BULGARIA Law and Practice Contributed by: Nikolay Zisov, Svetlina Kortenska, Deyan Terziev and Teodora Peycheva, BOYANOV & Co.
1. Market Trends 1.1 Technology M&A Market
considered a somewhat more sophisticated corporate form, offering better corporate structuring and man- agement options. A significant development for Bulgarian start-ups was the recent introduction of the Variable Capital Com- pany (VCC). This new corporate form was created to overcome the rigidities of conventional structures, providing founders with greater agility and a much easier path to incorporation and capital management. While a few initial VCCs have already been registered, its long-term success and adoption rate remain a key point of observation for the market. 2.3 Early-Stage Financing In Bulgaria, early-stage financing is usually provided by business angels and/or venture capital funds which specialise in providing seed investments. Govern- ment-sponsored funds are also a source of financ- ing for early stage start-ups. There is no standard set of early-stage financing documentation. Usually, the documents include an Investment Loan Agreement and/or Shareholders’ Agreement together with Arti- cles of Association reflecting the relevant arrange- ments between the parties. 2.4 Venture Capital The typical sources of venture capital in Bulgaria are local and foreign venture capital funds as well as busi- ness angels. While the venture capital ecosystem in Bulgaria has been growing, it is still relatively small compared to more mature markets. Therefore, secur- ing venture capital can be competitive, especially for start-ups in early stages. However, there have been notable successes, and government initiatives and for- eign investment have been contributing to the devel- opment of the VC landscape. Bulgaria has several government-sponsored venture capital funds. These funds aim to support local start-ups and provide them with the necessary capital to grow. Foreign venture capital firms are increasingly active in Bulgaria, par- ticularly those with a focus on Central and Eastern Europe. They often bring international expertise and networks to the local start-up ecosystem. 2.5 Venture Capital Documentation It could be said that there are established standards for venture capital documentation in Bulgaria. The
The Bulgarian tech sector is experiencing rapid growth and remains a major hotspot for foreign investment, with a large percentage of announced mergers and acquisitions focused on information and communica- tion technology. Despite global economic uncertain- ties, US and Western European investors continue to drive acquisitions in Bulgaria, targeting companies specialising in AI, cloud solutions, cybersecurity and software engineering. 1.2 Key Trends The tech sector has continued to lead M&A activ- ity in Bulgaria over the past year, attracting foreign investors due to the region’s favourable business cli- mate and growth potential. Bulgaria’s adoption of the Euro, starting January 2026, is expected to further significantly boost investor confidence by eliminating currency risk and enhancing economic stability. The transition will simplify cross-border trade and financial operations, reduce foreign exchange costs, and align Bulgaria more closely with the EU’s monetary system. 2. Establishing a New Company, Early-Stage Financing and Venture Capital Financing of a New Technology Company 2.1 Establishing a New Company New start-up companies are typically incorporated in Bulgaria. The incorporation process is considered relatively simple and inexpensive. At this time there do not seem to be any general advantages of having the start-up registered in another foreign jurisdiction. The incorporation is a quick process as the procedure itself takes about a week. Since the process involves the opening of a bank account prior to registration of the company in the Commercial Register, the bank KYC procedures sometimes take longer to complete and may extend the incorporation timeline. 2.2 Type of Entity The most frequently used form of entity for the initial incorporation of start-ups is the limited liability com- pany (OOD). The joint stock company (AD) is usually
56 CHAMBERS.COM
Powered by FlippingBook