dimitrov
Chairman, Biotechnology and Health Cluster Bulgaria

Maya Marinova
Executive Director, BASSCOM

Yordan Atanasov
Founder, Sofia Startup

Kristina Eskenazi
Board Member, AI Cluster Bulgaria

Valeri Valchev
Chairman, Bulgarian Fintech Association