Rosen Ivanov, managing partner at BlackPeak Capital, “In development”, 24.11.2022

Economies in the region continue to grow and capital is found for good companies and assets, but there will be a change in the definition and number of “good asset companies” and acquisitions will likely decrease. The funds are liquid and need to invest their capital, so despite the delay, a “financial winter” like in 2008 cannot be expected. Most of the problems in the region are due to known challenges such as lack of staff and political uncertainty, but already seen in some sectors such as e-commerce. Comment on that Rosen Ivanov, managing partner at BlackPeak Capital, on the air of the program “In development” with presenter Veronika Denisova.

“Bulgaria is basically in a very advantageous position to benefit from geostrategic changes – the return of supply chains from China, and because of the war in Ukraine, many investors are moving away from there and suffering in the region. The problem is that here we are losing competition with countries like Romania, Serbia and North Macedonia – and I lose out significantly and significantly. Political uncertainty is one reason, but also the US special investment legislation is absolutely morally antiquated and uncompetitive. who do not have much other competitive proposition than us, except that their laws are far more adequate.”

Even if there are proposals for legislative changes in this direction, at the moment there is fundamentally no parliament to discuss, political instability has turned into blocking the state, Ivanov said. The postponement of the recovery plan and entry into the Eurozone further has negative effects on investor sentiment.

Over the past ten years, the capitalization of startups in the region has increased fifty times, and in Western Europe – twelve times. For 2022, the total financing attracted by start-up companies in the region exceeds 1.3 billion. dollars, six times more than the funds raised in 2017.

These results are due both to very good participants in the ecosystem in Bulgaria and to a very good policy ten years ago, which started the first funds and gave Bulgaria an advantage over other countries in the region, said Ivanov.

“Several quite successful examples of entrepreneurs building world-class technology companies in Bulgaria are already giving courage to more people. There are media, conferences, events in the ecosystem and it has risen to another level.”

As much as there are positive results, the sector is very far from the levels in Western Europe, Ivanov said.

“The growth is high, but we’re starting from a very small base and a nascent ecosystem at all levels – and as we’re equity investing in startups, more advanced and very large companies – there’s an awful lot to grow.”

Funds will have to prove that they have a return and must avoid the admission of irregularities in order not to lose the confidence of investors; another direction to maintain the upward pace of the sector is to strengthen the advertising of the entire region, said Ivanov.

BlackPeak Capital’s second Southeast Europe Growth Equity Fund completed raising €126 million in funding in the summer.

“We are lucky that we closed it in time, because now the environment is much worse. The main priority is to invest as we are on Wednesday, which expects to be paid to the economies of the region. The expectations are for the reduction of company valuations, which has not yet happened, but we have a clear strategy and continue to actively seek deals.”

The goal is next year to include three to four deals, with three finalized so far and one more likely to close by the end of 2022, Ivanov said.

The fund invests in Bulgaria, Romania, Serbia, Croatia and Slovenia, each of which offers companies and sectors that are not as developed in the others and has different levels of competition. The fund relies on its strategy of acquiring minority stakes that go to entrepreneurs who see a lot of growth potential, and on its expertise in growing companies through acquisitions of competitors.

You can watch the whole conversation in the video.

All guests of the show “In progress” can announce here.