FinTechs in Bulgaria achieved a record of BGN 1.86 billion ($1.03 billion) in 2020, a roughly 20% increase compared to 2019, helped by the boost in real-time transactions.
This data was published in the annual FinTech report by the Bulgaria FinTech Association (BFA), released on Nov. 23, and further revealed that the digital payments segment was the largest contributor to the overall performance of the FinTech sector, representing 66% of the total operating revenue in 2020.
Like other FinTech ecosystems around the world, the pandemic-induced shift to online was also a huge boost, leading to the creation of 18 Fintech companies in 2020.
Today, the southeastern Europe (SEE) nation is home to 135 FinTech companies, 95% of which are small and medium-sized businesses (SMBs) mostly located in three cities: the capital Sofia, Varna, and Plovdiv. Despite this growth, the FinTech ecosystem still has a long way to go.
Per the report, about 50% of Bulgarian FinTech representatives listed these factors as the leading challenges hindering the sector’s growth: lack of a strong innovation infrastructure, including innovation hubs and regulatory sandboxes; the lack of governmental support, and the lagging regulatory environment.
Despite these challenges, Veselina Markova, a BFA member and FinTech Lead at Bulgaria-based venture capital fund Eleven Ventures, is of the view that there is still an enormous untapped potential in the market.
“The potential here [in Bulgaria] is huge because we are a cost-efficient destination for running a FinTech business, we have great talent like software engineers and a very high number of women in the tech and engineering space,” Markova told PYMNTS.
She added that the SEE region is a booming FinTech destination, which continues to attract international companies — a claim backed by the BFA report which showed that €32.2 million ($36 million) was invested in FinTech SMBs in the last two years, with more than 70% of the funds coming from foreign funds in Germany, the Netherlands and the U.S.
Eleven Ventures, one of the leading venture capital funds in the region, is also doing its bit to support startups in the region. The fund has an ongoing partnership with credit card giant Visa, helping emerging FinTech startups in the Visa SEE Cluster (Bulgaria, Greece and Cyprus) to grow and scale faster.
The initiative, known as the Visa Fintech Corporate Innovation program, gives startups access to Visa’s tech infrastructure, FinTech experts and domain experts, helping to guide the startup in its overall journey, including how to structure their products depending on market needs and the infrastructure best suited for their products.
Markova, the program lead, said the initiative has proved to be very successful in the three years since it launched and has grown to become “a magnet for the best entrepreneurial talent across Southeastern Europe.”
Related news: B2B Spend Management Startup Payhawk Closes $112M Series B
One of its success stories is Payhawk, an integrated financial software platform aimed at simplifying expenses, payments, and card spending for growing businesses.
The London-based, Bulgaria-founded FinTech startup recently announced a $112 million raise, the second largest Series B in Central and Eastern Europe to date.
See also: Payhawk Launches New Enterprise Suite, Cash Back
“They were part of the first season of this program in Bulgaria and […] they are now one of the fastest growing FinTech companies in the region and in Europe,” Markova said of their portfolio company.
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