BULGARIA’S “START-UP NATION “
Bulgaria was for a long time a country under the orders of Moscow during the USSR and despite the end of communism, Bulgaria has not managed to get out of this long communist tunnel.
Yet Bulgaria has certain assets with real thousand-year-old culture, recognized expertise in the field of the food industry, wines of great quality, mineral waters of exception of which everyone knows that water for the XXIst century, it will be the oil of the XXth century, “the White Gold”.
The Bulgarian relief is very beautiful with magnificent beaches on the Black Sea like Karadere Beach and world-famous ski resorts like Pamporovo and Malyovitsa.
Bulgaria’s great strength is technology, with the ‘Silicon Valley’ of South-East Europe, where germanium transistors (under license from Thomson) and silicon diodes (with technical assistance from the Soviet Union) were produced in 1964 in the factories of Botevgrad. On this ground where experimental curiosity, proto-entrepreneurship, and university and private research are combined, copies of IBM microprocessors are produced, and, in small series, the first Bulgarian computers, the “IMKO-1”.
At the dawn of the 1980s, the Soviet computer industry could no longer compete with those of the capitalist countries due to the lack of common standards and critical size. The USSR encouraged catching up by pirating Western systems and entrusted Bulgaria with the production of central units and microcomputers.
In 1982, the first “IMKO-2” (combining a clone of the Apple II and Bulgarian variants of Commodore microprocessors) came out of the Pravetz factory (near Botevgrad). At its peak in 1985, the Bulgarian industry accounted for 40% of the Soviet production of microcomputers and CPUs and employed up to 130,000 people. It was at this time that the country earned its nickname of “Silicon Valley of the Eastern Bloc”.
In fact, this area was originally a ‘Silicon Valley in Eastern Europe’ of worldwide importance. Presented at a conference in England in the middle of the Cold War by Bulgarian researchers, the association of an IMKO-1 with a robot impressed British and Japanese researchers. Another example: in 1975, the ELKA electronic computers, designed at the Institute of Computational Technologies in Sofia, were exported to Switzerland in more than 30,000 units (source: Invest Bulgaria Agency).
The legacy of this period is not negligible. “Today there is a large and diversified technology cluster: video games, software, algorithms, blockchain, deep technology”, says a venture capitalist.
After the 1990s, this concentration of IT know-how, combined with attractive conditions, made the country a fertile ground for outsourcing by American technology giants such as Cisco Systems, Hewlett-Packard, VMWare, Microsoft, and Oracle, which have set up production and/or R&D units here.
Following the financial crisis of 2008, and the drying up of foreign investments and available credit lines, the Bulgarian government is investing in the enrichment of its technology cluster.
In 2008, an agreement between the national IT agency and IBM paved the way for the installation of the Blue Gene supercomputer to support pharmaceutical research, DNA diagnostics and financial modelling. The first Eastern European country to have a supercomputer at the time, Bulgaria became the tenth European country to join the HPC-Europa EU initiative for the promotion and coordination of research efforts in high-performance computing in 2017.
In 2009, the Sofia government decided to establish a 30-million-euro nanotechnology research center, again in partnership with IBM.
Bulgaria’s ability to import technology and capital through commercial, industrial, scientific and/or capital-intensive cooperation with foreign companies has been proven in sectors other than IT in the strict sense.
Other foreign players have contributed to the spread of NICTs. In 2004, the Bulgarian government sold 65% of the capital of BTC (Bulgarian Telecommunications Company) to the American capital investor Viva Ventures and granted a 3G license to BTC the following year. Today, in a country where the Internet penetration rate is close to 60% (source: standartnew.com), compared to 85% in France and 51% in the world (source: Blog du Modérateur), the majority of fixed lines continue to be operated by BTC, and its subsidiary Vivacom is one of the top three cell phone providers.
Foreigners are also strongly present in the electrical and electronic sector, which exports more than 75% of its production (source: Invest Bulgaria Agency). Schneider opened offices in Sofia in 1991, while the Swiss company ABB acquired the national components company Avanguard in 1993, and the Japanese company Huyndai bought the largest Bulgarian transformer producer in 1997.
In ten years, the turnover of the electrical sector has quadrupled and the export mix has evolved towards products with increasingly high added value: the Bulgarian subsidiary of the American company EnerSys manufactures batteries weighing more than 300 tonnes for submarines, while the local subsidiary of Liebherr (which also produces 600,000 refrigerators per year) supplies Bombardier with the ventilation system for the electric train linking Johannesburg to Pretoria.
The sector has also seen local companies flourish, such as Datecs, which was founded in 1990 by researchers from the Bulgarian Academy of Sciences and is one of the leaders in sales solutions in Eastern Europe.
The European Union and its members, through funds disbursed since 2004, have contributed directly to the reinforcement of infrastructures (transport, energy) and to the support of non-regal missions (education, scientific research) of the Bulgarian State.
Nearly 2 billion euros in pre-accession funds were earmarked for the period 2004-2007. After joining the European Union in 2007, 12 billion euros were budgeted for the period 2007-2013, and 9.9 billion for the period 2014-2020 (including 7.4 billion in structural funds and 2.5 billion for the CAP), which is approximately 3% of GDP.
In the field of education and scientific research. In 2014, the “Science and Education for Smart Growth” (SESG) program, co-financed with €77 million from the Bulgarian government and €600 million from the European Social Fund and the European Regional Development Fund, planned to invest 250 million in R&D and 350 million in education and learning.
In addition to the modernization and stimulus effect, this European aid has acted as a spur to local political action. Faced with the risk of misappropriation of certain funds allocated to highway projects, the Commission had already decided in 2008 to freeze 800 million euros. And when Brussels turns off the tap, Sofia has to rework its copy, although there is no guarantee that 100% of the funds will be allocated to the projects in question.
In addition to the so-called structural funds, the EU shapes and irrigates the Bulgarian scientific system through Horizon 2020, the EU’s 2014-2020 R&D program, with a budget of €79 billion.
In June 2016, the “Better Science for a Better Bulgaria 2025” plan, driven by 4 principles and articulated around 4 pillars, lists a dozen priority areas, not limited to hard sciences (in contrast to most of the funding policies underway in North America and Western Europe).
With the 2021 elections and the victory of the charismatic and pro-European Kiril Petkov, he founded his government with a surprise and a very clear message to the international community, Bulgaria wants to become a leader in new technologies.
For this purpose, Daniel Lorer has been appointed Minister of Innovation and Growth, he has an impressive resume, he holds a degree in computer science and business management from Tel Aviv University.
Daniel Lorer created his first startup FranceBusinessPlus in 1999 in Paris, which was later successfully sold. He worked as an IT expert at the Israeli high-tech company Mercury Interactive which was acquired in 2006 by Hewlett-Packard. After this acquisition, Daniel Lorer was one of the promoters of OPTiiM, a high-tech software solutions company based in Istanbul and sold in 2016 to the Austrian holding company New Frontier Group.
Daniel Lorer is a founder and managing partner of BrightCap Ventures – a venture capital fund for technology companies. His responsibility is to evaluate new companies and monitor the implementation of their business plans.
With this exceptional background, Daniel Laurer and his ministry have the ability to bring Bulgaria to a level that could compete with the best European economies. Bulgaria will become like Israel, a “start-up nation”.