It was over 19 centuries ago when Seneca wrote that “Fortune is of sluggish growth, but ruin is rapid.” After long observations of nature, human society, and civilizations, the Roman Stoic Philosopher concluded that things grow gradually but collapse suddenly. Alternatively, when they start going bad, they go bad rapidly. The last became known as the “Seneca cliff.”
Startups know this effect all too well. After years of gradual growth, they can find themselves standing at the cliff's edge, watching others slip down - a reminder of the consequences of unchecked growth and the importance of sustainability and long-term thinking.
According to Seneca, after the collapse of a system, a new one emerges to replace it at a rate faster than the preceding one since it is walking a trodden path with most of the constraints already brought down by the previous system. It is often the same in business - MySpace and Facebook, Napster and Spotify, Friendster and LinkedIn.
To avoid finding themselves standing at the edge of the Seneca cliff, startups have one priority focus - learn from the experience of others. This is even more important in a market as small yet dynamic as the Bulgarian one.
To help you on your journey, we curated the top reasons why Bulgarian startups fail. But we didn’t just stop there. In a bid to enrich our insights and give you even more value, we also asked Vesko Kolev, Founder & CEO of Icananpreneur, to share his team’s know-how. Founded in 2021, Icanpreneur is the first Accelerator-as-a-Software that streamlines the entrepreneurial journey for everyone wanting to start their own company and shape more successful entrepreneurs.
3 top reasons why Bulgarian startups fail
“The most common challenges faced by Bulgarian startups are very similar to those encountered by entrepreneurs worldwide. The journey from idea to product-market fit is often chaotic, as entrepreneurship is primarily guided by gut feelings and luck. As a result, 9 out of 10 startups fail,” explains Vesko.
Asked how to avoid this, he highlighted the importance of prioritizing a structured approach to entrepreneurship based on the proven theories and methodologies from the past 20-30 years.
“This know-how is scattered across books, courses, blogs, and videos, and even when successfully gathered, such static guidance is hard to follow. Being disciplined and systematic requires rhythm—something even the most comprehensive playbook cannot provide,” he explains.
It is also worth noting that while both idiosyncratic and systemic factors can contribute to the failure of a startup, it is rarely a result of just a single one. More often than not, it is a combination of events. And while some may be beyond your control, most can be avoided through careful planning, including:
Financial mismanagement
Bulgaria’s healthy startup environment is widely recognized around the world. According to the Global Startup Ecosystem Index Report 2024 ranking of the winners of the global innovation economy, our country is the 37th best in the world, while Sofia’s startup ecosystem ranks 117th out of 1,000.
The favorable business environment, competitive taxation policy, and top tech talent have put Bulgaria on the radar of American and West European venture capitals (VCs). While still far from the levels of investment activity in more mature EU markets, according to the report, the average investment annual growth rate (CAGR) over the period 2020 - 2023 in the country was approximately 64.47%. In 2023 alone, Bulgarian startups raised EUR 170 million in venture capital funding.
In addition, they have been relying on public financial support packages under the Recovery and Resilience Plan to help tame the impact of the Covid crisis.
In that sense, the lack of funding is not a major stumbling block for startups. The opposite is true: capital is there for the taking, especially at the start of the new funding mandate. By 2030, VC funds will distribute over 1.5 billion BGN of public funds for company equity investments - a record-high amount in the history of our country. A big part of it will go to startups, with Eleven Ventures, Bulgaria’s leading early-stage venture capital fund, and a Campus X member, playing a significant part in the allocation process.
However, the more important thing is what companies do with all the available funding. For example, while the era of ballooned valuations and easy access to capital has made many startups increasingly dependent on continued cash injections to sustain their growth, the situation is changing.
Today, funds and investors require accountability and insist that startups demonstrate resilience and sustainable, long-term planning so that their money is well spent and not lost due to adverse circumstances like shifting market dynamics, overly aggressive expansion, or worsened macroeconomic outlook, to name a few. As a result, there is a growing emphasis on startups learning to do more with less money and following more sustainable business models.
A talent conundrum
The IT and tech industry is the beating heart of Bulgaria’s startup ecosystem and the primary reason why Sofia is on the map of the best places for doing business today.
Yet, ask around, and you will see that, despite the significant number of software professionals in our country, Bulgarian tech startups can often find it hard to attract the right talent to help them address their growing pains. According to Dobroslav Dimitrov, Chairman of the Bulgarian Association of Software Companies, while not as big as before, the talent shortage in the IT industry continues to be a thing, reaching up to 50% or 100%.
However, even these figures pale compared to the challenging mission of finding world-class, experienced business, marketing, and sales professionals. While the data to back this is scarce, and you are free to take it with a grain of salt, we have noticed this trend from our constant communication with Bulgaria’s top startups. As most of them have learned the hard way - even the best product or service is doomed to fail if it can’t reach enough people.
For Bulgarian startups, this is proving to be a real struggle since 85% of the revenue of local tech companies is generated from exports. And to fight the competition on a global level, one needs top personnel in both the tech and business directions.
Over the years, Campus X has helped many of its members bridge the talent gap. For example, we have a strategic partnership with Telerik Academy, Bulgaria’s leading programming and digital training provider. Moreover, Campus X community members can capitalize on the knowledge of leading digital marketing service providers like Verto Digital, ROIMonks, Easy Exhibit, and Ingotify.
As a result, startups can easily bring down potential technical, business, and marketing barriers, positioning themselves for rapid market expansion.
Failure to find proper support and a nurturing community
Bulgaria has over 1,300 startups and the EU's highest rate of young entrepreneurs. While the proactiveness of young Bulgarians is admirable, its downside is the need for more experience.
In the dynamic startup world, founders, especially in early-stage, often have to navigate multiple facets of the business, which can be daunting. The task can get even more challenging when there are aspirations for international expansion on the table. Different markets have different specifics, including cultural differences, regulatory and business landscape dynamics, audience profiles, financial and economic barriers, etc. Entrepreneurs must uncover as many unknowns as possible to make all this a smooth sail.
How to overcome bureaucratic hurdles?
Should you bootstrap or raise external funding?
Is it the right time to seek funding?
How much ownership to give?
What valuation to aim for?
What KPIs to prioritize to lure investors?
What about follow-up investments?
Is it the time to scale overambitiously or prioritize existing markets and products?
At some point, every startup team faces questions like these. And as hard as one can try to find the answers, this nasty feeling that there is more to it often settles. The best way to get rid of it is by leaning on people who have already walked that path.
Fortunately, over the past two decades, there have been many of them. Thanks to all those believers, the path for Bulgarian startups today is well-trodden, and it has never been easier to launch a business and conquer the global stage.
“Over 20 years ago, when tech product companies like Telerik were founded, it was considered nearly impossible to build a successful product company in Bulgaria,” reminds Vesko.
“Today, however, there are numerous examples of thriving startups emerging from Bulgaria and the surrounding regions. I won't even attempt to list them all—there are simply too many. The ingredients for starting and growing a successful business are readily available,” he adds.
The halls of Campus X are filled with inspiring entrepreneurs, every one of whom has their own journey with unique challenges, opportunities, and lessons learned. In fact, many of Bulgaria’s leading startup success stories, including Payhawk, Dronamics, and Digital Lights, to name a few, have a chapter on how they have navigated the rise to global prominence from our workspaces. More importantly, many of them were once in a similar position as you are today, facing the same questions.
Some have stared bankruptcy in the face but struck financing in the eleventh hour to keep them afloat before growing exponentially.
Others had to go through what-is-a-small-graveyard of failed projects before striking gold.
Third have had that “Eureka” idea and managed to surround themselves with the right people from the get-go.
The point is everyone’s experience is invaluable. That is why, over the years, we have nurtured internal dynamics that have helped various startup founders access mentors from our community and capitalize on their know-how.
From idea validation to purely practical lessons about raising capital, navigating market expansion, or making up for scarce resources lean business models, our members can be your wildcard. And while we are on it, why don’t you take a minute to meet them?
5 tips for Bulgarian startup founders
1. Be ambitious and confident, but keep your feet on the ground.
“If I had to highlight one specific local challenge, it would be the lack of self-esteem,” notes Vesko. “Many people in the region struggle with it, which either prevents them from pursuing their dreams or limits their ambitions to goals far smaller than their true potential.”
Asked how to overcome this, Vesko said: “I advise anyone interested in entrepreneurship to focus on two things: 1) follow a structured and disciplined approach, and 2) Dream BIG.”
Find the balance between product development and go-to-market strategy.
“We tend to observe two extremes: on one side, product-focused individuals heavily concentrate on building the product, while those with sales and marketing experience primarily focus on go-to-market efforts,” notes Icanpreneur’s CEO.
“Both approaches are suboptimal—marketing without a product is like making promises with no means of delivering while building a product without a clear strategy for reaching customers is like performing a great concert with no audience,” he warns.
2. So the question is, where is the golden mean?
“Our advice is to maintain a 50-50 balance. Yes, go-to-market activities may slow down product development and vice versa, but when done right, that’s a positive thing,” explains Vesko.
“What do I mean by "done right"? Effective product development and go-to-market strategies should be grounded in a disciplined approach to entrepreneurship—based on properly conducted problem discovery and validation. This is the core of what we offer through our Accelerator-as-a-Software, which dramatically improves the odds of success for entrepreneurs,” he adds.
3. Just ship it.
We all struggle with this toxic perfection paralysis, and we know you probably do, too. The truth is there will always be areas for improvement. However, perfection equals procrastination, and it is crucial to learn to find that sweet spot where you feel confident to ship it (Seth Godin explains it brilliantly here).
Or, in the words of Dronamics’ founders, “If you’re not fast, you’re last.” Follow their advice, and you will minimize the risk of a competitor with funding equal to a developing country’s GDP entering your niche and complicating your journey.
4. Be forward-looking and adaptable.
The year is 2013. In Nokia's headquarters in Espoo, Finland, there is a press conference announcing the company’s acquisition by Microsoft for a fraction of its former value. The closing lines in the speech of Stephen Elop, Former Nokia CEO, are: “We didn’t do anything wrong, but somehow, we lost…”
So, it isn’t always about doing something wrong, but more of just doing something, preferably with a focus on tomorrow.
5. Surround yourself with the right people.
The team at Dronamics share that they feel at home seeing all the founders of the startup ecosystem’s early days grow their successful ventures at Campus X. This is only possible thanks to various stakeholders, including venture capital investors, tech teams, marketing consultants, sales professionals, legal experts, and more, giving each other a helpful hand.
Not to be those guys, but if there were someone around Robert Apatoff, former CEO of the iconic mapmaker Rand McNally, back in 2006 to give him a nudge, he probably wouldn’t have said: “Anyone who thinks old-fashioned folded maps are going away should think again. It’s kind of like saying newspapers are going to disappear.”
Ready to put your startup under the spotlight?
The numerous success stories of Bulgaria’s startup scene have taught us to use words like “impossible” or “not good enough” a bit more carefully. Moreover, they have inspired a wave of new entrepreneurs and, fortunately, provide a great learning curve for the next Payhawks or Dronamics among you.
“The one thing I want to emphasize to your audience: everyone can be an entrepreneur—literally everyone—as long as you’re willing to put in the necessary deliberate effort, follow the right guidance, and use the right tools. Just pick an initial idea in a space you deeply care about and start working on it. Today,” says Icanpreneur’s CEO.
In closing, let’s just leave you with the fact that, according to some VC experts, currently, there is a lack of quality startups in Bulgaria. If you take this personally and are ready to prove them wrong, just follow Vesko’s advice:
“Dream big, and remember that big success is built on small, daily steps. And if you need support, Campus X and Icanpreneur are always here for you.”
Comments